English: A Glass Bottom Ferry near Puerto Rico, Gran Canaria. Deutsch: Ein Glasbodenboot nahe Puerto Rico (Gran Canaria). (Photo credit: Wikipedia)
By Felix A. Montelara
Autor: Potencial Millonario
Antes se consideraba un paraíso de vacaciones , la pequeña isla de Puerto Rico está tratando de llevar a los ricos a vivir allí de forma permanente. A principios de este año , el Secretario de Desarrollo Económico y Comercio, Alberto Baco Bague , viajó a Nueva York para explicarle a los ricos todos de los beneficios que Puerto Rico tiene para ofrecer.
Un artículo escrito por Dan Bobkoff (npr.org) explica los esfuerzos del gobierno de Puerto Rico: “Bajo las leyes promulgadas en 2012, cuando una persona se muda a la isla, todos los ingresos por inversiones de esa persona, al igual que las ganancias de capital, dividendos y los como – es completamente libre de impuestos… Y, como lo es para todos los residentes de Puerto Rico, alli es no hay impuesto sobre la renta federal.” Ademas, Sr. Bobkoff dice que “las reglas dicen que usted debe vivir en Puerto Rico por lo menos 183 días al año y demostrar que usted es realmente parte de la comunidad. Su cónyuge debe vivir con usted, y sus hijos deben ir a las escuelas locales “.
El gobierno de Puerto Rico es el lanzamiento de este esfuerzo con la esperanza de estimular la difícil situación económica de este territorio de los EE.UU.. Según el artículo, los sentimientos acerca de los beneficios dados a estas nuevas elites es mixta, que van desde el desconocimiento de las nuevas leyes a de resentimiento. Mientras que traer a los ricos a la isla se piensa para traer más industria, el empleo y opportunidades a los locales, existe un cierto riesgo político en el tratamiento de esta nueva clase diferente a la ciudadanía local.
Me encantaría tener sus pensamientos sobre este tema. ¿Crees que este tipo de táctica es beneficioso para Puerto Rico? ¿Cómo te sentirías si tuvieras que pagar impuestos locales y los ricos no? ¿Valdría la pena que a la economía? Llámame o envíame un email con tus pensamientos!
Coat of Arms of Puertor Rico (Photo credit: Wikipedia)
By Felix A. Montelara
Author: Potential Millionaire
Once thought of as a vacation paradise, the little island of Puerto Rico is now attempting to bring the rich and wealthy to live there- permanently. Earlier this year, the Secretary of Economic Development and Commerce, Alberto Baco Bague, travelled to New York City to explain to rich stock brokers the benefits that Puerto Rico has to offer.
An article on npr.org written by Dan Bobkoff explains the efforts of the Puerto Rican government to entice millionaires: “Under laws enacted in 2012, when someone moves to the island, all of that person’s investment income, like capital gains, dividends and the like — is completely tax-free. Plus, service income — say, a hedge fund’s management fees, is taxed at just 4 percent. And, as it is for all Puerto Rico residents, there’s no federal income tax.” Mr. Bobkoff continues that in order “to take advantage of the tax breaks, the rules say you must live in Puerto Rico at least 183 days a year and prove that you’re really part of the community. Your spouse must live with you, and your kids must go to local schools.”
The government of Puerto Rico is launching this effort in hopes of stimulating the difficult economic situation in this U.S. territory. According to the article, feelings about the breaks given to these new elite are mixed, ranging from ignorance of the new laws to resentment. While bringing the rich to the island is thought to bring more industry, jobs, and opportunities to locals, there is some political danger in treating this new class differently than the local citizenry.
I would love to have your thoughts about this issue. Do you think this type of tactic is beneficial to Puerto Rico, or any other country or city? How would you feel if you had to pay local taxes and the newly invited rich didn’t? Would it be worth it to economy? Call me or email me your thoughts!
A few weeks ago, Alberto Baco Bague arrived in New York for a roadshow of sorts. In just 48 hours, Baco, Puerto Rico’s secretary of economic development and commerce, met with more than 30 hedge fund managers, investors and others who could be classified as very well-off.
