For most global citizens, 2020 has not been an easy year. Far from it, when you consider the coronavirus pandemic, volatile economies and stock markets and in many countries like the US, political and social unrest. All this, and the 2020 presidential election and its many potential consequences and even violence, loom less than a month away.
These big picture global challenges are creating short-term headaches for things we used to take for granted would go smoothly. If you’re a CEO, c-suite executive or individual who “lives on an airplane,” chances are your travel has crawled to a halt, and business has been significantly impacted.
For many of these American business leaders, especially the high net worth individuals (HNWI) who have accrued significant value and cash savings over the years, 2021 is not going to be just like its predecessor. Even more specifically, some HNWI are already hedging their bets for 2020 by betting on other countries and pursuing citizenship by investment programs (CIPs) to do so.
First, a briefing on CIPs. These decades-old governmental programs were designed to do two things – drive investment and infrastructure in countries that really need it, and provide individuals seeking citizenship and passports from a country different than their own with the vehicles to do so. Now, it’s common for individuals and families from regions all over the world like Russia, China, the Middle East, and Africa to pursue citizenship in Caribbean countries like St. Kitts and Nevis, Dominica and Antigua, or European countries like Malta and Montenegro. Most CIPs are in exchange for real estate investment or a one-time contribution to government infrastructure, often building roads, highways, etc. However, Americans are starting to emerge on the global CIP scene, but why?
For some – like many of the CEOs and business executives who travel hundreds of thousands of miles a year – citizenship in the Caribbean or Europe appeals now more than ever. A US passport can currently get you access to just over 20 countries, a shocking number when you consider the wide range of access Americans regularly enjoy. Plain and simple, Americans can’t even go to Canada right now. The coronavirus, and the country’s failure to implement national safety programs and kickstart its recovery, is keeping business leaders stuck in their home offices. As many are coming to find, this of course, negatively impacts business.
Why else? Some HNWI are concerned by the politically charged environment. Take the position of many of the American conservatives pursuing CIPs. The bulk of them are concerned that a Biden victory would immediately result in increased taxes on the 1%, which Biden is on the record saying he’ll impose. With the potential for a hike nearing 40%, many wealth conservatives (especially business owners) are considering new citizenship in some places in the Caribbean island, where taxes are considered extremely minimal. Conservatives also cite continued concerns stemming from social unrest and the potential for violence to reach their families.
However, it’s not just conservatives. Liberals are very concerned and fearful about four more years under President Trump. They believe the historic national debt will continue to worsen under his administration’s spending, and that a significant recession is looming. They are challenged by today’s social climate, only they perceive danger in the form of global conflict with other countries, as well as domestic terrorism.
Overall, attaining citizenship elsewhere represents a solution for HNWI on both sides of the aisle for several reasons. One, in many of the countries referenced above, the cost of living can be lower, and taxes are much less – should that individual renounce their US citizenship. Two, a passport in the Caribbean or Europe would quickly grant you access to well over 100 countries, once again enabling global travel for the CEOs who need it. Three, citizenship by investment in another country is a hedge against uncertainty, an emotion felt now more than ever.