I think this will be the first in a series of myths I’d like to bust regarding PR. You see, before we came down here, we heard so many people up north talk about how cheap it was to live in Puerto Rico. Let me tell you, maybe in the past it was, but it sure isn’t anymore!

Sub-Myth #1 : Puerto Rican’s don’t pay federal income tax!

Sounds really good, right? No feds to pay. Well, keep this in mind: You still need to pay into Social Security and Medicare. And while you don’t have to pay US Federal, you DO have to pay the Puerto Rican income tax. And, get this: Because of the poverty down here, the HIGHEST tax bracket starts at ONLY $30,000! Also, any income you make from US based activities (ex. my ING savings account) require that you pay US Federal income taxes.

Sub-Myth #2 : Housing is cheap!

Well, if you consider a $250,000 home on 1/2 an acre cheap, then I guess it is. Don’t even try and live near any of the nice areas in the large metro (and tourist) areas, since the prices skyrocket. Frankly, we’ve seen much nicer houses in the Chicago metro area for similar prices.

Now, granted, you can still find some good deals. That 10 acre farm we were looking at was going to run us $150,000. But, keep in mind, it had a piece of shit house on it. We would have had to build a completely new house, for at least $100,000. (We didn’t want to live in a coffin. Our old apartment in Chicago was bigger than many of the houses down here.) Also, if you are in areas registed as farm land, your property taxes are very very cheap. But I haven’t seen real numbers on paper to prove this.

Sub-Myth #3 : Utilities are cheaper — you don’t have heating bills!

While it’s true that you don’t have any Natural Gas bills down here (except for Propane cooking), the electricity is far more expensive that what we saw in Chicago. In a bad summer month in Chicago, with AC running 24×7 for the whole month, I never saw an electric bill over $120. My typical bills–and this is with about 10 servers running 24×7–and an electric stove–were in the $60 range. Down here, we see bills of $160 a month–with NO AC. Only a fridge, washer, fans, and lights.

As an added bonus, figure on having your power go off at LEAST once a week. Heck, this last month has been horrible. Outages several times a week which last at least 8 hours at a time. Oh, and the water, well, it’s usually on. Except for the week or so when it’s not. Better make sure that cistern is filled! “Pay more get less” seems to be the motto.

Sub-Myth #4 : Goods and services are cheaper — no sales tax!

While there’s currently no sales tax on the island, there is (and has been) a 6% excise tax on every good that is imported–and that’s just about everything. Take for example simple stuff like video games. Whereas in the states I’d pay $20 for a game, down here I pay $23 (obviously more than 6% markup there). Clothes are another thing marked up even more. Name brands are nearly always a couple dollars more down here than they would be in the states.

As if that isn’t bad enough, the new sales tax (which will be anywhere between 5 and 8 percent) will be going into effect soon. So you’ll have an effective combined sales/import tax of between 11 and 14 percent on everything. And when I say everything, I mean everything. How often do you pay 8% tax on FOOD and MEDICINE in the US? Well, welcome to Puerto Rico, folks–’cause that’s what they are planning. (I’m hoping they don’t make the idiotic move and tax food and medicine, but the government down here isn’t exactly known for making good decisions.)

Still with me? Well, then head off to the grocery store, where I always walk out paying more than if I was in Chicago. Did you see the article about how Chicago has some of the highest milk prices in the nation? Well, PR prices are higher than those–and have been. (Kinda odd that we pay well over $4 a gallon for milk, yet there are dairy cows all over the place.) Beer, wine? All more expensive (by a large margin). The only spirit that is cheaper is rum. Most of the meat is imported, so that raises the price. Medium sized boxes of name-brand cereal are $4 a box and don’t go on sale. Etc, etc, etc.

Low Wages

In large part because of these myths, wages are abnormally low down here. Jobs that would pay $40,000 in Chicago pay $20,000 here. Let me tell you folks, the cost of living in Puerto Rico is NOT half of Chicago. As an added kick in the nuts, PR is going to have an even harder time as real estate prices continue to trend downward.

This really helps me to understand why there is so much poverty down here. Many things are run down because people can barely pay for the over-priced basics. In addition, all of this spawns a huge underground economy–an economy that’s un-taxed and un-regulated. The vicious circle will continue until people start seeing some VALUE from their tax dollars.

So, these are some of the myths I’ve learned first-hand by living down here. So, the next time someone tells you that Puerto Rico is “so cheap”, think again.