9 ms·

The Passport King

131 points by brk 12y ago

rooofer 12y ago
I don't see anything wrong with using it as a way of opening borders. I think, from an idealistic standpoint, borders should be completely open to everyone and people should be able to freely move from one country to another. Economics disparities between countries make that impossible, but people who can afford these passports aren't going to an economic drain on other countries. I'm skeptical on how effective it is as a way of reducing taxes. Don't most countries tax you on residency anyways? And if you're physically in St. Kitts for 183 days a year, isn't it fair that you pay St Kitt's tax rates?
- petegrif 12y ago
  Countries vary a good deal on how much they tax you. And as the article says, St Kitts has no capital gains tax which is by far the most important tax rate for the wealthy.
  - jessaustin 12y ago
    Couldn't a combination of consumption and inheritance taxes perform the same function? These seem harder to game than capital gains tax.
    - dublinben 12y ago
      Consumption (sales tax or VAT) taxes are regressive, so that's a non starter. Inheritance taxes are trivial to circumvent with careful estate planning and vehicles such as trusts.
      - jessaustin 12y ago
        Sales taxes, VAT, etc. are used basically everywhere, so "non starter" is a strange label to use. Regressivity is a problem, but that may be ameliorated with measures like EITC or guaranteed income. It's not clear that inheritance taxes are easier to circumvent than capital gains taxes, which certainly are easy to circumvent. Capital moves at the speed of light, to whichever locale offers the best return. The more you tighten your grip, Tarkin, the more numbered accounts will slip through your fingers. Investment is not like cigarettes; we don't actually want to tax it out of existence. OTOH, old rich dudes die eventually no matter what. The death of a wealthy person would be a difficult event to conceal, even if potential heirs wanted to do so. At that point, Caesar can take his portion. Trusts etc. are fictional entities, created by the state. If there is some problem with these entities that prevents the levy of tax, the state may modify them to solve that problem.
      - aianus 12y ago
        They don't have to be regressive. At least here in Ontario, Canada the government cuts you a check to reimburse you for the sales tax you paid during the year (if your declared income is low enough).
        klipt 12y ago
        In the US, you can deduct state sales tax ... but only if you don't deduct state income tax. Which somewhere like California, will usually be a much bigger deduction.
        prostoalex 12y ago
        In California food and any items bought with food stamps are not taxed. So the government has more or less complete freedom in reducing the regressive nature of the tax by expanding the food stamp eligibility.
vonnik 12y ago
So basically, these states have built a business off of the money that would otherwise be paid to governments through taxes. They're like H&R Block on a national scale. The purchasers of the passport simply reroute money they would otherwise owe, paying nothing extra and saving a great deal. I'm skeptical of how much these individuals "contribute to the country," as Kalin says. Many of these nations, such as Bulgaria, are well known for their corruption. So in all likelihood, money from the wealthy is being diverted into the coffers of another elite.
- tomp 12y ago
  > Many of these nations, such as Bulgaria, are well known for their corruption. So in all likelihood, money from the wealthy is being diverted into the coffers of another elite. Another way to look at it is that by utilizing another stream of income, these countries, unable to tap into existing wealth, natural resources or exploitation/colonization, can reduce corruption and improve the standard of living for their citizens faster than they would otherwise.
  - gwern 12y ago
    > can reduce corruption So, you think that selling passports - a low-volume, high-profit-margin, heavily-secret revenue stream handled personally by high-level politicians favored by questionable characters and which has no relationship to transparency, good government, good business practices, efficient government in any sense, or the consent of the governed - might reduce corruption?
    - a_c_s 12y ago
      There are ways of reducing corrupting by adding more money to the system, such as paying police reasonable wages or digitizing systems/processes. But of course more money has to be coupled with a desire to reduce corruption.
    - tomp 12y ago
      Your reasoning is based on the assumption that selling passports is some kind of a grey/black business. I see no reason it should be that way, especially since there are conditions attached to it (e.g. 250K investment).
