The island is in deep economic trouble, and its leader has said it is unable to pay back its $72 billion in debt.
Alvin Baez / Reuters
That means it has no provision for declaring bankruptcy, and it funds its government by issuing bonds in U.S. dollars. Its debt has long been gobbled up by individual and institutional investors in the U.S. because income earned from the bonds is tax free, much like the bonds issued by U.S. municipalities.
But while municipal bonds are only exempted from state and local taxes in the state where the bond is issued, all American investors get state & local exemptions for Puerto Rican bonds.
People ride atop a vehicle waving a Puerto Rican flag during elections in 2012.
Ricardo Arduengo / AP
SOURCE: BuzzFeed
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