Res 0372-2026

Res. No. 372 ..Title Resolution calling on the Legislative Assembly of Puerto Rico to pass, and the Governor of Puerto Rico to sign, legislation to repeal Act 22 and implement a progressive tax policy to minimize the revenue losses to federal, state, city, and territorial governments ..Body By Council Members J. Sanchez, Aldebol, Avilés, Schulman and Louis Whereas, Puerto Rico’s Legislative Assembly passed the Act to Promote the Relocation of Individual Investors, also known as Act 22, in 2012; and Whereas, As its name suggests, Act 22 is designed to attract wealthy investors to Puerto Rico; and Whereas, Act 22 works in tandem with the United States tax code, which exempts Puerto Rico-sourced income from United States federal income taxes, including taxes on interest, dividends, and capital gains; and Whereas, Under Act 22, United States citizens who move to Puerto Rico and become bona fide residents of Puerto Rico are exempt not only from United States federal income taxes, but also pay minimal Puerto Rico income taxes; and Whereas, To establish bona fide residency under Act 22, an individual must not have resided in Puerto Rico during the period from 2006 to 2012, must reside in Puerto Rico for at least 6 months before requesting a decree, must not have a tax domicile outside of Puerto Rico, must buy a house in Puerto Rico within 2 years of obtaining a decree, and must make an annual $10,000 contribution to one or more local nonprofit organizations; and Whereas, Thus, Act 22’s benefits are designed to benefit wealthy individuals and are not available to existing residents of Puerto Rico; and Whereas, According to a 2024 report published by Puerto Rico’s Department of Economic Development and Commerce, total Act 22 beneficiaries increased over 60 percent in the span of 3 years from 3,146 taxpayers in 2020 to 5,010 taxpayers in 2023; and Whereas, Act 22 is the subject of intense criticism; and Whereas, Advocates point to a lack of regulatory guardrails to ensure meaningful compliance with Act 22’s requirements; and Whereas, Moreover, according to Nomiki Konst and Federico De Jesus (Konst and De Jesus), whose article “Listen to Bad Bunny: Abolish Act 22” was published in The Nation on January 14, 2026, Act 22 makes Puerto Rico “the only place in the world where an American can ‘establish residency’ and pay Uncle Sam almost no taxes and not risk losing their passport”; and Whereas, In their article, Konst and De Jesus assert that Act 22 reduces revenues that would otherwise support the governmental functions in jurisdictions such as New York City and across the United States because it induces wealthy persons “to stash their money in Puerto Rico tax-free while avoiding local, state, and federal taxes back home”; and Whereas, In addition to lost municipal revenue, other negative consequences of Act 22 directly impact and concern New Yorkers; and Whereas, According to a January 2024 report published by The CUNY Graduate Center’s Center for Latin American Caribbean and Latino Studies, the United States 2020 Census recorded that New York City’s population is roughly 6.8 percent Puerto Rican, considering birthplace and ancestry, and accounts for one of the largest populations of the Puerto Rican diaspora in the United States; and Whereas, Puerto Rican New Yorkers have highlighted rising hosing costs and displacement of family members who live in Puerto Rico as a result of the gentrification under Act 22; and Whereas, According to Coral Murphy Marcos and Patricia Mazzei’s New York Times article “The Rush for a Slice of Paradise in Puerto Rico,” published January 31, 2022, the influx of wealthy Americans in Puerto Rico who seek to take advantage of Act 22’s tax incentives have oversaturated the housing market and driven up housing prices; and Whereas, For example, an average 2-bedroom condo was listed for $130,000 more in 2022 than in 2017; and Whereas, In passing Act 22, the government of Puerto Rico harmed both Puerto Rico and destabilized the local economic ecosystem of Puerto Rico with far-reaching and negative ripple effects in cities like New York City; and Whereas, Tax policy should promote equitable and sufficient public investment; and Whereas, Policies that only benefit a small subset of wealthy individuals are not consistent with the fundamental principles of sound tax policy which include simplicity, transparency, neutrality, and stability; and Whereas, Taxes and tax expenditures should be apportioned equitably across the population and ensure that public goods and services are available on an equitable and just basis; now, therefore, be it Resolved, That the Council of the City of New York calls on the Legislative Assembly of Puerto Rico to pass, and the Governor of Puerto Rico to sign, legislation to repeal Act 22 and implement a progressive tax policy to minimize revenue losses to federal, state, city, and territorial governments. BS LS #21562 3/4/26