I’m reminded of the time I posted on Craigslist FREE Furniture when we renovated our hotel.
Talk about ENTITLED. People were renting U-Hauls and rental trucks and then were PISSED when all the units were taken before they got there. People were driving two hours out. There were lines of cars and just a frenzy with people trying to pick up furniture.
How many employees and applicants secretly resent their employers for not paying a “living wage?” Do you think it may affect their job performance negatively and noticeably?
One of many reasons why turnover has been so high. The young people have been infected by an “entitled” mentality brought to a religious fervor by the latest election cycle (ie. BLM, SJW, Bernie Sanders, etc.). Just look at how crazy the college campuses have been.
It’s even worse here in California where $15/hour minimum wage has already passed.
They’re only shooting themselves in the foot when future employers see they can’t maintain a steady job. It’s that same short-sightedness that sets them off on “trigger” warnings in the first place. Our precious, little snow flakes can’t take the reality that it’s what they PRODUCE for the employer that dictates the amount they get paid.
Only 669 Act 20 / 22 Decrees Approved in 2015. I discuss my thoughts on why there are so few and my predictions on its future in light of Black Lives Matter, Social Justice Warriors, Bernie Sanders, Elizabeth Warren, Hillary Clinton, and Donald Trump.
I’m debating whether or not I should put such a politically charged image for this group. Let there be no illusions that the PRIMARY reason for your move is to save on your income taxes. You will face challenges to live in Puerto Rico, including the vilification by many of your peers (and strangers) for participating in a “tax haven” and for not paying your “fair share” to society (AKA “social contract”).
If you cannot come to grips with freeing yourself from Government tyranny (which is the initiation of force to expropriate your wealth, AKA Taxes), then the cognitive dissonance of “avoiding your social responsibility” will ultimately cause you to fail in the transition (I know of at least one example).
In other words, unless you’ve been deprogrammed from the public education system and mass media to see taxes for what they are (the legal theft of your 100% rightfully earned gains through voluntary means), the cognitive dissonance and guilt you’ll feel will ultimately result in you giving up and moving back to the States.
If “Live Free or Die” makes you uncomfortable, then you will want to question your premises before you make the move for your own mental health. If you embrace “Live Free or Die,” then the extra freedom you gain from having less expropriation will result in increased mental health. I also imagine you’re getting as excited as I am with the anticipation of better ways you could utilize the tax savings than the Government could.
For resources to help you get deprogrammed, I recommend the following, extreme remedies:
February 12, 2016 – File Date
April 20, 2016 – Acceptance Letter Dated (received digital version May 16, 2016)
April 27, 2016 – Signed Decree Date (received May 16, 2016)
April 28, 2016 – Notification of Signed Decree requiring $5,000 Payment
April 29, 2016 – Priority shipped check
May 6, 2016 – Check delivered to BDO (thanks Méndez Giovanni!)*
May 16, 2016 – Signed Decree Received
May 16, 2016 – Mailed out Unconditional Acceptance and $50 Fee
2.5 months from application file date to acceptance. Considering 100% tax free for interest and dividends up to December 31, 2035, I’m satisfied!
And I still have my US Citizenship. This still feels “too good to be true.”
Act 20 still pending.
Once I finish 2016 tax returns, perhaps it’ll feel more real.
– Imagine one of your sons taking over your hotel empire / business.
– 40 years later and he’s in his late 60s. The empire your son built is worth billions from the millions you first built.
– You would be proud if you were still alive. Your grandchildren are all proud to be executives in the empire you started.
– Your son created tens of thousands of jobs, numerous high level and high paying management positions, paid millions in taxes, billions to vendors, charities, lived a lavish life style, owned hundreds of hotels, started hundreds of other businesses, succeeded at most, and learned from his mistakes.
– All of this while developing one of the most famous brands on Earth.
Your son decides to run for political office and now will probably be President.
This is what they say about your son:
“I don’t like him because he’s an idiot. Just because someone is billionaire doesn’t mean they’re smart. It’s easier to become a richer man when you start from wealth already with all the advantages it brings. Wealth itself is not an indication of intelligence. Justin Bieber has millions of dollars to his name. Would you call him particularly intelligent?”
“He declared Chapter 11 bankruptcy four times during those years. He’s lost more money than he’s made. He’s had more consistent financial success being the star of a reality show than he’s had actually running a business.”
“If he’d just conservatively invested his money when he inherited it he’d be worth more than he is now.”
I just got an email this morning stating my Act 22 Application has been approved and now awaiting my $5,000 payment! My Act 20 Application is now “Eligible Case” which was defined in a previous email I received at the beginning of the process:
o Act 20: it means that the draft of the decree has been sent out to the agencies for their determination or recommendation. It has a time frame of 20 working days, however the public policy of this administration is that no case will be approved without the recommendation of the Department of Treasury. Once we receive the recommendations of the agencies, we send a final draft of the decree, where a team of the DDEC will evaluate your petition, this will not change the status but we call it the Final Stage. Once they understand that the case is ready for approval they send it to the Secretary of DDEC. Once we receive it the status will change to Approved and we will contact you so that you can pick your decree or we can send it by mail.
More info on the history of my process can be found at this link.
“It’s not the end of the struggle, but it’s a very important step forward. Let’s keep it going. We’re not stopping here.” – Governor Brown
$15/hour minimum wage. A worthy struggle to fight against the exploitative and evil hotel owners.
Something I wonder: is this minimum wage essentially a knock out against my bottom line? If so, does that essentially eliminate my hotel valuations based on the Net Income Approach? Or will this all be countered by me increasing my overall room rates?
The nice thing perhaps is that my hotel is deep in the coast of Southern California, hours away from the border, which will mean all my direct competitors will suffer alongside me.
I feel more sorry for those on the Californian border along a State that won’t be having these minimum wage increases.
What I can say as a direct result of this action is that I will most likely not be purchasing an additional hotel or labor intensive business in California due to the uncertainty this causes in my valuations of cash flow. At least until the $15/hour minimum wage is set and stabilized, or until the rest of the country follows and raises the federal minimum wage to $15/hour.
Should I purchase a hotel in the interim period as minimum wages increase, I would have to consider into the valuation of the hotel the loss of revenue from increased future payroll costs. I can’t imagine any Seller would allow that kind of valuation into decreasing the final price of their hotel.
The economic effects of a $15/hour minimum wage on a State level are relatively new, so the economic repercussions add an extra level of risk that I’m not sure the commercial real estate market will be able to properly adjust for. Just as the housing bubble of 2008 wasn’t properly calculated in, I don’t think any economist can properly predict what the economic consequences will be, let alone a limited-service hotel owner trying to sell their hotel.
Just trying to explain to most limited service sellers what a “Cap Rate” means is a challenge within itself. Trying to add on the complexities of future, guaranteed costs by Government fiat won’t make sense.
If I can make a prediction, I would say that the only buyers for California will be idiots who have no idea about the increasing minimum wage laws in California, or people who simply don’t care (ie. Chinese buyers).