International Entrepreneur Rule(federalregister.gov)
federalregister.gov
International Entrepreneur Rule
https://www.federalregister.gov/documents/2017/01/17/2017-00481/international-entrepreneur-rule
120 comments
One thing that will let you in is if you are invested in from
> investors with established records of successful investments
The rich get richer. Established investors get cheap labor, while upstart competitive investors get buried behind an artificial government wall. I wonder if any established investment firms lobbied for that?
> investors with established records of successful investments
The rich get richer. Established investors get cheap labor, while upstart competitive investors get buried behind an artificial government wall. I wonder if any established investment firms lobbied for that?
This kind of rule (Canada was floating a similar one) is usually added in an attempt to keep visa-sellers out of the market, i.e. outfits who will agree to fake "invest" money in your fake "startup" in return for an under-the-table fee. By limiting the people who can count as investors to those who have a track record of actually investing in startups, the hope is that this kind of fraud will be at least less frequent, and easier to police.
The EB5 program already exists which allows people to buy permanent residency. Anyone who wants to "buy a visa" can just do that with the full blessing of the government.
That requires quite a bit more money, at least $500,000. Yeah, people who have that kind of money can already buy a visa. But a visa-reselling scheme here could be much cheaper, targeting people who want to buy a visa for, say, $30,000. The fraudulent investor would structure their investment so they don't actually part with the purported investment money (depending on what checks are done, there are various ways to either hang on to the money or round-trip it), and just charges a fee for agreeing to pretend to invest and temporarily fronting the required investment money.
All you get for your money is parole though -- not a visa. You couldn't work for other companies or stay indefinitely without getting another type of visa.
Same with hedge funds. Government 'protects' the average investor by only letting qualified rich people invest in hedge funds (and get richer). I love how the government asserts that it knows what's best for me and protects me from myself. Such a free nation we live in.
> Government 'protects' the average investor by only letting qualified rich people invest in hedge funds
Having dealt with this situation recently, I'm a little more sympathetic to the government's position.
Most investors are dumb. Really dumb. No, dumber than that.
It's really easy for a con man to set up shop. It takes forever to get him shut down, and the scammed will fight you.
Scammed investors will defend the scammer even when you present them with incontrovertible proof. You can stand in court and have a judge hand down rulings of the level of "worst case I have seen" and they will STILL defend him.
Preventing these kinds of "investors" from even getting into the game is really the only way to keep it under control.
Trump being elected was hardly a surprise to me given my recent experiences with dumb investors.
Having dealt with this situation recently, I'm a little more sympathetic to the government's position.
Most investors are dumb. Really dumb. No, dumber than that.
It's really easy for a con man to set up shop. It takes forever to get him shut down, and the scammed will fight you.
Scammed investors will defend the scammer even when you present them with incontrovertible proof. You can stand in court and have a judge hand down rulings of the level of "worst case I have seen" and they will STILL defend him.
Preventing these kinds of "investors" from even getting into the game is really the only way to keep it under control.
Trump being elected was hardly a surprise to me given my recent experiences with dumb investors.
Won't such people find other ways of getting in trouble or losing their money? How many such avenues can the government block?
Sounds like a problem with a different part of the system (too many legal protections to effectively shut down ponzi schemes/cons/etc.). In general, I've never heard a compelling argument that the government should pass laws that limit people's freedoms, solely for the purpose of potentially defending people from their own willful decisions that affect only themselves.
> from their own willful decisions that affect only themselves
Handing your savings to a con man affects more than just yourself. It destroys your family, which increases crime, etc.
No one person wants to be constrained, but en masse these kinds of things can destroy a society. Especially when they are well-known cognitive exploits that work on people despite their own stated preferences.
Handing your savings to a con man affects more than just yourself. It destroys your family, which increases crime, etc.
No one person wants to be constrained, but en masse these kinds of things can destroy a society. Especially when they are well-known cognitive exploits that work on people despite their own stated preferences.
> Handing your savings to a con man affects more than just yourself. It destroys your family, which increases crime, etc.
So by your logic, it should be illegal to get conned. Let's punish victims. Seems pretty backwards to me, even though your goal is to be proactive. Might as well outlaw suicide while we're at it.
> but en masse these kinds of things can destroy a society
An example might be good here to back up a pretty questionable claim.
So by your logic, it should be illegal to get conned. Let's punish victims. Seems pretty backwards to me, even though your goal is to be proactive. Might as well outlaw suicide while we're at it.
> but en masse these kinds of things can destroy a society
An example might be good here to back up a pretty questionable claim.
>An example might be good here to back up a pretty questionable claim.
A civil war should be enough, no?
https://en.wikipedia.org/wiki/Albanian_civil_war_of_1997
A civil war should be enough, no?
https://en.wikipedia.org/wiki/Albanian_civil_war_of_1997
> "and government officials endorsed a series of pyramid investment funds"
From your own article, sounds like the problem was corrupt government, not a government that protected and prosecuted fraud.
From your own article, sounds like the problem was corrupt government, not a government that protected and prosecuted fraud.
Indeed. Preventing financial panics is one of the core purposes of modern government, the protestations of HN's resident Ayn Rand readership notwithstanding.
How is that working out? Booms and busts are inherent to a market, but with Keynesian policies we extend the busts and inflate artificial booms (see: housing crisis), and we rack up more debt every time.
> So by your logic, it should be illegal to get conned.
That really isn't what they said...
That really isn't what they said...
I'm surprised that this was your take-away from my response.
Perhaps this should not be a surprising takeaway.
