President Obama has made immigration reform one of his top priorities. I don’t know a lot about it, but I’m intrigued by stories about founders of tech businesses having run-ins with immigration.
Over the last few days Nate (also a student at Starter League) and I have been chatting about it. So I want to paint a hypothetical situation that illustrates one of the many problems with US immigration policy.
Let’s say you are a foreign national that has some technical, UX or design skills. You have read books like 4-Hour Workweek and The $100 Startup, and you finally decide to take the plunge and start your own business. After struggling to get clients in the beginning, you start to earn a steady income after 6 months.
Your customers give you glowing recommendations and as your portfolio grows, you get even more business. You do work for customers from all over the world. Where you are doesn’t matter and your clients don’t care – because you deliver.
Always wanting to travel and see the world, you decide to utilize your newfound mobility and take an RV trip through the US. But since you would also like to go skiing in Canada, you get a Canadian visa as well.
Just before you go, you decide to incorporate a company so business affairs can be completely separated from your personal affairs. Since most of your customers are based in the US, you decide to incorporate in Delaware.
So now you own a US-based company, which services customers from all over the world, including the US. But since you are not a US citizen and don’t have a green card, you can’t pay personal tax in the US. This means you have to be employed by your US company and pay tax in your native country.
After that is all set up, you start traveling. Both the US and Canada grant you a 6-month stay, so you could spend 6 months traveling the US in the summer and 6 months skiing in Canada. All 100% legal; as you continue to service your customers the company pays your salary back to your native country.
You can’t apply for a green card – well, at least not in any way I have found. So even if you wanted to, you cannot pay taxes in the US. You can be in the US legally for 6 months, but they don’t want you to pay tax.
One of the reasons for immigration law is to protect local jobs. But in your personal case, there are no jobs to protect. You customers will use you or somebody else, irrespective of where they are. There is no job to protect; just business that can be attracted to the US.
With an aging population and baby boomers retiring, the tax base in the US is potentially going to shrink. You would think the US would welcome people that can help pay the growing tax bill with open arms. But alas, current ‘policy’ does not allow it, and while politicians fight with each other, you end up paying tax in another country for work performed in another.