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For Baco and the Puerto Rican government, the benefits of injecting more rich people into the island are clear. “We are a poor island, and this is our way of developing [and] developing employment in Puerto Rico. We are very serious about that,” he says.s mission might seem quixotic at best: trying to convince these well-heeled New Yorkers to uproot themselves from Manhattan and relocate to Puerto Rico. But he says they are starting to come.
Baco has an enticing carrot for the investors. Under laws enacted in 2012, when someone moves to the island, all of that person’s investment income, like capital gains, dividends and the like — is completely tax-free. Plus, service income — say, a hedge fund’s management fees, is taxed at just 4 percent. And, as it is for all Puerto Rico residents, there’s no federal income tax.
Occasional Visitors Need Not Apply
The catch is that you can’t just set up a post office box and call yourself a resident. You have to move for real. Like Damon Vickers has.
“I love it. I love Puerto Rico, I love the climate, I love the people, I love the energy of the place,” Vickers says, sitting by the pool at the La Concha resort in Puerto Rico’s capital, San Juan.
Vickers moved his hedge fund and his family here from Seattle earlier this year. He had been eyeing the U.S. Virgin Islands for a move, but then caught wind of Puerto Rico’s new tax benefits. For him, it’s about simple math.
“I like making money. And we want to go to a place where our money is treated the best, so we might benefit ourselves, and we might also benefit our investors,” he says.
His friends in the investing world are watching closely to see how he fares. Many are unaware the island even has a financial district, much less modern highways and shopping malls. Once they learn more, many worry about the crime, including a murder rate six times the U.S. average. And, given its gritty reputation, word hasn’t gotten out that the wealthy can live well in Puerto Rico.
Paco Diaz, with Trillion Realty Group, the local affiliate of Christie’s, is among those trying to convince them. Picking them up in his late-model BMW SUV, he takes investors around tony neighborhoods like Condado on the San Juan beachfront, pointing out homes selling for millions.
He shows off resort hotels, new condo buildings and high-end stores along a segment he says many call “the Puerto Rican version of Fifth Avenue.” New York’s storied shopping strip doesn’t have anything to worry about, but one block here does feature Louis Vuitton and Cartier.
To take advantage of the tax breaks, the rules say you must live in Puerto Rico at least 183 days a year and prove that you’re really part of the community. Your spouse must live with you, and your kids must go to local schools. Some of the best, like the private Saint John’s School, are just feet from the ocean, which Diaz uses as a selling point. He points out students attending a surfing school behind him. “They just go across the street with their surfing boards to catch some waves,” he says.
If the city life is not to the investors’ liking, Diaz takes them to the suburb of Dorado. It’s a gated community on steroids. Past its guards, you’ll find lush palm trees, golf courses, private beach clubs and a water park. A few nights at the Ritz Carlton resort here costs about what the average Puerto Rican makes in a year. Singer Ricky Martin lives around the corner.
Diaz’s colleague Coco Millares says the tax incentives are already boosting her business. “We have had, since they passed the law, much more interest in Dorado than we had before,” she says.
Hoping To Boost A Weak Economy
But back in San Juan, few residents had even heard of these tax breaks. When told the details, their reactions were mixed. One thought it could bring some much-needed money to the island. But others, like restaurant worker Estefania Colon, were resentful that locals pay taxes while the newcomers are exempt from many of them.
“They’re already rich, and they’re making more money from us?” she says.
Tax incentives are nothing new to Puerto Rico. For decades, tax breaks brought manufacturing and pharmaceutical firms to the island. But many incentives have been phased out, and some officials believe that’s one reason the island’s recession has been so deep. Unemployment is nearly 14 percent, and the average income is about half that of Mississippi.
The hope is that a few super-rich people will help turn some of that around and beef up the service and financial sectors, while also buying real estate, eating at restaurants, hiring locals and, eventually, maybe even invest their own money in big projects on the island.
The zero percent tax on investment income, and the 4 percent corporate tax, went into effect at the start of 2012. The goal is for 500 wealthy investors to come in the next four years. So far, 77 have applied.
The investment tax breaks are guaranteed until 2036. Only congressional action — or granting Puerto Rico statehood — would put a stop to them. But while some say this is just Puerto Rico becoming the latest tax haven, there has been little serious opposition.
