How Tax Havens and Tourism Could Displace an Entire Population
In the turquoise shimmer of San Juan’s coastline, beneath a sky as clear as the U.S. government’s agenda, something strange is happening. A couple on a beach in Ocean Park claims to own the sand beneath their villa. They confront locals—Puerto Ricans—who have come to enjoy the shore. A phone is pulled out. The moment goes viral.
The next day, dozens gather for a defiant beach party outside the same house.
But this wasn’t just a protest about sand and sea. It was a symbol. A symptom. A spark in a larger fire. Puerto Rico isn’t just battling for public beaches—it’s battling for its soul.
Let’s take a closer look at the paradise that’s slowly being privatized.
A Tax Haven in Crisis
Puerto Rico is a U.S. territory. That means its people are U.S. citizens, but they don’t get the same representation in Congress or the right to vote for President. What they do get, however, is economic policies handed down from Washington—and lately, those policies are putting the island up for sale.
Facing a brutal economic collapse—42% of the population lives in poverty, the median income hovers around $25,000, and debt has exploded—the government decided to attract outside wealth.
Enter: Acts 20 and 22, now merged into Act 60.
These laws offer mainland Americans something most people can only dream of:
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0% tax on capital gains
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0% tax on interest and dividends
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0% tax on crypto profits
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A rock-bottom 4% corporate tax rate
All for moving to Puerto Rico.
The goal? Turn the island into a luxury magnet for investors and entrepreneurs. A Caribbean Monaco. A crypto haven with colonial flavor.
The result? Rising prices, record real estate listings, and a displaced middle class.
Paradise for Sale
In San Juan, the median home listing price is now nearly $900,000—in a place where the average annual salary is $25,000. It’s a surreal imbalance.
Locals are being priced off their own island.
Many fear Puerto Rico is on the same path as Hawaii, where tourism and outsider wealth have overwhelmed native populations, turning sacred land into commercial attractions and turning locals into service workers in a fantasy not made for them.
On average, tourists in Hawaii now outnumber Native Hawaiians 30 to 1.
The same formula may be underway in Puerto Rico—luxury condos, tax-exempt investors, and hotels with private beaches in areas once dominated by local families and public access.
This isn’t just gentrification. It’s a population swap.
A Changing Demographic
Over the past 15 years, over 700,000 working-age Puerto Ricans have left the island for the mainland United States. They’re not being replaced by fellow locals.
They’re being replaced by millionaires.
Young professionals can’t afford to stay. Middle-class families are pushed out by rising costs. Meanwhile, tax-exempt outsiders move in, buying real estate, building gated communities, and hiring local labor for rock-bottom wages.
And because those new residents are largely exempt from local taxes, the government collects less revenue—deepening the crisis for the people who do stay.
Puerto Rico is now one of the five most unequal places on Earth.
How Did It Come to This?
To understand the moment, you have to rewind history.
🇺🇸 1898: A Strategic Prize
In the late 19th century, the U.S. was emerging as a global power. During the Spanish-American War, the U.S. seized Puerto Rico from Spain—not as a favor to locals, but to expand its strategic footprint in the Caribbean.
Hawaii, seized around the same time, was another pawn in this imperial expansion.
In both cases, military and maritime strategy came first. Culture and autonomy came last.
Puerto Ricans welcomed the Americans, hoping for greater economic opportunity. But instead, the U.S. tried to “Americanize” the island. English was imposed. Cultural expressions were discouraged. Puerto Rico was treated not as a partner, but a possession.
Sound familiar?
Cold War Capitalism
In the 1950s, Puerto Rico was granted Commonwealth status—a move that offered the illusion of autonomy without actual power. Still, the U.S. began to invest more heavily in the island during the Cold War, using it as a model of capitalist success in Latin America.
Massive tax incentives drew in manufacturing giants. Puerto Rico became a hub for pharmaceuticals, textiles, and electronics.
This boom lifted millions out of poverty—but it came with strings. When the Cold War ended and Puerto Rico’s strategic value diminished, the U.S. started pulling the plug.
By the early 2000s, those tax incentives were phased out. The result?
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Massive job losses
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Economic collapse
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Tens of billions in unsustainable debt
In 2017, Puerto Rico filed for the largest municipal bankruptcy in U.S. history.
And then… came the disasters.
A Decade of Destruction
Puerto Rico hasn’t caught a break:
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Hurricane Maria (2017): Devastated infrastructure, killed thousands, left much of the island without power for months.
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Earthquake (2020): The worst in a century.
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Pandemic (2020–2022): Crushed tourism and exposed health system flaws.
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Hurricane Fiona (2022): Knocked out power to over 1 million residents.
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Rolling Blackouts (2024): Lasting 24 hours on average.
Meanwhile, energy prices are 41% higher than the U.S. average.
And residents are paid half as much as mainland workers.
And still they pay taxes.
Rich outsiders? Not so much.
Enter PROMESA: Washington Takes Control
In response to Puerto Rico’s debt spiral, the U.S. passed PROMESA in 2016—a law that put the island’s finances under control of a federal board, appointed entirely by the U.S. President.
The board’s job? Not to rebuild the economy.
Its mission is to repay creditors.
Critics say it sacrifices Puerto Rico’s future to Wall Street.
Supporters say it was necessary to impose discipline.
Either way, self-rule in Puerto Rico has never looked weaker.
At the same time, the island ramped up its new strategy:
Sell the paradise.
Gentrification as Growth?
With tax breaks flowing and luxury tourism booming, the island started to transform.
Construction spiked. New resorts emerged. Crypto startups popped up in villas. Remote workers moved in. And more locals moved out.
But here’s the catch:
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Most new jobs are in construction and hospitality—low-wage sectors.
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High-wage sectors like tech and finance are shrinking.
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Local homes destroyed by hurricanes are rebuilt as luxury condos.
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Land once accessible to all is now gated and patrolled.
The transformation may be lucrative.
But it’s not for Puerto Ricans.
The Hawaii Comparison
Many analysts say the writing is on the wall:
Puerto Rico is becoming Hawaii 2.0—a gorgeous island where native culture is commodified, sacred land is exploited, and locals are either priced out or reduced to labor for the wealthy.
In Hawaii:
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Many sacred valleys and islands were used as bombing test sites.
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Cultural traditions like hula were repackaged for tourists.
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Native Hawaiians now face one of the worst housing crises in America.
The pattern is familiar.
And Puerto Rico may be next.
What Does the Future Hold?
Today, the island is caught between competing visions:
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A luxury paradise for millionaires
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A homeland under siege for Puerto Ricans
There is no easy answer. But the question isn’t going away.
FAQ: Puerto Rico’s Tax Crisis and Gentrification
Why are so many wealthy Americans moving to Puerto Rico?
Because of Acts 20/22 (now Act 60), which offer huge tax breaks—0% on capital gains and personal income, among others.
What’s happening to local residents?
Many are being priced out of their homes, especially in San Juan. Salaries remain low while the cost of living and housing skyrockets.
How is Puerto Rico governed?
As a U.S. territory, it lacks full representation and now has a federally appointed board (via PROMESA) managing its finances.
Is it really like Hawaii?
There are strong parallels: cultural marginalization, land seizure, tourism-fueled gentrification, and displacement of the native population.
Is Puerto Rico still recovering from past disasters?
Yes. Hurricanes, earthquakes, blackouts, and debt continue to weigh heavily, with infrastructure and services still deeply unstable.
