If Puerto Rico Can Do It ...

... why not the USA?

Where have you heard this before?

Puerto Rico's Governor Channels Ronald Reagan
By Mary Anastasia O'Grady

Move over, New Jersey Gov. Chris Christie. You've got a tax-cutting, pro-growth competitor who may be even bolder than you. His name is Luis Fortuño and he is the governor of Puerto Rico, a place that, if you can believe it, is in worse fiscal shape than the Garden State.

When Mr. Fortuño took office in January 2009, Puerto Rico had a 46% budget shortfall equal to $3.3 billion. Things were so bad, he told me in a telephone interview from San Juan on Tuesday, that he had to fly to New York while still governor-elect to explain his fiscal plan to the investment community in order to avoid a sharp downgrade of Puerto Rican debt. "We were one step from junk status," he says.

After 22 months in office and a boatload of spending cuts, the deficit is now down to about 11%. That achievement notwithstanding, the commonwealth still is spending more than it takes in. In the Washington political handbook this means Puerto Ricans are not paying enough in taxes.

Mr. Fortuño has a much different view of the problem: He thinks high taxes have destroyed the Puerto Rican economy. He has already signed into law a five-year property tax holiday for real estate purchased through June of next year and waivers on fees for those transactions. Last week he handed his legislature a radical plan to simplify the tax code and sharply reduce corporate and individual rates.

Mr. Fortuño says that Puerto Rico's recession—which began two years before the U.S. recession—only partly explains the current crisis. "If you look at the past decade, Puerto Rico has had negative growth for the entire period." (According to his office, the economy contracted 0.2% in the 2000s.) This shows, he argues, that "we are in need of a major overhaul. If we just tweak it a little, we won't accomplish what we need."

The governor says he cut 20% of the budget but "it was not enough." Puerto Rico needs "to provide an environment for our people to flourish and to let their ingenuity take them where they want to go." He adds: "Puerto Rico has not been competitive. Investors have been going to Singapore and Ireland. Our system was failing us." And it wasn't for lack of capital. Commonwealth debt offerings, he says, always sell out quickly. "There is plenty of money here but it has not been worthwhile taking risk" in private-sector ventures.

To change that risk-reward profile, the Fortuño plan dramatically reduces corporate tax rates and raises the income levels in which higher rates kick in. The new schedule will replace six brackets with three and move the top corporate rate of 41% on income over $500,000 down to 30% on income over $2.5 million. [link] [emphasis mine]

Meanwhile, here in the USA, Obama and Pelosi scheme to raise taxes ever higher and make it more difficult for the job creators among us to thrive.

And we're now being shown up by the Puerto Ricans.

For the love of God.

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A worthy read: "Why We Should Eliminate the Corporate Income Tax."