Rethinking Immigration: Investor Visa Categories Must Be Expanded
From time immemorial, the world has been a dangerous place; no less so today. Those with the means and will have have always relocated to less threatening or merely more desirable locales. In today's globalized and interconnected era, the European debt crisis, terrorism, declared and undeclared wars, restrictions on religious and political freedom, and the remarkable rise to world leadership of a bi-racial man with roots in Kenya, Indonesia and Hawaii -- all of these developments, and still other enticements, have coalesced to make the United States the world's premier immigration destination for affluent individuals.
The federal government, however, has mismanaged the opportunity to capitalize on the willingness of foreign citizens seeking long term work visas or green cards to invest in the United States. Unlike countries such as Canada and Australia (which make the exchange of cash for visa privileges comparatively simple), American lawmakers have been miserly in creating immigration blandishments that would motivate foreign citizens to invest in this nation of immigrants.
We currently allow overseas investors to obtain immigration benefits if a foreign national puts a "substantial" amount of capital in a U.S. business enterprise and satisfies the myriad other requirements specified under one of two tedious categories -- the E-2 nonimmigrant visa and the EB-5 immigrant visa. (For an extended treatment of the complexities and problems plaguing these visas, see "Investing in America through the E-2 and EB-5 Visa Categories," co-authored by this blogger, Stephen Yale-Loehr and Ted Chiappari and published last Tuesday in New York Law Journal.)
The E-2 "treaty investor" category is available to citizens hailing from a "treaty country" -- comprising roughly half of the nations of the world. The list of E-2 treaty countries includes some surprises and quirky provisions. Iran but not India, Taiwan but not China, are signatories with the U.S. of E-2 treaties. Citizens of countries not on the approved E-2 treaty list are out of luck.
Moreover, the E-2 category is blighted by an array of complex and subjectively interpreted provisions: "substantial amount of capital," "irrevocably committed, at-risk funds," "non-marginality," "sliding-scale reverse proportionality," and "real, active commercial enterprise," to name a few. Woe to the individual investor who plunks down cash in a business, maintains it profitably for a decade, and then is told by an anonymous government functionary that the enterprise is too marginal, as the New York Times reported recently,"Maine Business Is Shut Without a Renewed [E-2] Visa." Even those who succeed in building non-marginal businesses, cannot transition from the E-2 visa to a green card, even at retirement age.
Investors seeking green cards under the EB-5 "employment-creation" category face an even more harrowing journey which begins with the investment of $500,000 or $1 million (depending on location in the U.S.) and the bureaucratic equivalent of a full-body scan as immigration officers pore over reams of documents detailing the investor's source of funds, job-creation activities (ten full-time jobs for U.S. workers must be created and "sustained"), business plans, five-years of worldwide tax returns and extensive personal histories.
Would-be investors who'd prefer that someone else operate the business must evaluate up to 100 "regional centers" -- entities pre-designated by U.S. Citizenship and Immigration Services to accept investments from foreign nationals -- and hope that the chosen center creates the jobs and safeguards the investment over what is typically a five- to seven-year holding period. The evaluation process is daunting notwithstanding our well-intentioned securities laws that try but too often fail to protect investors. For all this grief and uncertainty, the EB-5 investor gets a "conditional" green card, with the body-scanners returning two years later to repeat the review process in order to determine if the conditions on residence should be lifted.
These statutory and bureaucratic impediments to investment have produced all too predictable results. A mere 28,000 to 29,000 E-2 visas have been issued in each of the last four fiscal years. The EB-5 green card demand has been a tiny fraction of the quota allotment, as the U.S. Government Accountability Office has reported ("Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors").
If Congress is serious about creating jobs, fostering innovation and reinvigorating strapped cities and nearly-bankrupt state governments, then Congress must look at more enticing, user-friendly investor visa categories. As my colleague Rami Fakhoury proposes, why not declare the entire City of Detroit (full disclosure: my home town) and other municipalities with threadbare budgets and abundant vacant land as eligible for a $250,000 green card investor visa if two jobs are created? Why not allow foreign investors to team up with angel investors under the The Start-Up Visa Act proposed by Senators Kerry and Lugar? Why not allow foreign investors, properly screened, to invest in state bonds and obtain immigration benefits, much like the financial syndications that Canada allows? Why not enact The E-2 Nonimmigrant Investor Adjustment Act and allow E-2 visaholders to settle permanently in the United States?
Nothing prevents us from making intelligent changes to our investor visa categories other than the unimaginative lassitude of our lawmakers. We can clearly do better for ourselves and for generations to come if we more wisely manage our most valuable asset -- the right to live, work and prosper in America.