Citizens For Sale

By Global Tax Weekly

One thing the USA is probably not going to do, unlike many other countries world-wide, and even next-door companion-in-arms, Canada, is to sell citizenship. It is a popular sport nowadays, although many people find something unseemly in the spectacle of white-gloved butlers ushering the rich into a national club by the front door while the great unwashed try to scale the walls at the back of the house, to be beaten back very often, sometime physically, or even shot. These people will not like the fact that the UK is dining out on tax receipts from so-called “non-doms,” while deporting refugees and denying social benefits to legitimate immigrants from recent EU entrant countries. In fact there are dozens of countries with active programs to encourage incoming rich individuals: a recent report claims that the average incoming “citizenship” investor has net worth of a stunning USD200m. As ever, I am in favor of competition, and this seems an entirely healthy process, in which individual choice is improved, richer people get to subsidize poorer people, and investment is encouraged, although there may be some less beneficent impacts on the housing market. I would massively expand such top-end experiments to allow a worldwide market in citizenship: thus, citizenship in country A (warm, low taxes, good educational system, no conscription) would be worth X, while citizenship in country B (cold, high taxes, antiquated schools, compulsory military service) would be worth Y (a small fraction of X). The relative prices would be set entirely by a market-discovery process. Competition between countries to attract individuals would immediately become intense. There are some language issues, of course, but they are rapidly losing traction. Before you start back in horror at such a prospect, please consider that this is exactly what is already going on in the shadows: people make their choices based on the relative value of residence in prospective domiciles, but the process is extremely inefficient because they lack information, and, in particular, there is no feedback loop to influence the behavior of governments. An open market would be far more transparent. And please don’t tell me that the result would be a polarized world society with “rich” and “poor” segments – especially don’t tell me that while you’re in Hamilton, Bermuda, or the back-streets of Delhi.

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