How Does EB-5 Help U.S. Markets Remain Competitive Worldwide?
Immigration has always been one of cornerstones of American success. The best and the brightest leave their native lands to pursue success in the United States, and many of them succeed. In fact, immigrants or their children established 44 percent of all Fortune 500 companies in the U.S., a list that includes household names such as Apple, Bank of America, AT&T® and Costco.
The EB-5 visa program continues this tradition, allowing high net worth individuals, many of them successful entrepreneurs in their home countries, to bring their capital and expertise to the U.S. This, in turn, helps U.S. markets retain their worldwide competitiveness.
There is one simple fact when it comes to EB-5 investing and the American economy. If the EB-5 investor’s project does not create at least 10 new full time American jobs, that person will not receive a permanent green card for themselves, their spouse and unmarried children under age 21. Because they are business developers and job creators, EB-5 investors are a great asset to the U.S.
EB-5 Economic Impact
In 2018, Western Washington University Center for Economic Business Research published a report on EB-5 program’s economic impacts and contributions to the U.S. The report covers fiscal years 2014 and 2015, the most recent years for which data is available. The study finds that approximately $11.23 billion in EB-5 investments were invested in 355 Regional Center projects. That money made up 2 percent of all foreign investment in the U.S. during that period. Of the EB-5 investment funds, 69 percent was invested in construction-related industries. Roughly 184,700 jobs for U.S. workers were attributable to EB-5 projects, with overall spending accounting for a total of 207,000 jobs. That is about 4 percent of all private sector job growth in the country during 2014-15, and 9 percent of all construction job growth. Besides construction, the top industries impacted economically by EB-5 include:
- Professional services
- Real Estate
EB-5 investment federal tax revenue accounted for an estimated $2.7 billion during that timeframe, which the study finds is the equivalent of more than 630 percent of all funding the federal government appropriated for local economic development programs through the U.S. Department of Commerce’s Economic Development Administration (EDA).
As of 2018, more than 800 EB-5 Regional Centers were approved by the United States Citizenship and Immigration Services (USCIS), with such Regional Centers in every state. The states with the largest number of EB-5 Regional Centers are California, New York, Florida, Texas and Washington State. These states, with the exception of Washington, are among the most populous in the country and receive the most benefits from EB-5 investments.
Indirect EB-5 Benefits
The direct benefits of EB-5 investment are relatively easy to measure. The indirect EB-5 benefits are more difficult to quantify but still substantial. Millions of Americans are indirect beneficiaries of the EB-5 investment program while having little idea of the source of the capital making their lives richer and more rewarding. Additional job creation occurs from service industries catering to EB-5 Regional Center workers, such as realtors, restaurants, retail stores, barber shop and beauty salons. The list is endless. Local business support services, such as insurance agencies, employment agencies, management companies and other enterprises also benefit indirectly from EB-5 investments.
Let’s not forget the economic benefits of the EB-5 investors themselves, which are considerable. First, most of these immigrants purchase homes in the U.S., which they must furnish. They buy motor vehicles, apparel, electronics, spend money on vacations and entertainment, make investments, pay tuition and otherwise help boost the economy. Of course, they must pay legal fees to their immigration attorneys to guide them through the EB-5 visa process. Another indirect benefit is that these EB-investors are less likely to prove a burden to the government by ending up on welfare or Medicaid or requiring similar services.
Keeping the U.S. Competitive
The U.S. is not the only developed country trying to lure well-to-do investors. Australia, Spain and the United Kingdom are just a few nations with programs similar to EB-5. While the U.S. has long been the premier destination for wealthy foreign investors, the fact is that the applicant backlog and resulting years of waiting can make other countries more attractive. In some countries, it takes just months, rather than years, to obtain naturalization.
Moreover, these investors often have businesses in their home countries and will engage in commerce between their native and adopted lands. That’s just one example of how the EB-5 visa program helps U.S. markets remain competitive globally. The U.S. benefits when foreign capital invests in our markets rather than those of another country. Only 10,000 people annually may apply for the EB-5 visa program. Although immigration is a controversial topic nationally, it should be remembered that these applicants bring funding and skill sets that the U.S. needs for future prosperity and job growth.