I hear the same arguments all the time about protecting people from themselves. The argument typically goes "well it doesn't just affect you; your decisions could impact people who depend on you, so we'll add a 'protection' that may prevent you from harming yourself and your dependents." If it is acknowledged that it is indeed the decisions of the actor which affects his dependents, not the dangers of the world that may tempt the actor, and you want to protect his family from his own ineptitude through government force, then it sounds like you would have to make it illegal for that actor to make mistakes/get conned.
But of course, the whole 'protect people from themselves' argument is flawed long before that point, because it assumes that the government can and should try to create a world without risk. This is clearly impossible and subjective, and for the government to even come close, it would have to become so oppressive as to reduce freedoms to nothing. The same exact logic is used for keeping marijuana illegal, which I would speculate many of the dissidents on this thread do not support.
So in our current system, for example, we have rich people who get to use hedge funds (of which some very very low percentage turn out to be a Bernie Madoff-type of a scheme) and poor people who are protected from themselves and get to enjoy the Fed's ultra-low interest rates as inflation eats away at their savings. Clearly not a very good solution.
Maybe a better system would allow all people to use hedge funds, and instead we could focus on preventing/prosecuting fraud.
I hear the same arguments all the time about protecting people from themselves. The argument typically goes "well it doesn't just affect you; your decisions could impact people who depend on you, so we'll add a 'protection' that may prevent you from harming yourself and your dependents." If it is acknowledged that it is indeed the decisions of the actor which affects his dependents, not the dangers of the world that may tempt the actor, and you want to protect his family from his own ineptitude through government force, then it sounds like you would have to make it illegal for that actor to make mistakes/get conned.
But of course, the whole 'protect people from themselves' argument is flawed long before that point, because it assumes that the government can and should try to create a world without risk. This is clearly impossible and subjective, and for the government to even come close, it would have to become so oppressive as to reduce freedoms to nothing. The same exact logic is used for keeping marijuana illegal, which I would speculate many of the dissidents on this thread do not support.
So in our current system, for example, we have rich people who get to use hedge funds (of which some very very low percentage turn out to be a Bernie Madoff-type of a scheme) and poor people who are protected from themselves and get to enjoy the Fed's ultra-low interest rates as inflation eats away at their savings. Clearly not a very good solution.
Maybe a better system would allow all people to use hedge funds, and instead we could focus on preventing/prosecuting fraud.
> too many legal protections to effectively shut down ponzi schemes/cons/etc.
The problem is that the the person carrying out the scam is playing with "house money" while the ones trying to stop him are paying cash. He is paying lawyers with the money from the investors and burning up the assets. So, by the time you are done, it may be a Pyrrhic victory.
The problem is that the the person carrying out the scam is playing with "house money" while the ones trying to stop him are paying cash. He is paying lawyers with the money from the investors and burning up the assets. So, by the time you are done, it may be a Pyrrhic victory.
How many hedge funds fall into this category of scammers? And with our protective legal framework, how come you still had to deal with a situation like this?
Not only do I dislike the freedom limitations in principle, but I've been giving everyone the benefit of the doubt that limiting freedoms will actually prevent the targeted type of scams. In reality, scammers will always find a way, criminals are not bound by laws, and we're still stuck with the inherent flaws of only giving the rich access to wealth-generating funds.
Not only do I dislike the freedom limitations in principle, but I've been giving everyone the benefit of the doubt that limiting freedoms will actually prevent the targeted type of scams. In reality, scammers will always find a way, criminals are not bound by laws, and we're still stuck with the inherent flaws of only giving the rich access to wealth-generating funds.
> Trump being elected was hardly a surprise to me given my recent experiences with dumb investors.
This is needlessly flame-baitey
This is needlessly flame-baitey
Imagine if we were forced to live in a system where we had to choose between two people like that!
What bothers me more is the restriction on investing in IPOs.
Isn't the restriction on investing in IPOs imposed by banks and not the government? You're just not going to get an allocation if you're not a "good customer".
Yeah, that is 100% the result of the private financial system (investment banks). Remember when Google did the open dutch auction format and what a big deal that was for cutting them out?
Don't you think you're making too much assumption here? If a large firm lobbied to create an "artificial ... wall," they would write a pre-defined amount, such as "firms who have $100MM AUM," rather than making it vague.
"Successful investments" can be validated with a reasonable argument, so it actually opens door for younger VCs.
"Successful investments" can be validated with a reasonable argument, so it actually opens door for younger VCs.
Or maybe by making it vague they will get even more protection, especially if they have ins with the regulators who will interpret it. Seems more likely for established players than for upstarts.
But maybe not. Just throwing it out there.
But maybe not. Just throwing it out there.
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So your investment thesis is "cheaper is better."?
Who's going to stop an investor from pushing you out from a central role in operations and hence kick you out of the country? All this after 2.5yrs put in the company, working your best for those years.
Given the amounts we're talking about, it's likely the founders would still have complete control of the board.
The threshold feels low, especially when compared the the new H1B threshold at 100K. As mentioned earlier, this could be easily gamed.
especially when compared the the new H1B threshold at 100K
What on Earth are you talking about? That $100K threshold is designed to target body shops.
There are a class of employers which are H-1B dependent; generally, those with at least 15% of their employees on the visa. Currently, H-1Bs with a salary of at least $60K are not counted toward that 15%. The bill will change this to $100K salary.
It is possible to hire a H-1B for $50k under the current laws if that is market rate for the relevant position.
What on Earth are you talking about? That $100K threshold is designed to target body shops.
There are a class of employers which are H-1B dependent; generally, those with at least 15% of their employees on the visa. Currently, H-1Bs with a salary of at least $60K are not counted toward that 15%. The bill will change this to $100K salary.
It is possible to hire a H-1B for $50k under the current laws if that is market rate for the relevant position.