dublinben 12y ago
These programs might sound unsavory and unfair at the moment, but they just help highlight the archaic nature of nationality and citizenship. The wealthy have always been able to cross borders more easily, now the rules are just being clarified and systematized.
- speeder 12y ago
  I wish I had money to buy a citizenship... I think it is a great idea. In my case I want to get rid of mine for war reasons: I don't ant to be called to a war to fight for "my" country, because I don't think most of the population here deserve me throwing my life away for them, even if it is REALLY unlikely (our country is sort of pacifist, even WWII people were skeptical that we would actually retaliate after we were attacked).
  - zimbatm 12y ago
    Now that it's been adopted by multiple countries it's only a matter of time before some start competing on price. Hopefully it will start to become affordable soon.
    - bradleyjg 12y ago
      Leaving aside the developing and underdeveloped nations discussed in the article, the two cheapest right now look to be: the US ($500k equity in a job creating business for four years) and Portugal (€500k in real estate for five years). The big disadvantage to the US program is that it has fairly strict residency requirements and, almost alone, taxes on worldwide income. Portugal appears to have much looser residency requirements (both to maintain the visa and to ultimately apply for citizen) but I'm far less familiar with its program and could be missing some nuance. Hungary's program is €300k (in special government bonds), but I don't think they are considered a developed nation yet. (they used to be called 2nd world, but that category seems to have dropped out in the new developed/developing/underdeveloped scheme).
      - ksrm 12y ago
ForHackernews 12y ago
I'm really surprised the EU lets this fly for Malta, Bulgaria and Cyprus. They're not just selling their own citizenship, they're selling citizenship in the rest of the EU.
- retroafroman 12y ago
  I also found that surprising. There are a lot of benefits to having an EU passport-the biggest being living AND working in any of the EU countries without a visa. I'm guessing that's why they're also the most expensive.
  - njharman 12y ago
    Anyone paying that much for passport doesn't need to work.
- lumberjack 12y ago
  The fact that they are so cheap is an indication that people were already finding other ways to get in.
- mahyarm 12y ago
  Almost all of the EU countries have citizenship by investment. Almost all of the other developed countries have this too. It's just the numbers might be larger and there is a bit more of a waiting period as you go from permanent residency to citizenship. If your a very wealthy person where playing these border hopping games can save you taxes, then the citizenship stuff doesn't really matter unless your american. You could do with with a resident visa/permit and then just immigrate to the country normally. You just have to be non-resident in your high tax country of origin.
- draugadrotten 12y ago
  EU let Sweden give away citizenships in cornflakes packages to anyone who is (or claims to be) from Syria. So why would they be opposed someone doing the same for other nations.
  - 12y ago
maljx 12y ago
Doesn't the US have a similar program if you invest enough money? (~200,000 USD ?)
- kanwisher 12y ago
  He mentions that, most countries its only residency not a passport. For US you can't get a passport without many years of actual residency in the country, which is not what most people are looking to do
Tunecrew 12y ago
The critics of these programmes tend to be persons who already hold passports from developed countries, and who are therefore not subject to the tedious, arbitrary, expensive and humiliating process of applying for visas anytime they travel. More power to St. Kitts, etc.
- emodendroket 12y ago
  The wretched of the Earth are probably not buying quarter-million dollar passports.
littletimmy 12y ago
Poor countries selling citizenship? Come on. The US has a visa by investment program where you can invest either $500,000 (high risk) or $1,000,000 (low risk) and get a straight path to citizenship. The UK has a similar plan for $3,000,000. So do Canada, Luxembourg, Austria, and dozens of other very well developed nations. There have never been borders for the rich. No idea why this is being treated as news.
- mlmonkey 12y ago
  The difference is: the U.S. has a residency requirement. You have to live here for 5 years to get USC. These countries, on the other hand, have minimal or none.
  - buro9 12y ago
    > the U.S. has a residency requirement This is fairly loose though. Just don't leave the country for more than 6 months, and spend at least 6 months and a day in the country in each year. The rich aren't constrained too much.
