Why Trump’s plan to cut national debt by selling ‘gold card’ visas for US$5 million each won’t work
- Written by Amalendu Misra, Professor of International Politics, Lancaster University
The US president, Donald Trump, is set to introduce a “gold card” visa that would allow wealthy foreigners to buy permanent US residency – and a path to citizenship – for US$5 million (£3.9 million).
Speaking at the Oval Office on February 25, Trump said[1]: “I think it’s going to be very treasured. I think it’s going to do very well. And we’re going to start selling, hopefully, in about two weeks.”
US commerce secretary Howard Lutnick has touted the plan[2] as a way to raise revenue to bring down US national debt, which currently stands at over US$36 trillion[3]. As Trump put it[4] when answering questions from reporters at the White House: “We’ll be able to sell maybe a million of these cards, maybe more than that. And if you add up the numbers, they’re pretty good. As an example, a million cards would be worth US$5 trillion.”
Trump has also suggested[5] that the gold-card holders can help stimulate the US economy. “They’ll be wealthy, and they’ll be successful, and they’ll be spending a lot of money and paying a lot of taxes,” he said[6]. When asked whether Russian oligarchs would qualify for the visa, Trump responded[7]: “Hey, I know some Russian oligarchs that are very nice people. It’s possible.”
The idea that wealthy foreigners can address a nation’s faltering economy is not new. Trump’s gold visas will themselves replace the current EB-5 immigrant investor visa[8], which offers permanent US residency in return for job-creating investments of at least US$1 million.
In the aftermath of the 2008 global financial crisis, various European nations also floated similar golden visa schemes as a means of reversing their economic downturns. The visas offered by Spain, Greece, Hungary and Portugal, for example, all cost significantly less[9] than Trump’s proposed scheme.
A Spanish gold visa, which will no longer be available from April 2025, is granted in return for €500,000 (£417,000) in real estate investment. The required investment in Greece and Hungary is €250,000. And people looking to obtain a gold visa in Portugal have two options: a €250,000 donation to the restoration of national heritage, or a €500,000 property investment.
There is little data to support the argument that such policies boost the national coffers. Some experts[11] have suggested that golden visa schemes typically bring in no more than 0.3% of GDP in revenue. So, it’s no surprise that there is plenty of scepticism around whether Trump’s gold card scheme can reduce US national debt.
Critics of the plan argue[12] that the scheme will not add trillions of US dollars to the economy, as Trump has claimed. This is because demand for any such programme is likely to be limited to thousands of people.
In a recent poll[13] conducted by Forbes, 18 billionaires were asked if they would like to take advantage of an American gold card visa. Most of them (13) said they would not be interested. Many of the ultra-rich foreigners interviewed simply did not think they needed American citizenship and don’t want it.
“If you’re a billionaire, you don’t need it,” said one Canadian billionaire. “I don’t have to come to the United States to invest in the United States.”
The global rich are unlikely to be queuing up for Trump’s gold cards. At about US$5 million per application, it is “the most expensive”[14] golden visa option in the world. Any potential buyer will carry out cost-benefit analysis prior to committing to such a deal.
Two reasons a wealthy person might invest in a second or third passport are to ensure greater mobility and protect their wealth.
US tax laws have traditionally reduced the attractiveness[15] of American residency or citizenship for the global rich. American citizens and residents are required to pay income tax on their US earnings as well as any income they earn overseas.
Trump has said that gold-card holders would not be subject[16] to taxes on their overseas income. This tax loophole could open the door to more wealthy foreigners looking to protect their wealth. However, many details about the scheme remain unclear.
Notwithstanding this, golden visas in many other nations provide better opportunities than those offered by a Trump gold card. In terms of mobility, the US passport ranks eighth on an index of 198 different passports[17]. American passport holders can travel to 171 countries without needing a visa.
Spain ranks second, with a Spanish passport allowing access to 177 countries without a visa. And Portugal, Greece and a host of other European nations follow closely behind, with their passports allowing visa-free travel to 176 countries.
The most powerful passport in the world is offered by the United Arab Emirates (UAE), allowing access to 179 countries visa-free. The UAE government introduced a golden visa[18] in 2019, offering long-term residence in exchange for roughly US$550,000 of investment.
An American passport also has its own inherent limitations and hazards. A US-born colleague of mine who acquired Irish citizenship through lineage has never used his American passport while out of the country.
He believed that in a crisis situation, such as being taken hostage, a US citizen was far more vulnerable and exposed to danger than a non-American counterpart. In his opinion, people were far more prejudiced and hostile towards a US citizen than those belonging to other nations.
The return on investment of a Trump gold card remains unpredictable[20]. The asking price is extremely high and the benefits it promises buyers are – at best – marginal. The offer comes with enough holes to sink a ship.
References
- ^ Trump said (www.whitehouse.gov)
- ^ touted the plan (www.independent.co.uk)
- ^ over US$36 trillion (www.usdebtclock.org)
- ^ Trump put it (www.forbes.com)
- ^ has also suggested (www.bbc.co.uk)
- ^ he said (www.theguardian.com)
- ^ Trump responded (www.cbsnews.com)
- ^ EB-5 immigrant investor visa (www.theguardian.com)
- ^ cost significantly less (www.globalcitizensolutions.com)
- ^ Samuel Corum / POOL / EPA (epaimages.com)
- ^ Some experts (blogs.lse.ac.uk)
- ^ argue (www.axios.com)
- ^ recent poll (www.forbes.com)
- ^ “the most expensive” (www.aljazeera.com)
- ^ reduced the attractiveness (www.irs.gov)
- ^ not be subject (www.cnbc.com)
- ^ index of 198 different passports (www.passportindex.org)
- ^ introduced a golden visa (u.ae)
- ^ KieferPix / Shutterstock (www.shutterstock.com)
- ^ remains unpredictable (www.firstpost.com)
