The Logan Paul-Puerto Rico phenomenon
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A short YouTube segment scheduled to ostensibly repair Logan Paul’s image in Puerto Rico after a year and a half of mounting criticism had the opposite effect after the YouTuber launched similar accusations at Bad Bunny for allegedly deriving the same tax benefits in an interview held on Wednesday, Oct. 6.
Philip DeFranco, a YouTube figurehead whose name recognition far precedes his longevity on the platform, held a brief interview, offering Paul a platform to give his side of the story, allow viewers to draw their own conclusions, and give him some seemingly necessary advice along the way.
Ever since he moved his business operations to Puerto Rico, Paul and his brother's stay has been laden with controversy. From calling the island a third-world country, driving on a beach during turtle nesting season, and almost refurbishing a historic building in San Juan without consulting locals, he has become the poster boy for what not to do when you move to a new part of the world and establish relationships.
For the duration of his stay, Puerto Rican outlets followed his exploits and continuously reported on his newfound mischief, all the while, Paul remained quiet. No interviews to clear the air or dispel the narrative.
But it festered within him.
On DeFranco’s show, Paul laid out the cards in his hand.
“I don’t find it necessary to parade my positive pursuits on the island,” he said on the show while emphasizing further restraint. He would never say these things unless he is invited on a popular show to do so.
“But I do see this narrative developing in Puerto Rico that does have an anti-foreigner sentiment and I actually understand it,” he added. Does he?
His message lends itself to a mischaracterization of an unfriendly, unwelcoming, uninhabitable, hostile tourist environment. One would think locals held picket signs at the airport. But the data tells us otherwise. Despite pandemic-driven plunges, Puerto Rico averages upwards of 4 million tourists a year, far exceeding the actual population, and rakes in billions for the industry.
Across personal travel blogs, Puerto Rico has maintained its coveted position as a prime destination for vacation. And while it’s no Positano, there are plenty of instagrammable spots to go around.
But what Paul talks about isn’t tourism, and neither are the locals. Act 22, as it’s commonly known, is a government-designed tax benefit created in 2022 with the goal of attracting wealthy investors looking to ward off mean IRS bullies who want to take advantage of a man’s hard-earned dollar.
Purported as a “may have” for a “profound” economic impact in Puerto Rico, the Individual Investors Act enshrines every finance bro’s wet dream of a legal loophole made law, where beneficiaries are not subject to income or capital gains taxes.
The hope was to bring new business into the island and breathe life into the deteriorating, if not collapsing economy, infrastructure, and workforce at the hands of ambitious suits brave enough to foray into a beach paradise to do so.
Oh, and by the way, only folks who didn’t reside in Puerto Rico for six years prior are lawfully allowed to reap the benefits of Act 22. Residents who live and work on the island are subject to all relevant taxes described.
Act 22 became a huge talking point for Puerto Rican government officials, who would sooner clutter the airport with advertisements for newcomers than craft policy that works for the people, y’know, on the island. Like, living on it.
I suffer where you vacation
Investors flocked to Puerto Rico to purportedly seize this unique business opportunity. Puerto Rico isn’t even that far from the United States! And people actually live there! In apartment complexes!
And thus, the corporate class of America headed to the promise land, and the outlook for Puerto Rico’s economy was exactly just that. Promising.
The problem was that there was no way to keep track of all Act 22 grantees, nor a measure of economic accountability upon having arrived in Puerto Rico and establish a tax-free business.
And according to the Center of Investigative Journalism in Puerto Rico, the Department of Economic Development, they found, had not verified annual reports filed by Act 22 grantees, and for the first time in 2021 sent a notice of noncompliance to 1,086 beneficiaries.
Investigative reporters on the island further discovered a random sample, comprising 10% of grantees, or 304, who had barely created jobs and represented no significant impact on the economy while riding the tax-free wave. Whatever notable impact had was murky, at best. Promise land indeed.
At this point, you may be wondering what these people were doing, if not furthering the island’s labor market. While not all of them were necessarily motor crossing through a beach (one of them shot a dog in a golf course), many were buying out properties on the dollar, displacing residents and creating an inhospitable real estate environment for Puerto Ricans.
Through Bad Bunny’s most recent music video, we met Bianca Graulau, a solo reporter who set out to discover what was going on with Puerto Rican properties, and why it seemed so much of the inventory was abjectly inaccessible.
In 2021, Graulau's reporting led her to a community in the small-ish town of Quebradillas, located in the island’s northwest region, that faced threat of displacement after their building was bought out unexpectedly. The new owners gave them a limited time to pack up before the holidays.
Giovanni Feroce, a former Republican Senator, failed gubernatorial candidate and Act 22 beneficiary, is the new building owner and hopes to turn what was home to a community for decades into a social club.
At the time of Graulau’s reporting, Feroce was a whopping number two on a list of tax income delinquents in the state of Rhode Island. As the old adage goes: lose a primary, flee from the feds, displace a family?
Graulau found the phenomenon was widespread, and spreading rapidly, and quietly, across the island.
Feroce is just one of so many who hopped the proverbial pond and take advantage of what can only be described as the most unimaginably unequal playing field for island foreigners: a non-supervised, tax-free stay with nothing but cheap property up for grabs, and left on the wayside by its representatives.
But out of a crowded field of bad actors, Logan Paul stood at the heart of the controversy surrounding Act 22, perhaps because of his notoriety, or perhaps because upon his arrival he claimed a private beach in Dorado, Puerto Rico. Legally, there are no private beaches in Puerto Rico.
Paul lives in a wealthy, gated, and closed-off community — where many beneficiaries also reside — where there also happens to be a beach near the premises.
His contributions were, to the public, non-existent, though according to Paul, that’s on purpose.
Maybe it’s his legacy. Maybe, Paul is just a de-facto poster boy for the kind of person Act 22 ended up attracting. But it’s not just Logan Paul, it’s so many of the investors and crypto bros who come to a disaster-stricken island, make no effort to know or help the community, make blatant remarks about a good time while the average Puerto Rican struggles to make a living wage, own a home, plan for a family, or even a future.
Where the average young Puerto Rican has to decide whether staying on the island is worthwhile after all, even in the face of an onslaught of black-outs, infrastructure on the brink of collapse, and debt so large a U.S. federal bankruptcy court needed to decide if it was even tenable (it’s not, but Puerto Ricans pay the price either way.) Puerto Rico’s public debt, held by bond-holders primarily, amounts to billions of dollars.
To pay it, the debt must seep into all aspects of public life, like the island’s foremost public university, a beacon of higher education for the island’s youth. Today, the university struggles to keep courses open, much less an operable budget, which will remain stagnant for years to come as public officials attempt to pay back the debt.
Paul is not a bad person. But not unlike many of his counterparts, he is seemingly blissfully unaware of the adverse implications his stay means for locals.
After Fiona’s landfall, Puerto Ricans faced a rerun of Maria in 2017, when the island went months without electricity. On the eve of the five-year anniversary, locals wondered again if it was possible to live in Puerto Rico and survive.
Because too many survive the island, rather than live on it.
And while salty travelers will have you believe that Bad Bunny, who legally cannot reap benefits derived from Act 22, is the root of insufficiency on the island, rest assured that locals understand this to be a distraction from the topic at hand.
And thus the Logan Paul phenomenon is not about his “positive pursuits,” but a looming, inescapable fear that it will never be possible, for a Puerto Rican, to make a life in Puerto Rico, in their home.
It’s why 5.6 million of them reside in the mainland United States, whereas 3.2 million live on the island. While Logan Paul builds his home, Puerto Ricans leave theirs.