The 100k threshold will do nothing for body shops. They will structure it so that on paper every employee makes the required amount to keep the DOL/DHS happy while clawing it back from the employee through "fees", "charges", and other underhanded tactics.
They've always done this and always will.
They've always done this and always will.
It increases the threshold of money involved, increases the amount of potential accounting tricks they have to do, and it raises the bar.
Political measures don't need to be absolutely effective to be useful. Raising the difficulty might be enough to deter a large number of fraudulent applications.
Political measures don't need to be absolutely effective to be useful. Raising the difficulty might be enough to deter a large number of fraudulent applications.
It's explicitly designed for people who get into YC: you get 2.5 years to prove your startup can make it to the next stage, the 2.5 more years to turn it into a real business (after which there are far more options like K-1, O-1, and various E investor visas). Depending on the situation it might be a formality... if your startup has grown to medium size with 100 employees and $20m revenue my guess is DHS will find any excuse to give you general public-benefit parole or an O-1.
You are also free to apply for other visas while in the US without affecting your parole.
You are also free to apply for other visas while in the US without affecting your parole.
I know right!
Company "invests" 250k into a "startup" who's only job is to "consult" with the parent investor company.
BAM! You've just hired 3 engineers right there, who have completely skipped the greencard line.
Company "invests" 250k into a "startup" who's only job is to "consult" with the parent investor company.
BAM! You've just hired 3 engineers right there, who have completely skipped the greencard line.
I'd assume this is why they have qualification requirements on the investors.
Is the 100k cap official or is it just an idea so far?
Does anyone know how the process is supposed to work once one gets the Parole? Would the Parole allow one to travel freely in and out of the States, like a Green Card holder, during the its valid period?
E-2 visa for some nationals requires the person to reapply for the visa if one travels outside the US and wants to get back in, which is a major pain point. (There is a period, for example 6 months or 1 year, when the re-entry is permitted without re-application. This varies with the country.)
E-2 visa for some nationals requires the person to reapply for the visa if one travels outside the US and wants to get back in, which is a major pain point. (There is a period, for example 6 months or 1 year, when the re-entry is permitted without re-application. This varies with the country.)
I read through the rules and couldn't find any mention. Which means it's safe to assume that you can travel freely in and out of US within the parole period.
All Visas to the US are mostly multiple entry Visas unless otherwise stated. Probably this parole is similar.
That is quite reassuring. Thank you! :)
I'm afraid the point of parole is that it can be decided at the border, at the entire discretion of the custom officers, without needing change in laws (hence why Obama is doing it this way). So, even if there was a guideline about this, you're getting zero guarantee that you will be admitted in next time.
about the E-2 thing you said, it's only true if you applied within the US. if you applied and got an E-2 outside of US, you can freely leave and enter on it anytime.
I talked with an immigration lawyer last year. She told me that the period of free re-entry was only within 6 months of the visa issuance. I did check and found a list of varying periods for different countries on some website (I can't find it now.)
However, I just found this paragraph on www.uscis.gov:
"An E-2 nonimmigrant who travels abroad may generally be granted an automatic two-year period of readmission when returning to the United States. It is generally not necessary to file a new Form I-129 with USCIS in this situation."
So I guess one may want to re-check to be very sure if one wants to get an E-2. I'm going to apply for the Entrepreneur Parole since it fits my situation much better.
However, I just found this paragraph on www.uscis.gov:
"An E-2 nonimmigrant who travels abroad may generally be granted an automatic two-year period of readmission when returning to the United States. It is generally not necessary to file a new Form I-129 with USCIS in this situation."
So I guess one may want to re-check to be very sure if one wants to get an E-2. I'm going to apply for the Entrepreneur Parole since it fits my situation much better.
I have an E-2 visa, valid for 5 years. The way it works is exactly as you read on www.uscis.gov: upon entry in the US there is a 2 year reentry permission: it is renewed each time the border is crossed. In practice it means that I need to go out of the US at least once every two years to keep the ability to travel freely. Conclusion: the E-2 visa is great if you intend to travel abroad often, otherwise another visa is probably better.
The durations may vary depending on the country the visa is issued from (due to the underlying treaty), and the status associated to it: in my case France as an essential employee (NOT as an investor).
The durations may vary depending on the country the visa is issued from (due to the underlying treaty), and the status associated to it: in my case France as an essential employee (NOT as an investor).
What exactly does parole mean in an immigration context? Would it threaten future visa/immigration options if you fail to renew?
Thanks. That led me to:
> The Attorney General may, except as provided in subparagraph (B) or in section 1184(f) of this title, in his discretion parole into the United States temporarily under such conditions as he may prescribe only on a case-by-case basis for urgent humanitarian reasons or significant public benefit any alien applying for admission to the United States, but such parole of such alien shall not be regarded as an admission of the alien and when the purposes of such parole shall, in the opinion of the Attorney General, have been served the alien shall forthwith return or be returned to the custody from which he was paroled and thereafter his case shall continue to be dealt with in the same manner as that of any other applicant for admission to the United States.
[0]: https://www.gpo.gov/fdsys/pkg/USCODE-2015-title8/html/USCODE...
> The Attorney General may, except as provided in subparagraph (B) or in section 1184(f) of this title, in his discretion parole into the United States temporarily under such conditions as he may prescribe only on a case-by-case basis for urgent humanitarian reasons or significant public benefit any alien applying for admission to the United States, but such parole of such alien shall not be regarded as an admission of the alien and when the purposes of such parole shall, in the opinion of the Attorney General, have been served the alien shall forthwith return or be returned to the custody from which he was paroled and thereafter his case shall continue to be dealt with in the same manner as that of any other applicant for admission to the United States.
