The Fiscal System and Income Distribution: The Case of Puerto Rico

Abstract

This study provides statistical estimates of the incidence of Puerto Rico's fiscal system. In developing the estimates the openness of the Commonwealth's economy and its particular internal economic structure are taken into account. The tax system is found to be slightly progressive across income classes, whereas the public expenditure structure is found to be regressive (favoring the lower income classes). Thus, the overall fiscal system redistributes real incomes from higher to lower income classes.