Rum Wars: The Political Battle Over Subsidies

When you buy a bottle of rum in the United States, by law nearly all the federal taxes on that rum must be sent to Puerto Rico and the U.S. Virgin Islands. It's an unusual system that Congress designed decades ago to help fund these two U.S. territories. In 2021 alone, these rum tax payments added up to more than $700 million. Puerto Rico and the Virgin Islands split the money according to how much rum each territory produces. And the territories produce a lot of it — especially Puerto Rico, which single handedly supplies the majority of the rum that Americans drink. But in 2008, the U.S. Virgin Islands pulled off a coup. It convinced one of the largest rum brands in the world, Captain Morgan, to abandon Puerto Rico and to shift its operations to the tiny island of St. Croix. This was the beginning of the Rum Wars. Listen in to the story of how this war turned the two territories into bitter rivals—and put hundreds of millions of U.S. taxpayer money in the pockets of big liquor companies. (Guest episode)

Learn more about your ad choices. Visit podcastchoices.com/adchoices