    - sp332 12y ago
      But you can't do that in 2 countries at once.
      - deleted 12y ago
        [deleted]
      - buro9 12y ago
        I'm sure the rich have ways of being in two places at once (from a paper trail perspective). They do well with this when it comes to tax, I don't see why they wouldn't do well just because it's a question of citizenship.
        DougWebb 12y ago
        I'm sure the rich have ways of being in two places at once (from a paper trail perspective). No, they don't, because it's based on border crossings recorded in your passport, not something trivial like rent payment records.
emodendroket 12y ago
Well, if I were an immigration official I might consider not offering visa-free travel to a country that was outright selling passports to non-residents, personally.
- Vespasian 12y ago
  Depending on what scale their sales are I thinks its just a matter of time until at least some of the currently "visa-free" countries change their policies. Bureaucracies work slowly. Give them some time ;)
- klipt 12y ago
  Yeah, increasing the 'supply' of a citizenship will probably end up reducing its value. Economics!
presty 12y ago
I'd think Nevis' citizenship popularity increase is mainly due to the fact that it became a tax-haven, more than anything else check http://flagtheory.com/the-best-place-for-an-internet-entrepreneur-to-incorporate/ http://flagtheory.com/the-best-place-for-an-internet-entrepr...
- beej1981 12y ago
  Interesting article. Although, I'm pretty sure he's mistaken about Belize being the farthest South that still speaks English officially. Guyana's official language is English, and it's on the South American continent.
  - deleted 12y ago
    [deleted]
bekimdisha 12y ago
... you can always have more money than sense, you know ...
cpursley 12y ago
A second passport is pretty appealing not from a tax, but from an back-up / insurance perspective. Especially as an American married to a Russian with all the tension between those nations...
galuggus 12y ago
There is an interesting/funny documentary about this. http://www.imdb.com/title/tt2048877/ http://www.imdb.com/title/tt2048877/ The story of a guy trying to buy a diplomatic passport
NN88 12y ago
>In June, Bloomberg News reported that Paul Bilzerian, a former Wall Street raider who served two prison terms for fraud, was claiming to be licensed to process citizenship applications for St. Kitts, where he now lives. Bilzerian helped an entrepreneur named Roger Ver—a provocateur widely known as Bitcoin Jesus—to purchase citizenship on the island. The two men then launched a website called Passports for Bitcoin to help people in places such as China use virtual currency to skirt local laws limiting money transfers. Learning of this, the St. Kitts citizenship unit made a hasty announcement that it wouldn’t be accepting bitcoins as payment. Bilzerian declined to comment for this story. If you ever are on Instagram, this is Dan Bilzerians Dad
- mikeyouse 12y ago
  And "Served two prison terms for fraud" doesn't quite do justice to the massive scam he pulled off. He still owes some $60M in restitution but he fled the country and buried all his assets in related party deals with his wife's family. The guy is a complete scumbag. http://www.wsj.com/articles/for-decades-ex-corporate-raider-holds-off-sec-effort-to-collect-62-million-judgment-1410892550 http://www.wsj.com/articles/for-decades-ex-corporate-raider-...
tsuyoshi 12y ago
When I was living in Cambodia, I heard someone talking about how you could buy citizenship there. I assumed that it would be involve bribing a government official, since that's the kind of place Cambodia is. But I found out that in fact, Cambodian nationality law explicitly says you can apply for citizenship after donating 1 billion riel (about $250 thousand) to the government. But you still have to pass a Cambodian language test (which I've heard you can bribe your way around anyway - total cost I've heard is about $500 thousand). Unfortunately though, a Cambodian passport is almost worthless. You get visa-free entry to ASEAN (Southeast Asia) countries and that's about it. My daughter has Cambodian citizenship, but I never bothered to apply for a Cambodian passport for her, since her US passport is totally sufficient. That deal on Cypriot citizenship seems like a pretty good deal though. An EU passport would be more valuble than just about anything else. I imagine it won't last though; I would bet the other EU members would try to stop it. http://www.refworld.org/docid/3ae6b5210.html http://www.refworld.org/docid/3ae6b5210.html http://www.phnompenhpost.com/national/pros-and-cons-selling-khmer-citizenship http://www.phnompenhpost.com/national/pros-and-cons-selling-...