[0]: https://www.gpo.gov/fdsys/pkg/USCODE-2015-title8/html/USCODE...
A similar scheme works for Canadian immigration.
But... Does it work?
Typical case went like this: Immigrant investor to Canada spent $300K (Canadian) to buy a pizza joint, hired 5 minimum wage workers, operated business for 3.5 years, then sold it or closed it. Minimum investments and required duration of the business have varied over the years, and by province as well.
The typical immigrant investor was not starting Google, a genomics lab, a 3D printing business, or anything even vaguely innovative.
The typical immigrant investor was not starting Google, a genomics lab, a 3D printing business, or anything even vaguely innovative.
That was the "investor" visa ("owner-operator").
The US International Entrepreneur Rule is more like the "Start Up Visa" [1] that was introduced in Canada a few years ago, which allows entry for founders of a business supported by local venture capital or incubators (subject to certain monetary amounts and conditions).
A major difference: the Canadian start-up visa gives immediate permanent residence, rather than a number of years of temporary status with no guaranteed route forward.
[1] http://www.cic.gc.ca/english/immigrate/business/start-up/
The US International Entrepreneur Rule is more like the "Start Up Visa" [1] that was introduced in Canada a few years ago, which allows entry for founders of a business supported by local venture capital or incubators (subject to certain monetary amounts and conditions).
A major difference: the Canadian start-up visa gives immediate permanent residence, rather than a number of years of temporary status with no guaranteed route forward.
[1] http://www.cic.gc.ca/english/immigrate/business/start-up/
What happens to them afterward? Do they get a permanent residency just from operating that venture for 3.5 years?
(Do they need to pass the point-based qualification as well to get the visa in the first place?)
For the US, small business investor-entrepreneurs typically use an E-2 visa but it is non-immigrant and they need to leave the country when the business stops operating.
(Do they need to pass the point-based qualification as well to get the visa in the first place?)
For the US, small business investor-entrepreneurs typically use an E-2 visa but it is non-immigrant and they need to leave the country when the business stops operating.
Ok, that's the immigration side. What is the tax status of people admitted under this rule? IIRC, only F and J visas are exempt from becoming American taxpayers
Being an American taxpayer is fine and dandy if you never plan to live outside the us again; but if you aren't, it's a very expensive and labour intensive deal; your home country bank will fire you as a customer because of FATCA, the reporting requirements to the us are insane (FBAR and every single foreign transaction needs to be reported), and your e.g. Pension savings and other holdings likely become a losing proposition because they are PFICs.
Most people ignore these issues, but almost everyone is liable under the us tax code, and especially with the just announced sharing of NSA data with the IRS, it will all be legally documented for the IRS to pursue.
Being an American taxpayer is fine and dandy if you never plan to live outside the us again; but if you aren't, it's a very expensive and labour intensive deal; your home country bank will fire you as a customer because of FATCA, the reporting requirements to the us are insane (FBAR and every single foreign transaction needs to be reported), and your e.g. Pension savings and other holdings likely become a losing proposition because they are PFICs.
Most people ignore these issues, but almost everyone is liable under the us tax code, and especially with the just announced sharing of NSA data with the IRS, it will all be legally documented for the IRS to pursue.
Holders of F and J visas do pay taxes in the US, though they may also be liable for taxes in their home countries. (Depending on treaties with their home countries, they may or may not be better off than a regular US taxpayer.)
You may be thinking of the rule requiring American citizens to pay taxes over their worldwide income, not only their US income. That rule applies to American citizens as well as permanent residents ("green-card holders"), but generally not to anyone in the US on a temporary visa. That means that someone in the US on a temporary visa will generally be paying US taxes over any income from a job or business they have in the US, but if they have, e.g., income from renting out real estate in another country, that income may be taxed in that other country, but not in the US. Only US citizens and permanent residents are required to report any such foreign income in the US and pay taxes over it, even when they move abroad (with some exemptions).
FATCA is not as onerous as you describe for most regular people. As a US taxpayer (whether a citizen or permanent or temporary resident), you have to report foreign bank accounts that at any point during the year contain more than the equivalent of something like $10,000. That's it. There is no requirement (as far as I'm aware) to report "every single foreign transaction."
You're right that retirement planning can be complicated for immigrants and temporary visitors. Many countries have rules like the US, where you have to pay into the system for a certain number of years before you become eligible for social-security payments in old age. So for many immigrants retirement becomes a patchwork of sources (a bit of social security, a bit of foreign social security, and otherwise savings in whatever accounts are available in the US and abroad.)
You may be thinking of the rule requiring American citizens to pay taxes over their worldwide income, not only their US income. That rule applies to American citizens as well as permanent residents ("green-card holders"), but generally not to anyone in the US on a temporary visa. That means that someone in the US on a temporary visa will generally be paying US taxes over any income from a job or business they have in the US, but if they have, e.g., income from renting out real estate in another country, that income may be taxed in that other country, but not in the US. Only US citizens and permanent residents are required to report any such foreign income in the US and pay taxes over it, even when they move abroad (with some exemptions).
FATCA is not as onerous as you describe for most regular people. As a US taxpayer (whether a citizen or permanent or temporary resident), you have to report foreign bank accounts that at any point during the year contain more than the equivalent of something like $10,000. That's it. There is no requirement (as far as I'm aware) to report "every single foreign transaction."
You're right that retirement planning can be complicated for immigrants and temporary visitors. Many countries have rules like the US, where you have to pay into the system for a certain number of years before you become eligible for social-security payments in old age. So for many immigrants retirement becomes a patchwork of sources (a bit of social security, a bit of foreign social security, and otherwise savings in whatever accounts are available in the US and abroad.)
