Should Rich Immigrants Be Able to "Buy" Permanent Visas?

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Q. I hear that thousands of wealthy foreign families, mostly Chinese, are allowed to gain permanent residency in the U.S. each year by investing $500,000 each in a new American business venture that creates at least 10 new jobs. Do you think this is ethical?

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A. I have deep misgivings about the EB-5 visa program you’re referring to, and not just because it has attracted fraudulent promoters.

U.S. immigration policy, which is flawed in many ways, should tilt toward admitting people who actually want to work in this country, at jobs with shortages at both the low and high ends of the labor market, ranging from agriculture to high tech. An immigrant’s wealth shouldn’t by itself confer priority for citizenship.

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Supporters of the EB-5 program argue that the foreign capital it attracts—an estimated $1.8 billion annually in recent years, $6.8 billion total since 1992—has created 49,000 new jobs in rural and high-unemployment urban communities, which are the intended beneficiaries of the program.

But claims of robust job creation have been disputed by impartial studies, and the dynamic American economy attracts plenty of foreign investors even without the offer of permanent residency.

What’s more, most of the EB-5 investment has been made in just one business sector: commercial real estate, such as hotels, offices and stores. And loopholes in the definition of an economically distressed place have led to EB-5 certification of ritzy realty projects in affluent areas of Los Angeles, New York City and Washington, D.C., which have no trouble attracting conventional capital. (Investors of $1 million don’t have to meet the depressed-locale requirement that applies to $500,000 investors.)

Of the 10,000-plus wealthy visa applicants approved in 2014 (including their spouses and unmarried children under 21), about 85% were from China. It appears that these immigrants are much less interested in an investment return—which is often very meager—than in the prospect that their children can legally remain in the U.S., not just for college but forever after.

Knight came to Kiplinger in 1983, after 13 years in daily newspaper journalism, the last six as Washington bureau chief of the Ottaway Newspapers division of Dow Jones. A frequent speaker before business audiences, he has appeared on NPR, CNN, Fox and CNBC, among other networks. Knight contributes to the weekly Kiplinger Letter.