What Logan Paul’s Move To Puerto Rico Means– Beyond the Tax Breaks

Alan Taveras had just received an MBA when he decided to leave Buenos Aires, Argentina and move back home in 2012 with one mission in mind: help Puerto Rico. Like millions of Puerto Ricans abroad, his dream was always to give back to the island. As the founder of an e-commerce-based start-up created to help small Puerto Rican businesses, he was advised to move to New York or Silicon Valley where entrepreneurs have long flocked to be close to venture capital and a network of media-candy companies. But instead, he took a risk and moved back to Puerto Rico to start his business. 

“It was an entirely emotional decision,” says Taveras, who is now the co-founder and CEO of Brands Of that exports local goods to the United States and Latin America. “It was for the love of patria [country].”

Puerto Rico — an unincorporated territory of the United States — was not just unfriendly to tech start-ups back then, but to businesses in general. Spurred by decades of financial mismanagement and Wall Street vulture funds, the island was entering what would be a devastating and financial crisis that’d sink the territory in $123 billions of debt. In 2015, former governor Alejandro García Padilla declared the debt unpayable and by 2016, Congress passed the notorious PROMESA bill, which imposed a financial oversight board that’s since approved austerity measures, cutting pensions, closing schools, and privatizing public institutions amid consecutive natural disasters that further crippled the local economy. 

"We don't tell them to not come here because we don't want them to visit us to learn [about] the amazing things this land has to offer. That's not it at all," says Alexandra-Marie Figueroa of Taller Salud, a community-based feminist non-profit, about the influx of Act 60 beneficiaries. "What we want is respect."

The people taking advantage of Puerto Rico’s disaster crisis are largely entrepreneurs in creative, tech, and real estate industries who seek an escape from the rising tax rates in the mainland (and well as a beachfront lifestyle). Underlying that is a savior narrative that’s permeated American media in the years following Hurricane Maria, reinforcing the idea that traveling or moving to Puerto Rico helps create local wealth. “Of course, it’s easy to move to Puerto Rico right now. You will find a depressed economy, a lot of cheap properties because people have been forced to migrate to the United States,” says journalist Ana Teresa Toro, a critic of Act 60. “It’s a prime moment for a final pillage.”

In response, Puerto Rico’s government bet on its paradisiacal features and alluring tax breaks to attract wealthy people and businesses to move to the island. Since 2012, Puerto Rico has enacted a series of business-friendly policies that were compiled under Act 60 in 2019. Known as the Puerto Rico Incentives Code, the law allows foreign individuals to pay close to no income taxes by living in Puerto Rico just six months a year. Today, Taveras is far from the only tech entrepreneur on the island; a barrage of billionaires, developers, cryptocurrency bros, and influencers including entrepreneur Brock Pierce, influencer Kinsey Wolanski, and professional boxer Jake Paul have seized upon the opportunity to pack their bags, move to an island in crisis, and create their own fantasy life full of fast money and indulgent thrills  — at the detriment of Puerto Ricans. 

Most notably, famed YouTuber Logan Paul joined the ranks, reportedly moving his myriad of media and fashion businesses, including Maverick Clothing, from Southern California to Dorado, Puerto Rico, a town 30 minutes west of San Juan. The town is the preferred settlement for wealthy expats who mostly live inside the luxurious Dorado Beach, a Ritz-Carlton Reserve complex spanning 1,400 acres. Established in 2012, the gated community houses a resort, condos, golf courses, and million-dollar villas (the median home value in Dorado is $135,000.). 

“I thought it was more third world than I suspected,'' the YouTuber said on his podcast Impaulsive. “So I went out there to scout it and I just fell in love with it.” Paul and his brother Jake allegedly settled for a $10 million beachfront mansion inside Dorado Beach, which the YouTuber called “heaven on Earth.” (Logan Paul and his team did not respond to multiple requests for comment.)

Paul’s flippant comments about the island reveal some of these entrepreneurs' ulterior intentions, beyond just saving money. Wanting a permanent vacation-like lifestyle, Paul revealed in his podcast that his contempt for Los Angeles is one of a “plethora” of reasons why he’s settling in Dorado, saying, “The streets are not fixed, homeless people everywhere, a dearth of employment, Covid not handled.” But outside the Dorado Beach gates, life is far from a utopian as the decades-long crisis makes essential services, employment, and wealth inaccessible to locals, leaving Puerto Ricans unable to thrive at home. 