131 points by brk 12y ago

I don't see anything wrong with using it as a way of opening borders. I think, from an idealistic standpoint, borders should be completely open to everyone and people should be able to freely move from one country to another. Economics disparities between countries make that impossible, but people who can afford these passports aren't going to an economic drain on other countries. I'm skeptical on how effective it is as a way of reducing taxes. Don't most countries tax you on residency anyways? And if you're physically in St. Kitts for 183 days a year, isn't it fair that you pay St Kitt's tax rates?

petegrif 12y ago
Countries vary a good deal on how much they tax you. And as the article says, St Kitts has no capital gains tax which is by far the most important tax rate for the wealthy.
- jessaustin 12y ago
  Couldn't a combination of consumption and inheritance taxes perform the same function? These seem harder to game than capital gains tax.
  - dublinben 12y ago
    Consumption (sales tax or VAT) taxes are regressive, so that's a non starter. Inheritance taxes are trivial to circumvent with careful estate planning and vehicles such as trusts.
    - jessaustin 12y ago
      Sales taxes, VAT, etc. are used basically everywhere, so "non starter" is a strange label to use. Regressivity is a problem, but that may be ameliorated with measures like EITC or guaranteed income. It's not clear that inheritance taxes are easier to circumvent than capital gains taxes, which certainly are easy to circumvent. Capital moves at the speed of light, to whichever locale offers the best return. The more you tighten your grip, Tarkin, the more numbered accounts will slip through your fingers. Investment is not like cigarettes; we don't actually want to tax it out of existence. OTOH, old rich dudes die eventually no matter what. The death of a wealthy person would be a difficult event to conceal, even if potential heirs wanted to do so. At that point, Caesar can take his portion. Trusts etc. are fictional entities, created by the state. If there is some problem with these entities that prevents the levy of tax, the state may modify them to solve that problem.
    - aianus 12y ago
      They don't have to be regressive. At least here in Ontario, Canada the government cuts you a check to reimburse you for the sales tax you paid during the year (if your declared income is low enough).
      - klipt 12y ago
        In the US, you can deduct state sales tax ... but only if you don't deduct state income tax. Which somewhere like California, will usually be a much bigger deduction.
      - prostoalex 12y ago
        In California food and any items bought with food stamps are not taxed. So the government has more or less complete freedom in reducing the regressive nature of the tax by expanding the food stamp eligibility.

vonnik 12y ago

So basically, these states have built a business off of the money that would otherwise be paid to governments through taxes. They're like H&R Block on a national scale. The purchasers of the passport simply reroute money they would otherwise owe, paying nothing extra and saving a great deal. I'm skeptical of how much these individuals "contribute to the country," as Kalin says. Many of these nations, such as Bulgaria, are well known for their corruption. So in all likelihood, money from the wealthy is being diverted into the coffers of another elite.

tomp 12y ago
> Many of these nations, such as Bulgaria, are well known for their corruption. So in all likelihood, money from the wealthy is being diverted into the coffers of another elite. Another way to look at it is that by utilizing another stream of income, these countries, unable to tap into existing wealth, natural resources or exploitation/colonization, can reduce corruption and improve the standard of living for their citizens faster than they would otherwise.
- gwern 12y ago
  > can reduce corruption So, you think that selling passports - a low-volume, high-profit-margin, heavily-secret revenue stream handled personally by high-level politicians favored by questionable characters and which has no relationship to transparency, good government, good business practices, efficient government in any sense, or the consent of the governed - might reduce corruption?
  - a_c_s 12y ago
    There are ways of reducing corrupting by adding more money to the system, such as paying police reasonable wages or digitizing systems/processes. But of course more money has to be coupled with a desire to reduce corruption.
  - tomp 12y ago
    Your reasoning is based on the assumption that selling passports is some kind of a grey/black business. I see no reason it should be that way, especially since there are conditions attached to it (e.g. 250K investment).