That seems correct. On my FBAR I have to report every foreign bank account I have and the highest balance each account has had during the year. I've never had to report individual transactions and have not ran into any problems with my banks.
> You may be thinking of the rule requiring American citizens to pay taxes over their worldwide income, not only their US income. That rule applies to American citizens as well as permanent residents ("green-card holders"), but generally not to anyone in the US on a temporary visa.
It is indeed what I'm thinking about, but I believe you are wrong about the "temporary visa" thing - As far as I know, only F and J visas (inherently temporary) are exempt; H-1B, L-1, E-1, O and K visas which are temporary in the sense that they expire on job termination / divorce, but they still subject you to taxation of your worldwide income.
> There is no requirement (as far as I'm aware) to report "every single foreign transaction."
There is a requirement to report the details of every transaction that has capital gains and losses associated with it, if that transaction did not happen in the US.
A few years back, I got a call from my foreign bank one day, saying that because I was a US taxpayer (for several years, at that point, well documented with the bank), they could no longer maintain any of my accounts other than checking and saving. At that point, my bank was also my broker keeping some long term bonds, stocks, mutual funds, etc. So, they had me choose whether I want to transfer them to a SEC-regulated bank/broker (impossible - non had the facilities), or liquidate them -- which is what I did.
Had this been done in the US, I would just have to report aggregate capital gains/losses. and that's it. However, as this was outside the US, I had to fill a 2-page form describing every liquidation transaction that the bank did. I ended up filing north of 300 pages that year. "Luckily", now I can't purchase any of these securities so that won't happen again, except ....
> You're right that retirement planning can be complicated for immigrants and temporary visitors.
No, I'm not talking about retirement planning, which is indeed complicated.
Almost every country has a pension saving system independent of the social-security (or equivalent) system. In the US, for example, it is IRAs and 401K. These things get preferential tax treatments, usually "no tax (up to some limit) as long as you only cash it when you retire". However, the US does not recognize any other country's preferred retirement saving. Those savings are in 99% of the cases, a PFIC from the perspective of the US tax system.
Which leaves you with three choices: Either cash it, retroactively forfeiting any tax benefit (possibly 20 years of it), and move it to a US equivalent; Or .. pay a tax each year on the theoretical profit of those pension accounts ... or, pay a lump compounded interest-and-penalty tax the day you actually cash it, which will likely be 50%-100% of that sum.
Now, if you've moved to the US for good, then, by all means, you have to take the hit to switch systems. However, if you can't guarantee that you can stay forever, all your options regarding taxation of your pension saving are awful.
It is indeed what I'm thinking about, but I believe you are wrong about the "temporary visa" thing - As far as I know, only F and J visas (inherently temporary) are exempt; H-1B, L-1, E-1, O and K visas which are temporary in the sense that they expire on job termination / divorce, but they still subject you to taxation of your worldwide income.
> There is no requirement (as far as I'm aware) to report "every single foreign transaction."
There is a requirement to report the details of every transaction that has capital gains and losses associated with it, if that transaction did not happen in the US.
A few years back, I got a call from my foreign bank one day, saying that because I was a US taxpayer (for several years, at that point, well documented with the bank), they could no longer maintain any of my accounts other than checking and saving. At that point, my bank was also my broker keeping some long term bonds, stocks, mutual funds, etc. So, they had me choose whether I want to transfer them to a SEC-regulated bank/broker (impossible - non had the facilities), or liquidate them -- which is what I did.
Had this been done in the US, I would just have to report aggregate capital gains/losses. and that's it. However, as this was outside the US, I had to fill a 2-page form describing every liquidation transaction that the bank did. I ended up filing north of 300 pages that year. "Luckily", now I can't purchase any of these securities so that won't happen again, except ....
> You're right that retirement planning can be complicated for immigrants and temporary visitors.
No, I'm not talking about retirement planning, which is indeed complicated.
Almost every country has a pension saving system independent of the social-security (or equivalent) system. In the US, for example, it is IRAs and 401K. These things get preferential tax treatments, usually "no tax (up to some limit) as long as you only cash it when you retire". However, the US does not recognize any other country's preferred retirement saving. Those savings are in 99% of the cases, a PFIC from the perspective of the US tax system.
Which leaves you with three choices: Either cash it, retroactively forfeiting any tax benefit (possibly 20 years of it), and move it to a US equivalent; Or .. pay a tax each year on the theoretical profit of those pension accounts ... or, pay a lump compounded interest-and-penalty tax the day you actually cash it, which will likely be 50%-100% of that sum.
Now, if you've moved to the US for good, then, by all means, you have to take the hit to switch systems. However, if you can't guarantee that you can stay forever, all your options regarding taxation of your pension saving are awful.
> However, the US does not recognize any other country's preferred retirement saving.
This is not completely true: Canadian RRSPs are recognized by the IRS at the federal level due to a tax treaty, though may not be recognized by all states. (For example, I had to figure the interest on the investments for my California return, until I decided to sell the RRSPs to simplify my life.) Other countries may get special treatment for their tax-deferred retirement accounts via a tax treaty too, though it can be tricky to ascertain -- you may end up actually having to read the treaty!
This is not completely true: Canadian RRSPs are recognized by the IRS at the federal level due to a tax treaty, though may not be recognized by all states. (For example, I had to figure the interest on the investments for my California return, until I decided to sell the RRSPs to simplify my life.) Other countries may get special treatment for their tax-deferred retirement accounts via a tax treaty too, though it can be tricky to ascertain -- you may end up actually having to read the treaty!
