Study Finds 2014 Migration Reduced Tax Revenue by $86 Million
CAYEY, Puerto Rico – The migration of Puerto Ricans to the U.S. mainland meant a loss in tax revenue for the government of Puerto Rico estimated at about $90 million, according to an analysis by the Census Information Center (CIC) of the University of Puerto Rico in Cayey.
The reduction comes about because many of those who emigrated paid taxes for consumption and income, among others. For example, for 2014 a net 68,099 people who earned nearly $12,000 per person migrated.
That year, the sales-and-use tax (IVU) was 7%, resulting in an estimated tax loss of $59 million. In terms of income taxes, and using the premise that only individuals who earned more than $15,000 had paid taxes at an average rate of 10%, this represented an additional $27 million.
In total, the estimated revenue loss was $86 million.
“This is a conservative estimate, since the average rate could have been higher, and that estimate does not include potential revenues lost in tolls, in oil taxes, in property taxes and other fees charged by government entities,” explained Dr. José Caraballo Cueto, director of the only CIC in Puerto Rico.
“If we also include the revenue from economic activity derived from the consumption of these migrants, the loss in revenue could exceed $100 million,” he added. “On the other hand, the migration may have helped remittances from abroad to increase by $37 million that year, representing an increase in IVU revenue of $2.6 million for that year.”
He also indicated that the migration may have reduced the number of low-income earners who need government services, representing some savings. But in the final analysis, migration negatively affects the government budget, he said.
During 2015, net migration to the U.S. mainland is estimated at 65,089 people. The loss in revenue for 2015 was probably higher than in 2014, as the IVU had increased to 11.5%, but the socioeconomic data of for that survey has yet to be published to produce an estimate for 2015.
“This loss in revenue impacts all government budgets for the coming years as the tax base is permanently reduced, unless public policies that promote this migration are changed,” the economist said.
According to the CIC director, the community survey is one of the few databases available in Puerto Rico to measure migration and estimate revenue losses.