"Puerto Rican society is designed in a way where, if you come into Puerto Rico as an outsider, you get more out of the island than if you’re a local,” says Taveras. “At the end of the day, that's what colonies are for.”

While Act 60 encompasses numerous tax breaks for domestic Puerto Rican companies and young entrepreneurs, others like Act 22 are only available to foreign individuals. Passed in 2012, Act 22 is meant to attract new residents to Puerto Rico. All they have to do is live on the island six months a year and purchase property, much of which is located in towns like Dorado and Rincón, a coastal town on the west side of the island where you’re much more likely to hear California-tinged English than Spanish. Local entrepreneurs like Taveras describe the discrepancy — “a dude paying 4% tax while I personally pay 30-something percent” — as enraging. 

While these economic policies make it easy for people like Logan Paul to move to the island, there are little to no economic incentives for Puerto Ricans to find work at home. The median household income in Puerto Rico is $25,000, roughly 64% less than the United States, and more than 40% of the island’s population lives below the poverty line. As employment opportunities become scarce, the island’s unemployment rate reached 9.3% in January 2021, according to the Puerto Rico Institute of Statistics. The island has also lost a significant portion of its population: more than 4.3% of Puerto Ricans left the island in 2018. 

“It's hard to measure the anger that's being felt and the tension that is building up,” says Gustavo Díaz Skoff, founder of Based, a media platform focused on highlighting Puerto Rican entrepreneurs. “We are binding ourselves to repeat history.”

Puerto Rico’s economic strategy has long depended on aggressively attracting US and foreign capital and investors with too-good-to-be-true incentives, and then rushing to regulate them once they proved unsuccessful. These back and forths have ended in disaster, laying the ground for Puerto Rico’s economic nosedive in 2006. In 1947, economic development policy “Operation Bootstrap” attempted to rapidly industrialize Puerto Rico, exempting American corporations from paying taxes. It’s estimated that by 1949, more than 1,900 manufacturing companies had created 55,000 jobs on the island. Yet, unemployment and labor participation rates fell rapidly during this time, with more than 600,000 people leaving the island between 1950 and 1970.

Later, the notorious Section 936 implemented tax breaks for American companies seeking to manufacture products on the island. As a consequence, Puerto Rico became one of the biggest hubs of pharmaceutical manufacturing in the world when the government bet on the success of these corporations to grow the local economy. But by 1996, Section 936 was repealed through a 10-year phase-out after critics in Congress called it “the mother of all tax shelters.” Procter & Gamble and Pfizer were among the companies that closed shop the following decade, contributing to a 40% loss of Puerto Rico manufacturing jobs. 

The catastrophic aftermath of these policies don’t worry supporters of Act 60, who argue that employment and wealth creation metrics cannot be more favorable to the island right now. According to a report conducted by Puerto Rico’s Department of Economic Development (DDEC), close to 50,000 direct jobs and an estimated 100,000 indirect jobs were created because of these policies. The report also reveals that decree holders have created an estimated $1.3 billion in personal real estate and almost $2.5 billion in direct investments. “Candidly, our critics either don’t understand the facts, or don’t care about them because they are furthering a hidden agenda,” wrote Robb Rill, founder of 20/22 Act Society, an organization for people who have moved to Puerto Rico to benefit from Act 20 and Act 22, in an email to Refinery29. Rill believes the media and politicians are using American newcomers as “scapegoats,” as he penned in a recent op-ed for local newspaper El Nuevo Día, to ignore the positive impact Act 60 beneficiaries have made on the island. 

But the critics’s concerns go beyond job creation. Instead, they are focused on how much of Act 60 investments and wealth is getting into the pockets of Puerto Ricans. Toro argues that these incentives are a new iteration of colonialism that sets a vision of Puerto Rico without actual Puerto Ricans, forcing them to migrate when life at home is unlivable. Furthermore, as history has shown, Puerto Ricans would be forced to once again pick up the pieces if the Act 60 economic bubble shatters. 

