[swombat]

I don't understand the funding requirements... Take someone like patio11, who's running a profitable business but not making a killing with it yet. Why not let him immigrate to the US, and run his business (and pay his taxes) there?

And what about someone who ran and sold a successful business in, say, Germany, and decides they would like to live in the Valley for a while. Let's say that person has a couple of hundred thousand dollars of wealth, is a proven bootstrapping entrepreneur, and wants to move to the Valley and bootstrap the next Facebook... Why stop them at the border?

Many valuable people want to move to the US, but by making it so damn difficult, the US misses out on enormous amounts of top talent.

Why not, instead, make immigration a straightforward process for anyone with some set of criteria, e.g. recognised science education or other degree from a top university, or track record of entrepreneurship, all of that with good credit score and no debt ... it makes sense to have entry requirements, but why are they so arbitrary?

[quant18]

Take someone like patio11, who's running a profitable business but not making a killing with it yet. Why not let him immigrate to the US, and run his business (and pay his taxes) there?

Somewhat off topic (bear with me, I do have a point at the end), but he already does pay taxes in the US: http://www.kalzumeus.com/2007/04/15/taxes-dont-have-to-be-pa...

In fact any person anywhere in the world whether American or not can volunteer to pay taxes to the US government even if he doesn't have a single US-based customer. All you have to do is incorporate in the US with an American nominee director+secretary and yourself as the sole shareholder. Then it's up to you whether you want to tell your local government about all the profits your American business is raking in.

Delaware in particular makes it hard for foreign governments to find out exactly who owns a particular corporation there. This is why you sometimes hear America referred to as the world's largest tax haven: http://www.lectlaw.com/filesh/bbg33.htm

However, for an American citizen living overseas and trying to run a small business, the main reason to incorporate in the US (rather than whatever country you're living in) is not to evade foreign taxes, but to avoid American paperwork. American owners of foreign corporations have to file form 5471 and spend all their time worrying whether any of their income can be classified under Subpart F (particularly Foreign Base Company Services Income --- look it up if you'd like your head to explode), in which case it DOES get taxed in the US as if it were a dividend to you personally. If you're Google and you want to pretend that your office in Bermuda with zero programmers and three lawyers is actually a major profit centre for software income, this is easy. If you're one guy selling bingo software, this is much harder, because you don't have the money to hire an international tax lawyer. Thanks President Kennedy!

Right now all the multinational corporations are deferring US taxes on their foreign subsidiaries by using Form 8832 declarations to create "hybrid entities" (ones which different governments disagree are corporations or pass-through entities). This all started back in 1997, when the IRS amended the entity classification rules in response to perceived abuses. Next year that law might get amended to make that impossible (Obama already tried last year, but failed), at which point all the high-priced accountants and lawyers will comb through the new regulation to find some other bright idea, while I hide under my pillow and cry.

Anyway, rant over, here comes the point I promised: US laws, whether in the field of immigration or taxation or whatever, may start out simple, but they inevitably get amended into increasing complexity until they make no sense at all, because unlike, say, the laws of Vanuatu, there's so many people looking for loopholes. Thus the laws manage to ensure that no one abuses process X, by making it damn near impossible for anyone, abusive or not, to get through process X in the first place. So I don't really have high hopes for this startup visa bill. It may pass, and in the first year hopefully some genuine foreign entrepreneurs will grab on to the chance to get a foothold in the US. But then there will be abuses, or maybe only perceived abuses blown out of all proportion by the media (or by disgruntled competitors who use PR agents to plant stories in the media), and then the law will get amended into oblivion starting from year two.

[patio11]

It's downright quirky that I can get a visa to do it from Japan, a country which, ahem, has not historically been known for its welcoming embrace of foreigners. (Long story short: my previous employers know how the game is played, and keeping a status of residence once you have it is pretty trivial: pay taxes, file forms in a timely fashion, and don't get arrested.)

[w1ntermute]

Isn't that similar to having a green card in the US? I guess the problem is the difficulty of getting one in the first place.

[patio11]

A green card is equivalent to Japanese permanent residence, which I don't have. (I would theoretically have been able to apply for it six months prior to leaving the day job, which would result in me getting it about a week prior to leaving the job, but the day job would have had to go to bat for me to get it and I thought telling them to go to bat then quitting would be discourteous. My odds of permanent residence prior to marrying a Japanese woman now are exactly equivalent to my odds of being featured on the front page of the Japanese economic newspaper, since any success in my business sufficient to justify one would justify the other.)

[cletus]

As for the small(er) business argument, there are a couple of factors:

1. This visa isn't meant to solve every problem. As soon as you try to solve every problem, you've just guaranteed you're not going to solve any problem; and

2. Arguably someone who is small isn't yet of interest to the American government in terms of being a taxpayer.

As for the successful investor example you've made, you've chosen a (quite deliberate, imho) strawman. The argument has several holes:

1. If you have $1m or more to invest in a business, there is an existing green card program for that;

2. I believe you know this, which is why you've said a couple of hundred thousand. The line has to be somewhere. 5-10 years ago, at least for tech companies, $1 million probably made sense. Does it make sense now? Maybe not. If not, address it by changing the requirements for that separate visa class; and

3. The American government has a vested interest in fostering businesses of American citizens and residents rather than those of foreign residents; and

4. If that person was going to seed invest (ie become an angel), a couple of hundred thousand isn't really enough to do that. Each "bet" they make, even if only $25,000 is simply too high a portion of their total investment pool.

As for the requirements being arbitrary, that's a double edged sword. Sure $1m is enough for an investment-based green card. Why not $950,000? Again, the line has to be drawn somewhere. After all, you're a minor up until you turn 18. Is someone 17 years and 11 months old so vastly different?

The positive side of arbitrary requirements is that they have certainty. Someone can look at those rules and clearly know what they mean and whether or not they qualify.

To give you a counterexample, in Australia the ATO (our equivalent of the IRS) has a discretionary test to decide whether you're "in business" to see if you can manage your tax deductions in a certain way. It's completely vague, sort of a "you'll know it when you see it" kind of test.

The problem of course is that there are still grey areas and humans need to make decisions about whether a given situation qualifies or doesn't.

At least arbitrary rules are clear.

[phjohnst]

Arbitrary rules are clear, yet, but also blunt. If you were building a capital intensive product (see most of the alternative energy/biotech space - to get a prototype built costs millions and millions of dollars in most cases), 250k investment is really low, and probably would have no bearing on the success of a company. But for a small tech/software company whose only expenses are its 2-3 founders' accommodation and sustenance, 250k is a lot. So maybe some arbitrary rules are the right thing, but there needs to be some common sense and differentiation across different sectors. Not all startups are the same.

[mdda]

The current E2 visas don't include a hard-and-fast minimum investment. It has to be sufficient, though : and the interviewer in the Embassy will be the judge of that, ultimately.

For an Internet technology startup, $100k is enough (proven in 1999, and renewed ever since).

[phjohnst]

I completely agree; there should be a far less arbitrary and obtuse set of criteria.

I would love to move to the Valley (I'm Canadian) for everything that is there, but there is no outlet for founding a company and moving it south of the border without jumping through multiple legal hoops. I have no debt, I'm not going to go on benefits, I pay my taxes, I have a good degree from one of the world's best uni's, I'm driven, resourceful, etc. Why is there an arbitrary, xenophobic law preventing me from doing so? Canada (and now the UK) seem to provide a much more sensible set of regulations that promote entrepreneurship which have huge and wide-ranging impacts on the local economies.