Wouldn't substantial presence test determine tax payer status? I've been paying US income tax the past few years without even being there on a visa, simply by meeting substantial presence test while on visa waiver and not claiming a closer relation to any other country. [I travel a lot and spend more time in the US than anywhere else [roughly 5 months out of the year], but don't technically live anywhere]
That requires tax payer obligation. However "american taxpayer" is a well defined status reflected in laws and regulation which you may or may not have, even if you are paying US taxes regularly.
If you do have "american taxpayer" status, banks outside the US (essentially all of them these days) will refuse to let you do anything other than keep a checking and saving account, and brokers will refuse to do business with you, thanks to SEC regulations that say that only SEC regulated brokers and banks can handle securities on behalf of US taxpayers.
If you do have "american taxpayer" status, banks outside the US (essentially all of them these days) will refuse to let you do anything other than keep a checking and saving account, and brokers will refuse to do business with you, thanks to SEC regulations that say that only SEC regulated brokers and banks can handle securities on behalf of US taxpayers.
If you're moving to the U.S. to grow your young, early-stage startup for the next 5+ years, wouldn't it be easier if you moved your banking to a Silicon Valley / equivalent bank, who tends to be more startup-friendly and gives easier filing rules?
That's unless if you have more than 5 years of a banking relationship, but then you wouldn't qualify for this rule anyway.
That's unless if you have more than 5 years of a banking relationship, but then you wouldn't qualify for this rule anyway.
That's true for simple saving and checking, but not true for just about anything else. Most importantly, retirement/pension accounts, which get preferential treatment (in the US they are IRAs and 401k) in one country but not another -- and the US PFIC rules make them much worse than "just" not getting the tax benefits.
This will be gamed hard by rich people to get into the U.S.
Essentially a red carpet side door if you have a slab of cash.
Essentially a red carpet side door if you have a slab of cash.
That's nothing new, if you pay $1million (or $500k depending on the area of investment) then you can essentially get a green card as it is:
https://en.wikipedia.org/wiki/EB-5_visa
Many other countries, such as the Netherlands, have a similar law: http://www.dutchdailynews.com/netherlands-offers-residency-t...
Interesting. It seems equivalent of USD 1.3M. I wonder if it is competitive for investors.
Portugal has a similar system, called "Golden Visas", which is significantly cheaper. Of course, being true to this country, there's already a five year backlog due to bureaucracy and investigations into misappropriations and fraud.
I doubt it. There are already 2 programs that allow rich people to immigrate by investing their own money: the EB-5 and the E-2 visa [1].
However, these visas require that people invest their own money. This visa is different because it allows investment with other people's money. It's a big change.
[1] https://www.uscis.gov/green-card/green-card-through-job/gree...
However, these visas require that people invest their own money. This visa is different because it allows investment with other people's money. It's a big change.
[1] https://www.uscis.gov/green-card/green-card-through-job/gree...
E2 is explicitly a non immigration visa. In fact you need to demonstrate your intent to NOT immigrate during your interview process.
The E-2 is a non immigration visa without dual intent. So... just like an F-1 student visa which is a non immigration visa without dual intent.
All this means in reality is that once you've come to the US and established the basis for another visa, your "intent" changes and you apply for an applicable immigration visa. People do every year with both the F-1 and the E-2 visa.
However, some people prefer to reside in the US long term with non immigration status. The E-2 allows people to emigrate to the US and remain there, indefinitely renewing their E-2 visa, whilst (i) protecting their future non-US tax status, and (2) entering and exiting the US for long periods of time (as long as the business is operating successfully). This contrasts with a green card, which (i) subjects green card holders to "citizen-like" tax obligations after a specified period of time and (ii) typically requires continuous residence in the US.
The continuous presence restriction would lift upon receipt of citizenship but not everyone wants (or is able) to hold dual citizenships.
An E-2 is just fine for many rich people.
All this means in reality is that once you've come to the US and established the basis for another visa, your "intent" changes and you apply for an applicable immigration visa. People do every year with both the F-1 and the E-2 visa.
However, some people prefer to reside in the US long term with non immigration status. The E-2 allows people to emigrate to the US and remain there, indefinitely renewing their E-2 visa, whilst (i) protecting their future non-US tax status, and (2) entering and exiting the US for long periods of time (as long as the business is operating successfully). This contrasts with a green card, which (i) subjects green card holders to "citizen-like" tax obligations after a specified period of time and (ii) typically requires continuous residence in the US.
The continuous presence restriction would lift upon receipt of citizenship but not everyone wants (or is able) to hold dual citizenships.
An E-2 is just fine for many rich people.
I am not native English speaker so I might be misreading, but isn't parole meant to be for people in prison? So how does this have anything to do with getting into the U.S.?
There is already something like what you are suggesting in the U.S. AFAIK, just $500k or $1M depending on the situation.
There is already something like what you are suggesting in the U.S. AFAIK, just $500k or $1M depending on the situation.
Parole is a term used by immigration for cases where they use their own authority to let someone in when the law doesn't quite allow it.
For example in late 2000 the US government didn't get around to renewing the "visa waiver" law in time. Rather than suddenly requiring visas from everybody from the former visa waiver countries (and cause travel chaos), passports were stamped "PAROLED" for visa waiver people (mostly tourists) entering until the law was renewed. (I had a stamp like that in October 2000).
For example in late 2000 the US government didn't get around to renewing the "visa waiver" law in time. Rather than suddenly requiring visas from everybody from the former visa waiver countries (and cause travel chaos), passports were stamped "PAROLED" for visa waiver people (mostly tourists) entering until the law was renewed. (I had a stamp like that in October 2000).
Parole essentially means granting the right to enter or remain the US to an applicant who does not technically meet the conditions for the visa or status. It's usually applied on humanitarian grounds or to fill "gaps" in the immigration system [1] where there would be negative consequences.
