In a 1/10/11 article headlined Expats in US pay high price, China Daily reported some pitfalls, given that not only must residents pay taxes on worldwide income, there are new reporting requirements:
Under the new [IRS] requirement, US citizens and permanent residents must disclose detailed information about their foreign assets, including stock holdings, retirement pensions and life insurance policies.Qi Lixin, president of the Beijing Entry and Exit Service Association, commented, "Unlike other wealthy economies, the US' immigration policy is exceptionally one-sided."
...What's more, the law demands foreign financial institutions register with the IRS by 2013, release account holder information and annually declare their compliance...
"As result, some foreign financial institutions may no longer wish to have customers who are US residents or citizens," Mark Goldsmith, practice group leader and partner of the tax division at Troutman Sanders LLP, told China Daily.
I'm not so sure about that, given that there's no proof that new jobs are actually created and many other countries require a much larger investment, as well as ensure that investors get their money back.
However, if as Qi told China Daily, some consultancies don't tell "fully inform applicants of the tax burdens as a US immigrant," then that's another pitfall.
The number of Chinese applicants for the EB-5 visa in the fiscal year that ended September 30 was 2,969, some three-fourths of the total applicants, and an eleven-fold leap over the total in 2007 of 270.
China Daily details the issue of investment risk, which gets downplayed significantly by American EB-5 proponents:
The US government, unlike other emigration destinations, does not guarantee against investment loss, which means that applicants might lose their seed capital and, in some cases, eligibility.But people still want to come to the United States, especially for their children's education.
"We rarely take US immigrant investor cases as there are significant uncertainties," Ma Yuan, a consultant with East J&P Star, told China Daily.
"We mainly deal with Canadian immigrant investors as the return of the seed capital is guaranteed."
The bottom line
Here's the money quote, from Qi: "Hopefully, the zeal to emigrate will dampen a little and people can apply for EB-5 visas more rationally."