Latest / IMI Podcasts / Will The Trump Card Solve the US Debt Problem? Analyzing 4 Potential Markets

Transcript

Will The Trump Card Solve the US Debt Problem? Analyzing 4 Potential Markets · IMI Podcasts

• 0:00
  SPEAKER_00: There has been much speculation from some in the media and even the U.S.
• 0:03
  SPEAKER_00: president that his announced Trump card would be an economic boon to the U.S.
• 0:08
  SPEAKER_00: economy and the debt problem.
• 0:10
  SPEAKER_00: In a recent cabinet meeting, some claimed that the government's issuance of the Trump card was imminent.
• 0:16
  SPEAKER_00: Therefore, I thought it might be appropriate to test these assertions by looking at its four possible target markets.
• 0:22
  SPEAKER_00: Target Market 1, wealthy business people who want access to the U.S.
• 0:26
  SPEAKER_00: This group can already get access to the U.S.
• 0:29
  SPEAKER_00: through non-immigrant visas, such as L1, E1, E2, O1, and so on.
• 0:35
  SPEAKER_00: If they either spend less than the time allotted under the substantial presence test or have either a closer connection or treaty election to overcome the substantial presence test, they will not become U.S.
• 0:46
  SPEAKER_00: taxpayers subject to U.S.
• 0:48
  SPEAKER_00: global taxation.
• 0:50
  SPEAKER_00: The promoted feature of the Trump card is that the holders will magically only be subject to U.S.
• 0:56
  SPEAKER_00: territorial taxation.
• 0:57
  SPEAKER_00: Actually, making this happen would require a change to the definition of a U.S.
• 1:03
  SPEAKER_00: person for tax purposes in the Internal Revenue Code.
• 1:06
  SPEAKER_00: There would need to be a new category that outlines how Trump cardholders' tax obligations are completely different from the worldwide tax obligations of citizens, green cardholders, and those who trigger the substantial presence test.
• 1:20
  SPEAKER_00: Not only is it impossible to make such a significant legislative change by executive order, but there will almost certainly never be a sufficient number of votes in both houses to make such a change.
• 1:32
  SPEAKER_00: In fact, the necessary proposed changes are not even included in Trump's big, beautiful tax bill that Congress is discussing.
• 1:40
  SPEAKER_00: Even if this change were to slip into the reconciliation bill at the last minute and somehow pass by a skeptical Republican majority Congress, any applicant would know that this tax advantage would only be valid for a 10-year period because of the Bird Rule.
• 1:53
  SPEAKER_00: If not included in the budget reconciliation, it would be subject to Democratic filibusters and stands no chance of passing.
• 2:01
  SPEAKER_00: Without this permanent tax benefit, the Trump card has no advantage in justifying a price tag that is six times greater than an EB5 visa, especially for those willing to expose their global wealth to U.S.
• 2:13
  SPEAKER_00: taxation.
• 2:14
  SPEAKER_00: Commerce Secretary Howard W.
• 2:15
  SPEAKER_00: Lutnick stated that there are 37 million people in the world who could afford this.
• 2:21
  SPEAKER_00: He even claimed that the administration has already sold 1,000 Trump cards.
• 2:26
  SPEAKER_00: This is a remarkable claim because not only does the Trump card not exist in law, but there isn't even a website where one could register interest.
• 2:35
  SPEAKER_00: No one will spend their entire fortune on a donation to the U.S.
• 2:39
  SPEAKER_00: government for the honor of becoming a U.S.
• 2:41
  SPEAKER_00: taxpayer.
• 2:42
  SPEAKER_00: So in reality, it is generally acknowledged that people would only spend one-sixth of their wealth, for example, over$30 million net worth.
• 2:51
  SPEAKER_00: According to Wealth X, there are only$395,070 such individuals in the world.
• 2:58
  SPEAKER_00: Furthermore, 225,000 of them are already Americans.