“Their perspective is coming to Puerto Rico to exploit our resources, leaving very little money,” says Toro. “In exchange, they do the minimum, which minimally stimulates the economy of one small region. I think it’s an unbalanced pact.”

This inequality is evident in Dorado, where Paul is settling. Local resident Sofía Vázquez says Dorado has long existed in two different worlds: the countryside barrios and the gated communities that house expensive private schools and luxury properties. “People think that Dorado is all luxury areas,” says Vázquez. “But that’s not our reality. We are a town with impoverished neighborhoods, and if you’re not from Dorado, you wouldn’t know.”

The real estate boom is nigh in the beachfront part of Dorado, where wealthy buyers are paying more than $1,000 per square foot. Recently, the most expensive house in Puerto Rico was sold to two Californian newcomers for $30 million inside the Dorado Beach Ritz-Carlton Reserve. Medical tourism is also about to boom in the area with Dorado Beach Health, a 105-bed private care facility developed by local stakeholders in collaboration with Johns Hopkins Medicine International, set to open this year. This would be the town's only hospital, which Vázquez says, “won’t be available to all doradeños."

“There is a latent displacement issue,” says Figueroa, who works closely with displaced communities in the northern town of Loiza, where developers are also setting their sights. "Once these acts are abolished, they will leave once again because they are not here for us.” Figueroa calls it “disaster capitalism,” a term coined by journalist Naomi Klein in the 2007 book “The Shock Doctrine.”

This is a landscape designed for people like Logan Paul to thrive. But it took a personality like Paul’s, whose notoriously exploitative antics have angered locals in a half-dozen countries, to shed light on these policies’ most insidious effects. Pro-Independence senator María de Lourdes Santiago took to the senate chamber to denounce Paul’s move to the island and called the tax policies he’s chasing a “contributory Apartheid.” Santiago argued that offering tax breaks to outsiders while Puerto Ricans struggle to access basic services is discriminatory. 

Then, came the memes. Many mocked Logan Paul’s Instagram selfies, remaking them into common Puerto Rican fuckboy Snapchat DMs: inviting a girl out for a night in trendy Condado and asking followers who're clubbing at Isla Verde’s Brava. One tweet summed up the sentiment, “As if Puerto Rico isn’t having a rough time, now Logan Paul is moving here.” Paul responded to backlash on his podcast, citing a Buzzfeed video with Barack Obama where the former president responds to an aid walking in on him pretending to land a jump shot: “I’m like Obama in that meme, can I live? Apparently, not in Puerto Rico.” 

“The capacity that a society has to laugh at itself and its circumstances is an example of its state,” says Toro, who recently penned the op-ed “Puerto Rico for Puerto Ricans.” “The deeper the pain, the louder the laugh.”

The reality is that the backlash has little to do with Logan Paul. It was a cry in the form of viral memes from an island that has been in la brega, a constant resiliency mode, for the last century, and currently battling yet another mix of economic policies that create an unequal playing field for local entrepreneurs and professionals. 

As backlash following Logan Paul’s announcement built up, so did the fear of  negative repercussions for beneficiaries of Act 60 on the island. Many of the sources contacted for this story declined to comment or give an interview. “I am concerned that any negative connotations might reflect negatively on my positive mission,” one unnamed entrepreneur responded via email. But ignoring the impact these incentives have had on Puerto Ricans is one of the main reasons why many are against them in the first place. 

Nearly a decade after returning home, Alan Taveras says that building a business in Puerto Rico is “the hardest thing one can do.” Just recently, his company confronted the harsh reality of entrepreneurship in Puerto Rico, when the constant power outages forced him to spend $20,000 on an electric generator. “That’s a salary I could be paying someone,” he says. 

Unlike foreign companies in the past, Taveras says that he doesn’t plan to leave Puerto Rico, even when investors advise him to move as the economic and political crises in the island worsen. And as the Logan Pauls of the world set their sights on the island, he’d like to remind them of their responsibility: “If you’re already enjoying privileges and tax breaks that Puerto Ricans don’t have access to, you have to invest even more in the communities you’re coming into beyond just moving there.”