dublinben 12y ago

These programs might sound unsavory and unfair at the moment, but they just help highlight the archaic nature of nationality and citizenship. The wealthy have always been able to cross borders more easily, now the rules are just being clarified and systematized.

speeder 12y ago
I wish I had money to buy a citizenship... I think it is a great idea. In my case I want to get rid of mine for war reasons: I don't ant to be called to a war to fight for "my" country, because I don't think most of the population here deserve me throwing my life away for them, even if it is REALLY unlikely (our country is sort of pacifist, even WWII people were skeptical that we would actually retaliate after we were attacked).
- zimbatm 12y ago
  Now that it's been adopted by multiple countries it's only a matter of time before some start competing on price. Hopefully it will start to become affordable soon.
  - bradleyjg 12y ago
    Leaving aside the developing and underdeveloped nations discussed in the article, the two cheapest right now look to be: the US ($500k equity in a job creating business for four years) and Portugal (€500k in real estate for five years). The big disadvantage to the US program is that it has fairly strict residency requirements and, almost alone, taxes on worldwide income. Portugal appears to have much looser residency requirements (both to maintain the visa and to ultimately apply for citizen) but I'm far less familiar with its program and could be missing some nuance. Hungary's program is €300k (in special government bonds), but I don't think they are considered a developed nation yet. (they used to be called 2nd world, but that category seems to have dropped out in the new developed/developing/underdeveloped scheme).
    - ksrm 12y ago

ForHackernews 12y ago

I'm really surprised the EU lets this fly for Malta, Bulgaria and Cyprus. They're not just selling their own citizenship, they're selling citizenship in the rest of the EU.

retroafroman 12y ago
I also found that surprising. There are a lot of benefits to having an EU passport-the biggest being living AND working in any of the EU countries without a visa. I'm guessing that's why they're also the most expensive.
- njharman 12y ago
  Anyone paying that much for passport doesn't need to work.
lumberjack 12y ago
The fact that they are so cheap is an indication that people were already finding other ways to get in.
mahyarm 12y ago
Almost all of the EU countries have citizenship by investment. Almost all of the other developed countries have this too. It's just the numbers might be larger and there is a bit more of a waiting period as you go from permanent residency to citizenship. If your a very wealthy person where playing these border hopping games can save you taxes, then the citizenship stuff doesn't really matter unless your american. You could do with with a resident visa/permit and then just immigrate to the country normally. You just have to be non-resident in your high tax country of origin.
draugadrotten 12y ago
EU let Sweden give away citizenships in cornflakes packages to anyone who is (or claims to be) from Syria. So why would they be opposed someone doing the same for other nations.
- 12y ago

maljx 12y ago

Doesn't the US have a similar program if you invest enough money? (~200,000 USD ?)

kanwisher 12y ago
He mentions that, most countries its only residency not a passport. For US you can't get a passport without many years of actual residency in the country, which is not what most people are looking to do

Tunecrew 12y ago

The critics of these programmes tend to be persons who already hold passports from developed countries, and who are therefore not subject to the tedious, arbitrary, expensive and humiliating process of applying for visas anytime they travel. More power to St. Kitts, etc.

emodendroket 12y ago
The wretched of the Earth are probably not buying quarter-million dollar passports.

littletimmy 12y ago

Poor countries selling citizenship? Come on. The US has a visa by investment program where you can invest either $500,000 (high risk) or $1,000,000 (low risk) and get a straight path to citizenship. The UK has a similar plan for $3,000,000. So do Canada, Luxembourg, Austria, and dozens of other very well developed nations. There have never been borders for the rich. No idea why this is being treated as news.

mlmonkey 12y ago
The difference is: the U.S. has a residency requirement. You have to live here for 5 years to get USC. These countries, on the other hand, have minimal or none.
- buro9 12y ago
  > the U.S. has a residency requirement This is fairly loose though. Just don't leave the country for more than 6 months, and spend at least 6 months and a day in the country in each year. The rich aren't constrained too much.
  - sp332 12y ago
    But you can't do that in 2 countries at once.
    - deleted 12y ago
      [deleted]
    - buro9 12y ago
      I'm sure the rich have ways of being in two places at once (from a paper trail perspective). They do well with this when it comes to tax, I don't see why they wouldn't do well just because it's a question of citizenship.
      - DougWebb 12y ago
        I'm sure the rich have ways of being in two places at once (from a paper trail perspective). No, they don't, because it's based on border crossings recorded in your passport, not something trivial like rent payment records.

emodendroket 12y ago

Well, if I were an immigration official I might consider not offering visa-free travel to a country that was outright selling passports to non-residents, personally.

