Should you be able to buy U.S. citizenship? | The Tylt
Should you be able to buy U.S. citizenship?
The EB-5 program was created to encourage the creation of jobs in the U.S., especially in rural and and high-unemployment areas. While the program may have its flaws, it's a sound idea on paper. Individuals who are interested in investing in American companies should be given every opportunity to do so, no matter where they come from.
These individuals would not only be creating jobs. Granting them residence and citizenship means they'll be bringing themselves, their family and their money to the U.S., where they'll be adding to the economy that few can. These people are like immigrants everywhere. They're seeking a better life for themselves and their families. It just so happens they have a lot of capital they can invest in the United States. Letting people come here in exchange for their money is a win-win situation for everyone involved.
Their citizenship could be provisional — dependent, for example, on their making investments of a certain size in new businesses or homes. Expanded investments of that kind would help us jolt the demand side of our economy. These immigrants would impose minimal social costs on the United States, compared with the resources they would contribute. New citizens like these would make hefty deposits in our economy, not withdrawals.
Critics argue the EB-5 program is rampant with fraud and is fundamentally unfair.
But the program clearly needs an overhaul. For instance, the private firms that get federal permission to create regional centers design their own districts, which Feinstein's office argues has led to gerrymandering by tethering high-unemployment neighborhoods to wealthy ones. Remember, EB-5 visas are available for $500,000 invested in high-unemployment or rural areas; otherwise, the investment must be $1 million. So the gerrymandering allows wealthy immigrants to gain Legal Permanent Resident status by making what amounts to a two-year, $500,000 loan to an investment pool building a high-end hotel in a ritzy part of town that is connected, on paper, to a neighborhood with more risk and a higher need for investment. It's hard in that scenario not to see the program the way Feinstein does — as selling citizenship.
Critics say the program is set up in a way that makes it extremely easy to game the system. Foreign investors are already investing in U.S. companies to make money. The extra incentive of a visa is wholly unnecessary and it's unclear if it actually brings in money that wouldn't have otherwise been invested.
When we think about investment, the starting point is that investors don’t need citizenship or any other inducement to put money into a project when they will earn higher than the market rate of return. So given the risk and other opportunities, someone will invest $1 million or more in a mall complex or housing development if the expected return is, say, 10 or 15 percent. Many foreigners make such investments, and the vast majority of them make them not to obtain citizenship but to make money. In 2013, they ponied up $236 billion. Meanwhile, Americans invested another $2.5 trillion in the economy. At most $10 billion can be attributed to foreigners who seek visas, and probably a lot less.
(2/4) EB-5 sends a terrible message. A wealthy investor buys a visa while 4.4 million people wait in line, some for 20+ years. That's wrong.