By Robert Frank
Britain is entangled in a new debate over allowing rich people to “buy” citizenship. Its Home Office, according to the Financial Times, is about to make it easier for the wealthy to become citizens based on their investments.
Specifically, the moves would shrink the wait times needed for residency to two years from five years for those investing £10 million ($16.1 million). (Those investing £1 million still have to wait five years.)
Britain’s move highlights the global race to lure the rich. Some countries, such as Singapore, use tax incentives as bait. Others, such as Dubai, are doing it with man-made islands and apartments on the 140th floor.
The U.S., of course, already has a program allowing rich investors to “buy” residency. And our price is lower than Britain’s. According to the Department of Homeland Security, foreign investors have to invest only $500,000 to get residency, provided they meet other restrictions. They have to invest in a rural or underdeveloped community and they have to create at least 10 jobs, either directly or indirectly. They have to invest $1 million or more if they aren’t investing in rural or underdeveloped areas. (They are eligible for permanent residency after two years and full citizenship after another five years if they meet certain criteria.)
What is interesting is how many rich people have applied and succeeded in getting their investor residency. According to data provided by the DHS, the number of “Alien Entrepreneur” or I-526 approvals have more than tripled since 2007. They have gone up every year since 2004.
What does this tell us? First, it tells us that for all the hue and cry over rich people wanting to leave the U.S. because of higher taxes and regulations, there is an increasing number of rich people who want to move in. This doesn’t mean their numbers are equal. It just means that for many nearly 2,000 wealthy foreigners in 2010, the U.S. was their most desired residence.
Second, it tells us that perhaps the U.S. could make the program even more successful–and profitable–if they followed Britain and shortened the wait times. Maybe the U.S. could offer permanent residency in six months for those investing $5 million. And for those investing $10 million, maybe they could offer instant citizenship and throw in one of those “new neighbor” coupon books for discounts on Rolls Royces and Trinity yachts.
Do you think the U.S. should expand is “Alien Entrepreneur” program or is it just another unfair loophole for the wealthy?
I’m a Canadian who made millions in the US and lived there legally for over 17 years. I have a degree in computer science, have never been unemployed, have high FICO score and have always paid my taxes. I would have very much liked to become an American citizen, but the US doesn’t look upon Canadians favorably, they prefer other nationalities.
I had millions invested in the US stock market and had to remove it from the US, due to the laws of the United States upon leaving.
The United States doesn’t look at how much a foreign investor has in the US stock market, I’m sure my 2 million invested employed many more than 10 people all over the US, yet this did not meet the immigration requirements.
Now all those millions are invested in Canada, not what I intended, but what the US law demanded. US needs to revamp their laws concerning immigration, million dollar investments in the US stock market by individuals should be deemed admissible as a gateway to immigration. Otherwise you force the investment to go elsewhere.
US business is the stock market even Bernanke knows that!
The interactive graphic does not work for me. What does it show?
It is worth doing a closer examination of this program. Here are a few facts to ponder:
1) An applicant acquires residence, which if they have conditions removed could result in them acquiring citizenship after a five year naturalization period;
2) If one operates on the rule that they should not put more than 20% of their liquid wealth into this exercise AND one assumes that it is best to go at the lowest price of $500,000, THEN the threshold is $2,500,000 in wealth which is nowhere near the description of super-rich. (Note that there may be super rich who do this, but they only need to be affluent in order for it to make sense);
3) As pointed out by others, this program has never met its current quotas, is administered poorly by bureaucrats; and has a number of administrative problems;
4) While we cannot assume that all of the “super rich” are well advised upfront of the tax complications of US residence (or eventually citizenship), by the next April 15th they get religion very quickly and many drop the residence like a hot potato;
5) Many countries including the U.S., Canada, the U.K., Australia, New Zealand, Singapore etc. etc. etc. have programs to attract wealth creating “Golden Geese”. This is because they overcome zenophobic fears of “foreigners coming to take our jobs and welfare benefits” and recognize that the benefits these people can bring to their country FAR outweigh the small marginal cost of the public services they will consume. The problem is not with the concept, it is with the execution. Most of these programs are administred by immigration officials who cannot overcome their normal “gatekeeper” tendencies and adopt the “facilitator” mindset necessary to make these programs work.
What is not mentioned is that rich foreigners will set up their companies and then claim that current United States citizens are not qualified to work for them and they will bring in people of their own nationality to fill the positions they just created. The Department of Labor will happily stamp up the certification to ensure that yet another American goes on the unemployment line.
The headline for this article is misleading. The EB-5 investor program allows certain wealthy individuals to apply for permanent residency, not US citizenship. They must have five years as a US permanent resident before they can apply for US citizenship.
Moreover, they only get a conditional green card when their application is submitted - they have to file an application to “remove” the condition two year later, documenting that they continue to meet all the requirements for the EB-5 program. Very, very few individuals have received their final, unrestricted green cards through the EB-5 investor program. Most individuals are languishing in the conditional residency stage, or waiting for Immigration to issue a decision on their applications to remove the conditions. The extremely high hurdles to qualify, combined with years of delay and confusing policies issued by Immigration are why so few individuals have taken advantage of this immigration option.