Social Policies

Puerto Rico has to overhaul its anti-poverty strategy, moving away from programs that create dependency towards programs that promote self- sufficiency. Current government welfare programs are particularly ill-designed for working poor families. Moreover, regressive excise and Social Security taxes are detrimental to low-income families trying to make ends meet. An Earned Income Tax Credit Program is a promising route towards improving the standard of living of Puerto Rico’s low-income working families.

Equality and liberty, these two values lie at the heart of all democratic societies. Yet, the tension between them has caused endless debate. If the case for equality is pressed too hard in the name of “maximizing overall social utility” – for example, by taxing the well-off at punishing rates – liberty will inevitably be curtailed.

In this policy brief we offer a brief summary of the asset building approach to social policy, review the arguments in favor of implementing asset building policies to reduce poverty, analyze current incentives in the Puerto Rico tax code that favor asset accumulation by the non-poor, and offer some policy recommendations to promote asset accumulation by the poor in Puerto Rico.