The problem with being wealthy is that other people want to separate you from your wealth, especially the government of the country in which you live.
That’s why wealthy Chinese are leaving their country in droves, if reports out of China can be believed. And that is why there are reports of Americans turning in their passports and relinquishing their citizenship, in smaller numbers than the Chinese but in significant numbers from an American point of view.
According to CNBC, more than half of the multimillionaires from China have escaped the country or plan to emigrate in an attempt to avoid the country’s crackdown on tax cheats as it attempts to stabilize the government’s budget and raise capital for growth. In February, Australia reported it had received 545 applications for its “significant investor’’ initiative, which is an invitation to wealthy outsiders to move to Australia and apply for visas on the promise of investing in Australian commerce.
CNBC was quoting a report from a wealth research firm in China named Hurun, which says that one-third of Chinese’s wealthiest individuals with a net worth of approximately $16 million have already left the country with plans to settle elsewhere.
Meanwhile, a record number of Americans, almost 3,000, gave up their citizenship or terminated their long-term residency, according to information provided by the U.S. Treasury Department. In most cases, the Americans are leaving because of the country’s renewed efforts to get tax dollars out of offshore accounts, or to escape new laws that apply to American citizens living in other countries.
There is evidence from a Spectrem’s Millionaire Corner report that most wealthy Americans think their taxes are too high.
Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, 84 percent believe they should pay less than 30 percent in income taxes, and 54 percent believe they should pay no more than 20 percent in taxes. In most cases, the investors surveyed pay at least 30 percent in income taxes.
Seventy-two percent of UHNW investors said increased taxes is one of their most significant personal concerns. Ten percent said tax increases was their No. 1 national concern.
Australia is a favored haven of the Chinese. As of February 1, 2014, 65 of the special Australian visas had already been granted to mainland Chinese, and those Chinese have invested the equivalent of $289 million into the country’s economy as payment for the nationalized forms.
Australia’s announced goal is to attract 700 wealthy Chinese willing to pay for the right to live Down Under.
Other countries getting into the pay-for-visa concept include the United States, the United Kingdom, Spain, the Cayman Islands and Gambia.
Critics of the programs say the new residents do not create jobs with their investments and receive the benefits that poorer immigrant applications cannot receive.
In the United States, the program is known as EB-5, created by the United States Citizenship and Immigration Service to handle requests. According to CNBC, more than 80 percent of the special visa applications have come from Chinese citizens. The program calls for a minimum investment of $500,000 in an approved American business to complete the application. The investment has to provide for at least 10 new jobs.
One newly announced EB-5 program that is looking for investors would build luxury resorts in the Virgin Islands.
Many of the European models for special immigration status call for an investment in real estate, which has set off a buying binge on European real estate.
According to published reports out of Australia, the Chinese are coming to the country for a better life for themselves, including better education, better housing and cleaner air. But tax considerations are also paying a role, as the Chinese have instituted numerous programs in an attempt to get wealthy Chinese to pay their taxes.
There is also an abundant corruption scandal going on in China, as some of the wealthiest Chinese made their money by taking advantage of relationships with corrupt business owners. As Chinese government officials chase corrupt businessmen, the wealthy Chinese leave the country to protect their fortunes for fear they might get caught up in the operation.
The influx of Chinese nationals is having a positive effect upon real estate prices in San Francisco, New York and Seattle, all communities with thriving Asian populations.
Americans leaving the U.S., meanwhile, are following the Chinese to Australia and the Cayman Islands, but Germany is a popular destination among European countries. Singapore is a favored landing spot among Asian locations, according to HSBC’s Expat Explorer.