Congressional Democrats are pushing for a referendum to vote on giving the unincorporated U.S. territory of Puerto Rico statehood.
Led by Rep. Raúl Grijalva (D-AZ), the U.S. House of Representatives passed the “Puerto Rico Status Act” in mid-December.
While mostly symbolic, the bill could be brought up again in the new Congress.
The measure could spark a drastic change to the Caribbean island’s economy if signed into law.
The bill would require the U.S. government to conduct a plebiscite for the island’s residents, allowing them to democratically decide whether they would like Puerto Rico to become the 51st state, an independent country, or remain a commonwealth.
Previous non-binding referendums have resulted in a slight majority favoring statehood.
Grijalva’s act received unanimous Democrat support in the House.
16 Republicans also crossed the aisle to vote in favor of the bill, including outgoing Rep. Liz Cheney (R-WY).
Supporters of the bill view it as an important step in undoing the vestiges of American colonialism.
“Invaded by the United States during the 1898 Spanish-American War, Puerto Rico has remained in a state of colonial limbo that flies in the face of the anticolonial values upon which the American Republic was founded,” said Rep. Nydia Velázquez (D-NY) in a press release after the bill passed the House.
“The time has come to fully decolonize Puerto Rico.”
Economist and Puerto Rico resident Peter Schiff, the founder of Euro Pacific Asset Management, expressed opposition to statehood for the island.
He emphasizes the added tax burden that would come with it.
“Imagine owning a business in the state of Puerto Rico,” Schiff wrote on Twitter on Dec. 15.
“37 percent federal Income tax, 15.3 percent self-employment tax, 3.8 percent Obamacare tax, 33 percent state income tax, and an 11.5 percent sales tax.
“Plus, since Puerto Rico has more debt per capita than any other state, state taxes will likely be raised.”
Proponents of Puerto Rican self-determination argue that there is a moral imperative.
“For far too long, however, the people of Puerto Rico have been excluded from the full promise of American democracy and self-determination,” said Rep. Steny Hoyer (D-MD), speaking on the House floor in support of the bill.
“We owe it to Puerto Ricans to bring an end to their island’s 124-year-old status as a U.S. territory.”
Zero percent taxes on capital gains and dividends are very attractive for asset holders, but more than 50 percent of American assets are owned by the top 1 percent of the population.
Average Puerto Ricans are unaffected by these tax breaks but are still required to pay the island’s 10.5 percent sales tax.