Puerto Rican fiscal crunch is approaching Congress

Significance

Puerto Rico has suffered from an inability to service its debts, as its economy has been in or near recession since 2005. Its population has declined -- especially the working age population -- as residents, who are US citizens, have moved to the mainland to look for work. The governor has proposed an overhaul of the tax system in an attempt to raise revenues.

Impacts

• Tax breaks for US companies operating in Puerto Rico may be part of a corporate tax overhaul.
• There is little prospect for such legislation this Congress, but a fiscal crunch could spur a separate bill.
• The Democratic party would probably split, as opposition to corporate tax breaks would clash with its Hispanic base.