Vespasian 12y ago
Depending on what scale their sales are I thinks its just a matter of time until at least some of the currently "visa-free" countries change their policies. Bureaucracies work slowly. Give them some time ;)
klipt 12y ago
Yeah, increasing the 'supply' of a citizenship will probably end up reducing its value. Economics!

presty 12y ago

I'd think Nevis' citizenship popularity increase is mainly due to the fact that it became a tax-haven, more than anything else check http://flagtheory.com/the-best-place-for-an-internet-entrepreneur-to-incorporate/ http://flagtheory.com/the-best-place-for-an-internet-entrepr...

beej1981 12y ago
Interesting article. Although, I'm pretty sure he's mistaken about Belize being the farthest South that still speaks English officially. Guyana's official language is English, and it's on the South American continent.
- deleted 12y ago
  [deleted]

bekimdisha 12y ago

... you can always have more money than sense, you know ...

cpursley 12y ago

A second passport is pretty appealing not from a tax, but from an back-up / insurance perspective. Especially as an American married to a Russian with all the tension between those nations...

galuggus 12y ago

There is an interesting/funny documentary about this. http://www.imdb.com/title/tt2048877/ http://www.imdb.com/title/tt2048877/ The story of a guy trying to buy a diplomatic passport

NN88 12y ago

>In June, Bloomberg News reported that Paul Bilzerian, a former Wall Street raider who served two prison terms for fraud, was claiming to be licensed to process citizenship applications for St. Kitts, where he now lives. Bilzerian helped an entrepreneur named Roger Ver—a provocateur widely known as Bitcoin Jesus—to purchase citizenship on the island. The two men then launched a website called Passports for Bitcoin to help people in places such as China use virtual currency to skirt local laws limiting money transfers. Learning of this, the St. Kitts citizenship unit made a hasty announcement that it wouldn’t be accepting bitcoins as payment. Bilzerian declined to comment for this story. If you ever are on Instagram, this is Dan Bilzerians Dad

mikeyouse 12y ago
And "Served two prison terms for fraud" doesn't quite do justice to the massive scam he pulled off. He still owes some $60M in restitution but he fled the country and buried all his assets in related party deals with his wife's family. The guy is a complete scumbag. http://www.wsj.com/articles/for-decades-ex-corporate-raider-holds-off-sec-effort-to-collect-62-million-judgment-1410892550 http://www.wsj.com/articles/for-decades-ex-corporate-raider-...

tsuyoshi 12y ago

When I was living in Cambodia, I heard someone talking about how you could buy citizenship there. I assumed that it would be involve bribing a government official, since that's the kind of place Cambodia is. But I found out that in fact, Cambodian nationality law explicitly says you can apply for citizenship after donating 1 billion riel (about $250 thousand) to the government. But you still have to pass a Cambodian language test (which I've heard you can bribe your way around anyway - total cost I've heard is about $500 thousand). Unfortunately though, a Cambodian passport is almost worthless. You get visa-free entry to ASEAN (Southeast Asia) countries and that's about it. My daughter has Cambodian citizenship, but I never bothered to apply for a Cambodian passport for her, since her US passport is totally sufficient. That deal on Cypriot citizenship seems like a pretty good deal though. An EU passport would be more valuble than just about anything else. I imagine it won't last though; I would bet the other EU members would try to stop it. http://www.refworld.org/docid/3ae6b5210.html http://www.refworld.org/docid/3ae6b5210.html http://www.phnompenhpost.com/national/pros-and-cons-selling-khmer-citizenship http://www.phnompenhpost.com/national/pros-and-cons-selling-...