Wealthy investors able to pony up $5 million may soon be able to buy entry into the United States and a road to citizenship through a “Gold Card.”
Cash for citizenship is not a new concept in the U.S. or elsewhere. The current EB-5 program offers the wealthy and their families a path to citizenship through investment in commercial developments in the U.S. EB-5 is a longtime program, initiated in 1992 to stimulate capital investment by offering a citizenship path to wealthy foreigners.
Real estate developers in the U.S. appreciate the EB-5 program for the inflow of investment funds for commercial projects. Although funds from the EB-5 program are earmarked for targeted employment areas (TEAS), including rural environments and areas with high unemployment, the capital can be detoured to large programs such as Hudson Yard in New York. The New York Times, a company that advises both investors and U.S. companies about investment, noted, “Cheap capital is the crack cocaine to the real estate industry and probably every other industry.”
Requirements of the EB-5 Program
Currently, the minimum investment required for an EB-5 is $1,050,000 with $800,000 as the target for TEA investments. The EB-5 program also requires that the investment create ten new jobs for direct hires. The U.S. generally competes with the United Arab Emirates as a top destination for wealthy investors.
Given the blowback from the plan to replace the EB-5 program with the Gold Card, the new card may become an add-on, rather than a replacement. To sweeten the deal, the $5M price tag apparently comes with a pass on paying U.S. taxes on income in foreign bank accounts and elsewhere. While the rules are not yet clear, the plan would give applicants for the Gold Card a benefit currently unavailable to U.S. taxpayers—freedom from tax on offshore accounts. To deter tax evasion, U.S. taxpayers are currently required to pay taxes and submit FBAR reports on their offshore holdings.
NBC reported President Trump discussed the new Gold Card opportunity in a cabinet meeting, noting, "I think it's going to sell like crazy, it's a bargain."
A Two-Tier Tax System
A plan to relieve Gold Card purchasers of foreign bank account reporting—while not providing the same benefit to U.S. persons—will undoubtedly attract attention, essentially creating a two-tier tax system for those who buy their way in. More details to come as available on a potentially lucrative opportunity for those interested in U.S. citizenship without the burden of tax on foreign accounts.
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