The Price of En­try

The Star (St. Lucia) - - BUSINESS MATTERS - By Chris­tian Wayne

Ire­cently stum­bled across an in­ter­est­ing dataset com­piled by Al­li­son Chris­tians dur­ing her re­search for a new work­ing-pa­per en­ti­tled “The Price of En­try”. Al­li­son Chris­tians is an es­tab­lished tax lawyer and the H. He­ward Strike­man chair in tax­a­tion law at McGill Univer­sity in Canada, and has a pro­found un­der­stand­ing of in­ter­na­tional tax pol­icy and eco­nomic de­vel­op­ment. Chris­tians is a sta­ple name on the In­ter­na­tional Tax Re­view’s Global Tax 50 list—a global rank­ing of the most in­flu­en­tial thought-lead­ers on tax­a­tion pol­icy.

Ac­cord­ing to Chris­tians, while con­duct­ing re­search on res­i­dence and ci­ti­zen­ship by in­vest­ment pro­grams, her team com­piled data that pro­vides “a fairly thor­ough look at the res­i­dence and ci­ti­zen­ship by in­vest­ment pro­grams cur­rently on of­fer around the world.”

The ac­com­pa­ny­ing in­fo­graphic dis­plays the low­est cost pro­gram per coun­try for all coun­tries that of­fer ei­ther res­i­dence or ci­ti­zen­ship by in­vest­ment. For ex­am­ple, the cheap­est res­i­dence by in­vest­ment pro­grams are of­fered by Panama and Paraguay, each com­ing in at about US $5,000. On the other hand, France and Rus­sia have the most ex­pen­sive pro­grams at US $10.6 mil­lion and US $9 mil­lion re­spec­tively.

At the crux of Chris­tians’ in­ter­est with im­mi­grant in­vest­ment pro­grams is what she dubs “The In­equal­ity Fac­tor”—that is, how much wealth­ier, more de­vel­oped coun­tries can de­mand in terms of higher prices and more strin­gent re­quire­ments (such as ac­tual res­i­dence in the host coun­try) for en­try, ver­sus how much poorer, less de­vel­oped coun­tries can de­mand in price and com­mit­ments from their ap­pli­cants. Chris­tians cau­tions that her re­search is still on­go­ing, but “the an­swer seems to be that there ap­pears def­i­nitely a ‘rich get richer’ qual­ity to the dis­tinc­tions among pro­grams, but there are lots of de­tails in the pro­grams that re­quire fur­ther thought.”

The im­pli­ca­tions of the com­mod­i­fi­ca­tion of ci­ti­zen­ship and ac­cess to im­mi­gra­tion visà-vis pay-to-play visa pro­grams has long been a hot-but­ton is­sue for in­ter­na­tional tax schol­ars and po­lit­i­cal sci­en­tists alike. Their his­tor­i­cal anal­y­sis, how­ever, does not typ­i­cally con­sider the role tax­a­tion dy­nam­ics be­tween ori­gin and host coun­tries can play, nor how they im­pact the tax regime in terms of gross rev­enue or the dis­tri­bu­tional ef­fect on the wider econ­omy.

As a mat­ter of phi­los­o­phy, gov­ern­ments that fast-track im­mi­grant in­vestor pro­grams as­cribe to a logic that pre­sumes tax sys­tems can be a tool for in­creas­ing (or de­creas­ing) the value of their res­i­dency or ci­ti­zen­ship. Im­mi­grant in­vest­ment pro­grams also raise im­por­tant, nor­ma­tive ques­tions: given the cost in­volved in re­duc­ing rev­enue from those most able to pay, are these pro­grams ac­tu­ally ca­pa­ble of pro­duc­ing their pre­dicted out­comes? If these pro­grams are in fact able to meet their goals, is there a nor­ma­tive jus­ti­fi­ca­tion for us­ing the tax sys­tem as a means of lur­ing the wealthy away from other coun­tries? If so, does the case dif­fer when ap­plied to hu­man be­ings as op­posed to com­pa­nies? Does it dif­fer when the lur­ing state is richer or poorer rel­a­tive to the ori­gin coun­tries of prospec­tive im­mi­grants?

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