It's an attempt to soften the harsh consequences that often arise from these counterintuitive rules in a very technical legal space that is almost impossible to legislatively correct.
[1] https://www.cbp.gov/travel/us-citizens/advance-parole
It's an attempt to soften the harsh consequences that often arise from these counterintuitive rules in a very technical legal space that is almost impossible to legislatively correct.
[1] https://www.cbp.gov/travel/us-citizens/advance-parole
"Parole" refers to any situation where someone is given some trust for a period of time before they are given complete trust. It usually refers to people who get out of prison but have to check in with a parole officer for a while, but in this case it refers to immigrants being allowed into the country but having to check in with DHS.
Parole in this case is just leave to enter the US.
In this situation the parole is probably in the context of deportation proceedings.
Is that a problem? Why would we not want more rich people becoming citizens and paying US taxes on their worldwide income?
Of course we would want that, but that's not what we get. The rich pay few taxes and the international rich pay even less, given they already have offshore tax havens by the nature of being from another country. Given a green card allows establishment of US companies which are exempt from some tariffs which are imposed on foreign companies, there's no reason to believe that giving the rich green cards will be a net gain for tax revenue. It is indeed sometimes a net loss.
The rich don't pay fewer taxes in absolute terms.
They may pay a lower percentage of taxes on wealth gains than middle class or upper middle class, due to being able to delay income realization, lower capital gains taxes, and other means that are more accessible to the rich than the middle class or the poor.
But rich people still tend to pay more taxes than less rich people.
They may pay a lower percentage of taxes on wealth gains than middle class or upper middle class, due to being able to delay income realization, lower capital gains taxes, and other means that are more accessible to the rich than the middle class or the poor.
But rich people still tend to pay more taxes than less rich people.
Demonstrably not true in absolute terms in many cases, or as a percentage of income in others.
Spend 15 minutes talking to an accountant on the premise that you don't want to pay any tax. If you've got enough cash, that's not a problem, anywhere in the World.
Spend 15 minutes talking to an accountant on the premise that you don't want to pay any tax. If you've got enough cash, that's not a problem, anywhere in the World.
> The rich pay few taxes and the international rich pay even less
The rich pay almost all tax.
The rich pay almost all tax.
A humorous way to express the same idea is that the non-rich are actually sponging off the rich:
"The average American household of 2.64 people receives almost $13,000 worth of federal benefits, services, and protection per annum. These people would have to have a family income of $53,700 to pay as much in taxes as they get in goodies... Only 4.8 percent of the population -- 12,228,000 people -- file income tax returns showing more than $50,000 in adjusted gross income. Ninety-five percent of Americans are on the mooch." -- P. J. O'Rourke [1]
[1] https://books.google.com/books?isbn=1555847153
"The average American household of 2.64 people receives almost $13,000 worth of federal benefits, services, and protection per annum. These people would have to have a family income of $53,700 to pay as much in taxes as they get in goodies... Only 4.8 percent of the population -- 12,228,000 people -- file income tax returns showing more than $50,000 in adjusted gross income. Ninety-five percent of Americans are on the mooch." -- P. J. O'Rourke [1]
[1] https://books.google.com/books?isbn=1555847153
The chart depicted in xkcd https://xkcd.com/980/ doesn't seem to agree with this.
http://taxfoundation.org/article/summary-latest-federal-inco... Shows the top 50% paying nearly all the taxes. That is a far cry from the rich.
http://taxfoundation.org/article/summary-latest-federal-inco... Shows the top 50% paying nearly all the taxes. That is a far cry from the rich.
The data you link to shows that the top 5% income people pay 58.55% of all taxes, while the the top 50% pay 97.22%, as you indicated.
So as a simple-language summary we might all agree that the rich pay a majority of the taxes, while the richer half of the country pays nearly all the taxes.
So as a simple-language summary we might all agree that the rich pay a majority of the taxes, while the richer half of the country pays nearly all the taxes.
The richer half of the country _own_ 97.5% of the wealth. ( http://www.businessinsider.com/15-charts-about-wealth-and-in... ). It is hard to not pay nearly all of the taxes in that situation.
Note that the "richer half" starts at the median income. For the US, the median income is about $52k. That isn't particularly wealthy. When the bar for "nearly all the wealth" is set at that point, it is not surprising at all.
Note that the "richer half" starts at the median income. For the US, the median income is about $52k. That isn't particularly wealthy. When the bar for "nearly all the wealth" is set at that point, it is not surprising at all.
Just 'wealth' take into account the value of the commons? Or just private resources?
FWIW Canada beats US out of the water on this one.
You can immediately become Canadian permanent resident by merely LOANING the province of Quebec $800K for five years. At current interest rates your actual monetary loss would be ~$80K.
You don't even need any qualifications. You don't even need to live in Quebec afterwards, you're free to move anywhere.
Oh and you can become Canadian citizen after three years of living in Canada, although because Canada does not reliably track people at its borders you can just fake passport stamps and other stuff. Recent revelations showed that people have been doing that at massive scale.
You can immediately become Canadian permanent resident by merely LOANING the province of Quebec $800K for five years. At current interest rates your actual monetary loss would be ~$80K.
You don't even need any qualifications. You don't even need to live in Quebec afterwards, you're free to move anywhere.
Oh and you can become Canadian citizen after three years of living in Canada, although because Canada does not reliably track people at its borders you can just fake passport stamps and other stuff. Recent revelations showed that people have been doing that at massive scale.
Those people can already do this, with better immigration benefits available:
https://www.uscis.gov/green-card/green-card-through-job/gree...
So why is it so bad to have rich people relocate to your country?
