Op-Ed: Why taxing self-employed’s is a nefarious idea

Written by  //  July 19, 2017  //  Biz Views  //  2 Comments

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Author Ada Torres-Toro is president Full Circle Communications.

Of all the atrocious ideas I have heard in the past few years, and there have been plenty, none is more poisonous and counterproductive than the announcement that the Treasury Department is planning to significantly increase taxes to self-employed people.

This administration (as well as others, to be fair) keep repeating ad nauseam that entrepreneurship is key to our economy, that people have to disengage from the “mantengo” mentality that has plagued us for generations.

They swear (while campaigning) that nurturing new generations who create jobs for themselves and others, instead of aspiring to be employed, is the way to gain the competitiveness that we desperately lack.

And then they do the exact opposite. They crush these people over and over.

The fact that in Puerto Rico only four in 10 people work, speaks volumes of our mentality as an island. We have one of the lowest labor participation rates in the globe.

We all know that we have entire generations of families who have never held a formal job and live off subsidies and government welfare. This “mantengo” mentality has brewed some of the most critical problems we face as a society.

That, instead of raising taxes to the few that work, should be one top priorities of any government that aspires to make this island more competitive. It simply doesn’t cut it when 60 percent of your population does not contribute to our economy.

In our neighbor Dominican Republic, or Chile, no name a couple, nearly 60 percent of the population works.

This is not to say that welfare is not necessary: there are plenty of elderly, sick, children and many others (yes, there is real poverty in Puerto Rico, believe it or not) that truly need this help. But many do not. They simply have done the math, read news like this new tax increase, add up their subsidies and benefits and say, “The hell with it.”

Can you blame them? The federal government, as well as the local ones, is responsible for creating this social monster, for feeding it, for creating its false sense of entitlement.

For the rest of us who decided not to work for anyone but ourselves, or to create local companies that produce jobs, it’s just a sick dynamic of blow-after-blow by every administration every four years, while we watch global empires do business here with formidable tax benefits.

It’s almost enough to emulate the guy living on welfare and say: “The hell with it.”

Doing business in Puerto Rico as a local company or individual is not easy. Case in point: I recently registered my corporation, Full Circle Communications, in the Puerto Rico Unique Register of Bidders, and at one point, I simply gave up and had to hire an expert to do this chore for us. The sheer amount of documents (some simply nonsensical) and hoop-jumping was amazing.

This new hair-brained intent to raise taxes for people who work independently aims to raise $200 million for Treasury. Really? A mere $200 million?

The current administration could easily achieve that by simply cutting hundreds of unnecessary advisors contracts, and by actually prohibiting salary raises for hundreds of agency chiefs and other government executive employees.

Almost a quarter of that $200 million, $40 million, is what Lisa Donahue cost Puerto Rico taxpayers while her tenure at the Puerto Rico Electric Power Authority, with no tangible results. It’s disheartening.

Simply put, this despicable system is designed to annihilate business initiatives and entrepreneurship and incentivize dependency, or the “paycheck” mentality.

I wish I could say that that there is no consistency within our governments in this “backfire” suicidal strategy, but strangely enough, there is. Both major political parties act consistently to suppress progress, work independence, and a climate that breeds aspirations and competitiveness.

They seem blissfully unaware that in killing it, they are killing themselves.

2 Comments on "Op-Ed: Why taxing self-employed’s is a nefarious idea"

  1. carlos alberto ruiz July 20, 2017 at 1:54 PM · Reply

    Brilliantly exposed. The government sector tends to forget that the creation of wealth comes from the private sector and in Puerto Rico, from the self employed sector which keeps growing in number due to the closing of major industries and retailers.

  2. Aramis Ortiz Rosa July 31, 2017 at 5:26 PM · Reply

    Ada’s exposure of politicians lack of knowledge of economical principles is right on the money. We have no leadership to lead us out of our current head on economical crash (both parties just keep on taking turns on who does worst with Puerto Rico’s unfolding economy.
    I couldn’t say it any better…bravo Ada. It’s hard to believe that a party that is founded under the principle of less government is talking more taxes. And not just a general tax increase; but particularly targeting the class that keeps economy fair and balance. From the premise that the government does not generate revenue, but generates expenditures from those that do; this call for tax increase is political Seppuku.

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