The Mass Migration of the Super-Rich
The global rich are on the move.
Whether it’s wealthy French or Americans fleeing the prospect of higher taxes or wealthy Russians and Chinese trying to escape political uncertainty, millionaires and billionaires around the world are migrating like never before, according to government statistics and relocation experts.
“There is a sudden awakening among the wealthy that they’re no longer bound to a certain country,” said David Lesperance, a Toronto-based attorney who specializes in relocating the rich. “After the recession and other recent events, they realize they need to get themselves in better fiscal shape. For the wealthy, the idea of moving has changed from something that’s interesting or exotic to something they feel they really need to do.”
The number of Americans seeking to renounce their citizenship surged to more than 1,700 last year, more than twice the rate of 2009, according to U.S. Treasury data compiled by Andrew Mitchel, the international tax attorney. Among them was Eduardo Saverin, the Facebook billionaire who famously moved to Singapore before giving up his citizenship late last year. This year, 460 people expatriated in the first quarter alone.
In France, the wealthy are eying Switzerland, Britain and Singapore as possible escapes from President Francois Hollande’s proposed 75 percent tax on income exceeding 1 million euros. Switzerland had 5,445 people in the forfait system – which allows foreigners to immigrate through a special tax treatment -- at the end of 2010; more than 33 percent of those are French, according to a Bloomberg report.
Some rich French are also seeking to leave what they perceive as a growing hostility toward the rich in France.
Meanwhile, the newly rich people in several emerging markets – Russia, China or Brazil – are looking to come to better protect their wealth or families. The combination of slowing growth, political uncertainty and volatile markets at home has lured some of the newly rich around the world to move to Britain or the United States.
Wealthy Russians are moving to London is such large numbers that local commentators have coined the term “Londongrad.” Roman Abramovich, the Russian multi-billionaire who owns the Chelsea Football Club is the highest-profile rich Russian in Britain, but he is only one of ten Russian billionaires living there, while an estimated 1,000 Russian millionaires now call London home.
Attorneys and real-estate agents in London who deal with the Russian rich say their clients are attracted to the stability and refined culture of London, as well as the relative safety. After the tumultuous presidential elections last year, wealthy Russians are increasingly nervous about the country’s political stability and their own fortunes, experts say.
Meanwhile, Chinese millionaires and billionaires are flocking to the United States in record numbers. More than two thousand Chinese citizens sought to immigrate to the United States in 2011 through the so-called “investor visa.” That’s more than twice the number in 2010. The program allows foreigners and their families to receive permanent U.S. residency for an investment of $500,000 or more (or in some cases $1 million or more) that also creates a minimum number of jobs.
The impacts of all these new migratory patterns of the wealthy are still emerging. Some economists and sociologists say the rootlessness of the new rich could further tear the fabric of countries and communities, since the wealthy won’t be as grounded in local charities, workers or businesses. It could also lead to an arms race in tax policy, with locales like Singapore and St. Kitts offering generous income-tax and capital-gains rates to attract wealthy spenders and taxpayers.
Yet others say the rich are simply following the new rule of capital – money will move where it’s treated best. Technology has allowed the rich to run their businesses and investments from anywhere in the world. And while taxes play a role in the decision, relocation experts say culture, education and climate also play roles among the rich. He said some of the U.S. rich are looking to Britain and Switzerland as well as other larger countries in Europe that don’t necessarily have the lowest tax rates.
“It’s not just about taxes,” Mr. Lesperance said. “They’re not necessarily moving to small islands anymore. They want to go where they can replicate their lifestyle, run their businesses, educate their children and eat at great restaurants and enjoy the culture. They don’t want to be on an island where you say, “Well, we’ve eaten at the same three restaurants already. Now where do we go?’ ”