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HomeOpinionThe Trump Family Is Helping America by Marketing Economic Citizenship

The Trump Family Is Helping America by Marketing Economic Citizenship

Ivanka Trump, right, applauds as her father, Republican presidential candidate Donald Trump, as he delivers his childcare plan in a policy speech in Aston, Pennsylvania, on September 13, 2016. (Photo: AP/Associated Press)
Ivanka Trump, right, applauds as her father, Republican presidential candidate Donald Trump, as he delivers his childcare plan in a policy speech in Aston, Pennsylvania, on September 13, 2016. (Photo: AP/Associated Press)

Ivanka Trump, right, applauds as her father, Republican presidential candidate Donald Trump, as he delivers his childcare plan in a policy speech in Aston, Pennsylvania, on September 13, 2016. (Photo: AP/Associated Press)

Although I gave him a good grade for his first 100 days, it’s no secret that I’m not overly optimistic about the long-term policy implications of the Trump presidency. Simply stated, I fear he’ll wind up being a big-government Republican like Bush or Nixon rather than a small-government Republican like Reagan or Coolidge.

I’ve specifically complained about Trump’s approach to entitlements, his support for protectionism, his proposed childcare subsidies, and that’s just a partial list of his statist policies.

I mention all these things because I’m about to defend the President’s extended family for the practice of “selling” American citizenship and I don’t want anyone to accuse me of being a shill for Trump.

You will get a good grasp of the controversy if you read this editorial in the New York Times. Here are the key passages.

The Kushner family…has been highlighting its White House connections to entice wealthy Chinese investors and promising them green cards in return under a special government visa program. …it’s also a scandal that Congress allows real estate developers to use the American immigration system to pad their profits. …Jared Kushner, President Trump’s son-in-law and special adviser…. His sister Nicole Meyer was in Beijing and Shanghai this past weekend seeking investors for a luxury apartment project her family is developing… Her sales pitch cited her brother and laid out how a $500,000 investment could provide a coveted path to American citizenship. …Ms. Meyer’s disturbing investor pitch was made possible by the EB-5 investor visa, which opens an express lane into the United States for those who can afford to invest nearly 10 times what the median American household earns in a year. …Under the program, investors have to put at least $1 million, and it has to lead to creation or preservation of at least 10 permanent, full-time jobs. But the minimum investment drops to $500,000 if applicants invest in rural areas or places with elevated unemployment.

I don’t agree with the tone, but this is an accurate description of the program. The EB-5 program is a part of America’s immigration system and it is explicitly designed to lure job-creating investment to the U.S. economy.

Yes, it’s poorly designed and presumably should be improved.

But the underlying concept is good. If we want more prosperity, America should join in the competition to attract economically successful migrants.

After all, many immigrant groups are unambiguously good for the American economy, increasing our per-capita GDP.

The EB-5 program creates a pathway for those people, and the Kushner family is simply showing them that investing in commercial real estate is one of their options.

don’t understand why some people think this is a bad thing. All things being equal, I’d rather have rich immigrants than poor immigrants.

That’s why I defended Governor Scott Walker when he was attacked for wanting some of these people investing in Wisconsin. And that’s why today I’m defending the Kushners. I want America to become more prosperous.

Yet this rational policy rubs a lot of people the wrong way. Including some lawmakers.

Senators Grassley (R-IA) and Feinstein (D-CA), the Chair and Ranking Committee members of the Senate Judiciary Committee introduced bill S. 232 to terminate the EB-5 Visa Program.

Critics tend to make three arguments.

  • They don’t like rich people benefiting – My response is that don’t care that wealthy foreigners benefit or that wealthy American developers benefit. My goal is more growth for ordinary people, and that’s what we get with rich and/or high-skilled immigrants.
  • They are upset about favoritism – I agree that the current EB-5 system is too complicated and vulnerable to cronyism, but the solution is to copy the nations cited below by creating very simple rules allowing rich foreigners to move to America and make investments.
  • They worry about bad people getting visas – There already are fairly onerous rules designed to prevent crooks, terrorists, and other bad guys from sneaking into the U.S. by obtaining an EB-5 visa. There’s no evidence that the current system is inadequate.

To elaborate, let’s focus on the first argument dealing with economic benefits. There is considerable research showing that ordinary people benefit when high-skilled and/or high-net-worth individuals can migrate to their nations.

Here are some excerpts from a recent study by the World Bank.

The number of migrants with a tertiary degree rose nearly 130 percent from 1990 to 2010… A pattern is emerging in which these high‐skilled migrants are departing from a broader range of countries and heading to a narrower range of countries—in particular, the United States, the United Kingdom, Canada, and Australia. …For recipient countries, high‐skilled immigration is often linked to clusters of technology and knowledge production that are certainly important for local economies and are plausibly important at the national level. More than half of the high‐ skilled technology workers and entrepreneurs in Silicon Valley are foreign‐born. For native workers, high‐skilled immigration means…a chance to benefit from the complementarities and agglomeration effects created by talent clusters.

And here are some additional finding from the same authors in research published by the Bank of Finland.

…many countries are launching new policies to attract high-skilled migrants. Examples include the United Kingdom’s introduction of a points-based immigration system under Tony Blair’s government and its recent programs to attract the “brightest and best” innovators and entrepreneurs. The Netherlands introduced a new “Expatcenter Procedure,” which is an entry procedure designed for “knowledge migrants.” Competing programs pop up with regular frequency—in short, the doors seem to be opening ever wider for high-skilled migrants…the four Anglo-Saxon countries that attract the highest proportions of high-skilled migrants—Canada, the United Kingdom, Australia and New Zealand—implement points-based systems to varying degrees… high-skilled migrants boost innovation and productivity outcomes. …longer time horizons tend to show greater gains.

Here’s a map from the study.

Last but not least, let’s look at two small nations that have reaped big benefits from their economic citizenship programs.

Starting with Cyprus, as reported by Bloomberg.

…foreigners can become citizens in less than six months in exchange for investing at least 2 million euros ($2.2 million) in Cyprus property or 2.5 million euros in government bonds or companies. Since then, the nation has issued about 2,000 passports, Finance Minister Harris Georgiades said in an interview in Nicosia last month. About half have gone to Russians, according to PricewaterhouseCoopers and other consultants who guide clients through the process. The impact has been profound, sparking about 4 billion euros of foreign investment last year — equivalent to almost a quarter of the island’s annual economic output.

And also in Malta, according to Politico.

Malta has earned €310 million through the sale of EU passports… Justice Minister Owen Bonnici confirmed the figure during a parliamentary debate on the small island’s budget for next year, local media reported. …more than 700 individuals have obtained passports since 2014 in exchange for property investments and cash donations to the government

One final point, as seen in data on top inventors and entrepreneurs, is that super-skilled people want to migrate to places with good tax policy.

Written by

Daniel J. Mitchell is a Senior Fellow at the Cato Institute, and a top expert on tax reform and supply-side tax policy. Mitchell’s articles can be found in such publications as the Wall Street Journal, the New York Times, Investor’s Business Daily, and the Washington Times. He is the author of "The Flat Tax: Freedom, Fairness, Jobs, and Growth," and co-author of "Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It."

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