• 3:02
  SPEAKER_00: That leaves a possible total market of 170,000 individuals, not 37 million.
• 3:08
  SPEAKER_00: Target Market 2, those who want to garner favor with Trump, they will do something that directly benefits Trump.
• 3:14
  SPEAKER_00: For example, buy a Trump coin, book at a Trump hotel or resort, donate to his library, super PAC, or inauguration fund, et cetera.
• 3:22
  SPEAKER_00: Rather than throw away$5 million for the right to be taxed globally for the rest of their lives and a state after their passing.
• 3:30
  SPEAKER_00: Target Market 3, employers who want to hire the top graduate from Wharton or MIT.
• 3:36
  SPEAKER_00: Companies can hire such employees through a number of cheaper and faster ways, including one, H1B, then employer sponsor green card or the GC in a few years.
• 3:48
  SPEAKER_00: Two, funding I2, which would consult the employer and then the employer can sponsor them for a GC in a few years.
• 3:56
  SPEAKER_00: Or, lastly, get the employee a Canadian work permit and then permanent residence in their Canadian subsidiary.
• 4:04
  SPEAKER_00: Immediately get a B1 or B2 visa to visit for regular headquarters meetings.
• 4:09
  SPEAKER_00: After a year, they could then apply for L1.
• 4:12
  SPEAKER_00: After Canadian citizenship is granted with a three-year naturalization period, the employer can bring them in without limit on a TN visa.
• 4:20
  SPEAKER_00: The company could then also do an employer-sponsored GC like Target Market 4.
• 4:26
  SPEAKER_00: Wealthy Americans who want to turn their U.S.
• 4:28
  SPEAKER_00: global tax liability into a territorial liability.
• 4:32
  SPEAKER_00: This group would renounce their U.S.
• 4:33
  SPEAKER_00: citizenship and pay an exit tax, capital gains tax on unrealized gains over$890,000.
• 4:41
  SPEAKER_00: Once they have expatriated, they then take their net wealth and put it outside the U.S.
• 4:46
  SPEAKER_00: Then they get a Trump card and return to the U.S.
• 4:48
  SPEAKER_00: with no need to overcome their current U.S.
• 4:51
  SPEAKER_00: life inertia.
• 4:52
  SPEAKER_00: They also enjoy the future growth of non-U.S.
• 4:55
  SPEAKER_00: income capital gains, free of U.S.
• 4:57
  SPEAKER_00: income capital gains chalk, gift, and estate tax.
• 5:00
  SPEAKER_00: So in conclusion, the second and third target markets will find better, cheaper ways of reaching their goals.
• 5:08
  SPEAKER_00: For the first target market, let's assume that the Trump card would replace the current EB5 visa, which has a current price point of$800,000.
• 5:17
  SPEAKER_00: In 2024, a record year, the U.S.
• 5:21
  SPEAKER_00: issued a total of 12,055 EB5 visas.
• 5:25
  SPEAKER_00: As the price point would jump six times, and the idea of moving from an investment with potential ROI, no matter how minimal, to a donation, expect this number to drop significantly.
• 5:36
  SPEAKER_00: If it ever somehow becomes law with a territorial tax benefit, the Trump card will only be attractive to current Americans who wish to limit their future U.S.
• 5:44
  SPEAKER_00: tax liability for a one-time capital gains realization and a$5 million US dollar tithe.
• 5:50
  SPEAKER_00: For the U.S., this would be an own goal as it would lose a huge amount of future tax revenue to which it is currently entitled.
• 5:57
  SPEAKER_00: So the very predictable answer to the question posed in the title is no.
• 6:03
  SPEAKER_00: This episode first appeared as an article by David Lesperance on IMIDaily.com.
• 6:09
  SPEAKER_00: Subscribe for free to the IMI newsletter for breaking news and updates from the investment migration industry, and upgrade your membership to IMI Pro to get access to our exclusive professional community, citizenship catalog, investment migration company Rolodex, private briefings, and more members only content.