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88 Tul. L. Rev. 627 (2013-2014)

handle is hein.journals/tulr88 and id is 675 raw text is: COMMENTS Shooting for the Stars (and Stripes): How Decades of Failed Corporate Tax Policy Contributed to Puerto Rico's Historic Vote in Favor of Statehood Andrew E. Gerow* Puerto Ricans voted in 2012, to abandon the islandk status as an unincorporated tenitory and adopt statehood The currnt tenitonal system subjects Puerto Rico to some federal laws and privileges but exempts it from others. Income taxation is one area in wich Puerto Rico is tradionally exempt from federal law In an effort to generate employment and compensate for the prvileges that are not extended to Puerto Rico, the United States implemented several tax policies between 1921 and 1996 designed to icentivize investment in the island from the maindand The last ofthese tax incentives was phased out as meffective in 2006 Tis Comment describes the unique economic challenges Puerto Rico faces as an unincorporated ternitory examines why the tax initiatives that the United States applied to Puerto Rico all fadled and posits that statehood offers superior opportunities for Puerto Ricok long-term economic outlook. I. INTRODUCTION.. .......................................... 627 II. INTERNATIONAL TAXATION AND THE UNITED STATES.................630 Ell. PROS AND CONS OF PUERTO RICO's POLITICAL STATUS.............635 IV U.S. TAX INCENTIVES TOWARD PUERTO Rico..... ......638 A. Secon 931...................... ............639 B. Section 936.............................64 C Post-Section 936and CFCs ............643 V WHY FEDERAL TAx INCENTiVES FAILED ................645 VI. THE EcoNolIc CASE FOR STATEHOOD .................647 VII. CONCLUSION ......................... ................ 649 I. INTRODUCTION On November 6, 2012, Puerto Ricans voted in favor of ending the island's current territorial status and becoming a state.' Puerto Ricans * © 2014 Andrew E. Gerow. J.D. candidate 2014, Tulane University School of Law; B.A. 2009, University of Notre Dame. I would like to thank Professor Claire M. Dickerson-a wonderful teacher and invaluable mentor-for her guidance on this Comment. Thanks also to Felix Rodriguez-Cartagena for his feedback, the members and staff of the Tulane Law Review for their tireless work, and my parents, Kathleen and Kevin, for their love and support. 627

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