Considering the enormous benefits of moving to the US for most of the people in the world, I don't really like the idea of it being easier for the rich rather than the poor to migrate when they're already rich. For a lot of people, crossing a border and doing the exact same job can easily 5-10x real income. It's what my dad did. What I would like is a preferential option for the poor in migration policies. The positive aggregate effects of migration are well known as generally positive according to mainstream economic analysis, but the social problem is that, similar to free trade, it's a policy that creates very very invisible gains (largely unnoticeable as an individual things like marginally lower prices, marginally higher productivity) but with extremely concentrated and visible harm. The family trade is carpentry and I grew up working in it and viscerally saw being undercut by contractors using undocumented labor, so i know it's real. I just think migration doesn't have to be structured this way.
I don't have even the vaguest idea of policy in this (although I'm sure there's some research I can read up on), but I think something can be done, whether via some kind of redistribution scheme, regulation, etc. to attempt to mitigate these effects by redistributing aggregate gains to those hurt hard. I watched many people develop virulent xenophobia and racism because of the issues of undocumented labor and improperly managed migration. I wish in addition to free trade treaties we could have free movement treaties without having to form some pseudo federation like the EU.
I don't have even the vaguest idea of policy in this (although I'm sure there's some research I can read up on), but I think something can be done, whether via some kind of redistribution scheme, regulation, etc. to attempt to mitigate these effects by redistributing aggregate gains to those hurt hard. I watched many people develop virulent xenophobia and racism because of the issues of undocumented labor and improperly managed migration. I wish in addition to free trade treaties we could have free movement treaties without having to form some pseudo federation like the EU.
You need to raise the money from investors with a track record of investing in high growth startups, so won't be quite as easy as writing yourself a $250k check.
It would also be a stupid thing to game this rule when there already exists a separate system that allows you to write a 500k check and get a green card.
It is not as easy as that. You need to have plans, lots of paperwork, and lots of time (about 2 years). https://www.nytimes.com/2015/05/17/realestate/want-a-green-c...
Nope. You mean you need a consultation firm that does all of this for you for a fee, of which there are many.
The EB-5 is a huge site for immigration fraud and in many cases it functions as a green card-for-cash exchange. In fact, the poor foreign investors who didn't understand this are now suing state governments and associated companies because they received no returns from their investment.[1]
[1] http://www.forbes.com/sites/ellensheng/2016/08/01/foreign-in...
Google "EB-5 fraud" for many many more cases but note that, unlike in most immigration cases, the fraud here is being perpetrated against the visa applicants, not the immigration service. There is no suggestion that they do not have the capital or that they have not received a visa, just that there are no returns.
The EB-5 is a huge site for immigration fraud and in many cases it functions as a green card-for-cash exchange. In fact, the poor foreign investors who didn't understand this are now suing state governments and associated companies because they received no returns from their investment.[1]
[1] http://www.forbes.com/sites/ellensheng/2016/08/01/foreign-in...
Google "EB-5 fraud" for many many more cases but note that, unlike in most immigration cases, the fraud here is being perpetrated against the visa applicants, not the immigration service. There is no suggestion that they do not have the capital or that they have not received a visa, just that there are no returns.
I doubt that rich people are trying to get into the US (and make their worldwide income subject to taxation).
It depends. A rich person (multi-million range) in Delhi, a city covered with massive pollution, unbearable traffic might be much better of moving with family to US. A billionaire type might have other things to consider.
This is good news for YC, and I bet that the amount of international founders accepted will increase in the next batch.
Should you not be offered some sort of permanent residency in return for "growth and job creation that they would provide a significant public benefit to the United States", especially after the first 30 months?
So you get 60 months and then have to leave the country? How is that attractive?
So you get 60 months and then have to leave the country? How is that attractive?
People usually convert themselves to H1B at some point in the process.
When was this passed?
it is a regulatory action, so it was never "passed" per se. https://en.wikipedia.org/wiki/Rulemaking
it is post-dated next tuesday, I didn't know could post-date a rule
it is post-dated next tuesday, I didn't know could post-date a rule
Because it isn't legally "published" until the next business day and Monday is a federal holiday.
Federal law says rulemaking isn't valid until 180 days have passed so it kicks in July 17.
All of these rules are to keep federal agencies from changing the rules out from under people, and to give Congress/Courts time to act.
Federal law says rulemaking isn't valid until 180 days have passed so it kicks in July 17.
All of these rules are to keep federal agencies from changing the rules out from under people, and to give Congress/Courts time to act.
Interesting. Thanks for the background and links. So this is how federal agencies that report to the executive branch legislate. I had always wondered what the actual process was.
They don't "legislate" they "regulate".
The status is iffy and still no easy path to a permanent residence. They recommend the usual route of O-1A or EB-2 and no adjustment of status either.
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everyone should remember this is the port of entry body. allowing them to decide in case of urgency makes sense fully.
entrepreneurs already can request a visa in their home country usa embassy.
why the people validating documents at the airport should now decide on startups sounds crazy at least.
entrepreneurs already can request a visa in their home country usa embassy.
why the people validating documents at the airport should now decide on startups sounds crazy at least.
Does anyone know if you could apply for permanent residency while on this visa?
No, you can't. This is not a visa.
You can apply for any kinds of visa you want while taking advantage of the parole according to the linked article. You would need to leave the US to change status though.
250k is way too low a threshold. I'd put it at at least a million, if not more. But hey, it'll all be repealed shortly anyway, so who cares.
Looks like you can also get an additional 30 months by raising a further $500k, or having at least $500k ARR with 20% annual growth, or employing 5 US persons full time. You need to maintain a 5% stake and continue to serve a central role in operations in order to qualify for the additional 30 months.
The investment has to be raised from investors with a track record of investing in high growth startups.
This will come into force from July 17 2017.