Statehood worsens inequality and reduces corporate investment

4. Statehood would mean the citizens would start paying federal taxes. One of the issues that sometimes holds Puerto Rico back from the idea of statehood is the fact that any resident who lives on the island does not pay a federal income tax to the U.S. government. Workers are responsible for payroll taxes to help fund Medicare and Social Security. There is only limited funding for food stamps, Medicaid, and other benefits that most Americans take for granted. The sales and use tax rate in the territory is 10.5%, but Puerto Rico’s income tax is only 4%. There are no taxes on dividends either or are there any capital gain taxes to worry about when living on the island. Shifting to statehood would likely change this format, which could limit future business opportunities.