Mauro Guillen, a professor of international management at the University of Pennsylvania’s Wharton School, says Puerto Rico officials are being a bit optimistic about the direct effects.
“It is not going to create a major migration to Puerto Rico,” Guillen says. The biggest boon could be indirect, he explains. Even if just a few people move, it could change the conversation about the island.
“Puerto Rico will be making the headlines. It will be perceived as a location where you should do business in,” Guillen says.
Lawyer Fernando Goyco, who advises many of the investors, says in his practice, it’s millionaires, not billionaires, who are showing the most interest in moving for the tax deal. That could be a good thing for Puerto Rico, he says — too many super-rich moving here to avoid taxes could draw congressional scrutiny.
And he’s not surprised big honchos aren’t flocking to his island. “Moving somebody from New York to Puerto Rico, that’s very difficult, that’s very difficult. Moving somebody from Kansas to Puerto Rico [or] from North Carolina to Puerto Rico — it’s a different story,” he says, chuckling.
But as the word spreads, he says, millionaires are calling his office
Layoff – Day 3- If you own a home you know property taxes are due between October 1 and December 30. So, I paid taxes on my local properties. I do not recommend you do this unless you are sure when your next check will arrive. Just pay it before due date. I hope you budgeted for your tax payments. I went to the gym and I hurt. Then I went home looked at the news for the U.S. Capitol shoting incident and cooked. My kids and wife claimed dinner was burnt . Not bad for day 3.
To call Dan Nainan frugal is an understatement. He lives in New York City, home to the world’s largest public transit system, but insists on walking. Everywhere. Sometimes for miles on end. When he travels he prefers to couch-surf, and don’t be fooled if you see him at Starbucks. He’s not ordering any lattes. He just stays for the free Wi-Fi.
Oh, and did I mention he’s a millionaire?
“There are two ways to become a millionaire. You either make a lot of money or be a frugal person,” says Nainan. “I’ve kind of combined those.”
In fact the 32-year-old has managed to save a whopping $1.6 million nest egg despite quitting his day job as a software developer five years ago to pursue stand-up comedy. He says what began as a hobby now earns him tens of thousands of dollars per appearance — money that mostly goes to savings.
“In my business, you never know when the phone will stop ringing. There are so many entertainers who are more successful and famous than I am, but they end up poor because they throw all that money away,” he says. “It’s very important to save for my retirement.”
Pay Little to Travel
Even if he gets a generous travel stipend, Nainan keeps his journeys cheap. “I took a $1 bus to Boston for a show I was paid $10,000 to do. I use Couchsurfing.com and AirBnB.com to stay for $60 a night or even free. Instead of taking a car to the airport, I take the AirTrain. A 10-ride ticket is only $25. ”
Respect Your Roots
“I’m half Indian and half Japanese. Both cultures are extremely, extremely frugal. Indians are especially known for being unbelievable tightwads. I guess it’s in my blood.”
Never Buy New
A self-described “gadget freak,” Nainan shops for electronics on eBay, often scoring items for one-fifth their price, and frequents the library for the latest best-seller and even language-lesson CDs. “I don’t buy new furniture. That’s for suckers. There are many people who put stuff on Craigslist, and then as their moving day approaches, they get desperate and give it away for free. That’s how I got…a bedroom full of furniture,” he says.
Do as the Millionaire Next Door
His million-dollar lifestyle may seem counterintuitive, but it’s pretty much by the book as described in Thomas Stanley’s best-seller, The Millionaire Next Door. After all, being frugal pays. Nainan spends no more than $10 on haircuts and $15 on dress shirts. And those run-down sunglasses? He’s had them for five years and counting.
No-Gifts Policy
Another way he saves? Nainan refuses to buy gifts for family and friends. “I’ve trained my friends and family for years not to expect anything from me and, more importantly, not to give me anything. There isn’t really anything I need. I live pretty simply.”
Nainan’s lifestyle is up for debate, but it’s clear that his choices have earned him millionaire status. Is it worth it? Let us know. Connect with me on Twitter @Farnoosh and use the hashtag #FinFit.
