The tax situation for U.S. territories is complex and varies between them. Here’s a brief overview:
Puerto Rico and U.S. Virgin Islands:
Residents generally do not pay federal income tax on local income. They do pay federal payroll taxes (Social Security and Medicare). They have their own tax systems.
Guam and Northern Mariana Islands:
Have a “mirror” tax system that parallels the U.S. federal tax system. Residents pay taxes to the territorial government instead of to the U.S. federal government.
American Samoa:
Has its own tax system. Residents generally do not pay federal income taxes.
However, there are exceptions:
Federal employees in these territories generally pay federal income tax. Residents with income sources from the U.S. mainland may need to pay federal taxes on that income. Some residents may need to file U.S. tax returns under certain circumstances.
It’s important to note that while residents of these territories may not pay federal income taxes in many cases, they also don’t have full representation in Congress and can’t vote in U.S. presidential elections (though they may participate in primary elections).
This is actually the big wrench in just making them all states, some of the locals think the representation is worth missing out on to continue not needing to pay federal taxes.
In puerto rico this is especially pronounced since that’s the territory most likely to achieve statehood in the near future considering how small the populations of all the other ones are. Even doing something extraordinary like giving out a representative for every 50k people would leave some of these places with only one rep in Congress while states like NY and California are fielding delegations of hundreds each.
I would think that the likely future of these territories are as Freely Associated States, basically independent defacto but with special benefits in exchange for staying under US military protection.
If Puerto Rico or DC achieve state status then Republicans lose Senate majority forever. If they both do, Republicans are totally fucked. Expect continued discourse of both sides disagree we can’t do this etc.
I wouldn’t be so sure. DC yes absolutely I frankly don’t understand how the folks in that city haven’t mutinied yet with how viciously they hate the Republicans. Puerto Rico on the other hand does not have a clean Dem/Rep split, and it’d take a while for Puerto Rico’s local political parties to meld with the current system, and they could opportunistically choose to align with the Republicans if they thought they could get something out of it.
Also, for PR and USVI they would lose their Rum taxes. As island economies they are pretty limited, so they’d need to rely mostly on tourism to replace those dollars, however it’s not like they can get much more than they already do.
