Administration Takes a (Commendable) Baby Step Toward Taxing Aliens

Plus other ideas for collecting (or saving) money from immigration

By David North on April 1, 2019

Deep in the fine print in the president's budget message there is a deficit-offsetting proposal that would collect about half-a-billion dollars from the immigration system; it calls for a 10 percent surcharge on all the fees paid by aliens (legal and illegal), citizens, and corporations when they are seeking benefits from U.S. Citizenship and Immigration Services (USCIS). While the fees would continue to support the work of USCIS, the surcharge would go to the Treasury.

It is a good idea; in fact, a creative one, but if you want to raise money from aliens, why not seek the biggest amount possible that can be raised without serious political opposition, and from an as unattractive population as possible? The current proposal does the opposite: It would collect relatively little money from a relatively attractive population while stirring needless controversy.

Below are four alternative new ways to obtain money for the government from four different populations of citizens, legal aliens, and illegal ones, with differing mixes of criminal and non-criminal elements. Two involve Congress and two can be handled by administrative action alone.

Analysis of Four Different Ways to Raise Money from Aliens

Proposal Billions Raised Yearly Likely Big Business Opposition Characteristics of the Populations Paying the Bill
Add 10% surcharge to USCIS fees (as in the latest Trump Budget) $0.50 Substantial, many of the fees would be paid by H-1B users Legal and illegal aliens; and corporations seeking immigration benefits
Take away special SNAP benefits for families with illegal workers in them* $1.00 None Illegal aliens and their families, some of whom are U.S. citizens
Establish 2% fee on individual out-of- country remittances $2.60 Severe, notably from financial institutions A mix of some legal and many illegal aliens, as well as some drug dealers
Pay tax refunds only to workers with their own SSNs* Many, many billions None No one but felons and their families (it is a felony to misuse an SSN)

Source: Center for Immigration Studies estimates.
* These proposals do not need congressional action. For more detail on these four schemes see this White House budget document (p. 154); and these CIS postings on SNAP (formerly food stamp) benefits, on the 2 percent wire-transfer fee, and on making federal income tax refunds only to people who filed with Social Security numbers issued to that person.

While I would be perfectly happy (and very surprised) to see Congress accept the USCIS fee surcharge notion, I think it makes more sense simply to have the White House order the Internal Revenue Service to stop sending income tax refunds to people whose 1040s show Social Security numbers that have not been issued to the taxpayer. It's a frequent pattern: An illegal alien uses his or her real name on the 1040 and on the employer's books along with an SSN issued to someone else (or, in a few cases, invented); the illegal may have purchased such an SSN on the street, or is using one that was issued, years ago, to a relative or some other then eligible person.

While big business will object to the USCIS fee surcharge — after all it would add 10 percent to the fees they are already paying for their H-1B applications, for example — commercial interests will have little incentive to complain about the SSN-matching requirement suggested above. And no votes need be taken in Congress.

In the best of all possible worlds, Congress would add the surcharge, vote for a wire transfer fee, much like the one that brings $13 million a year to the State of Oklahoma, IRS would start checking those SSNs, and the Department of Agriculture would eliminate the part of the SNAP program that lets some families including illegal aliens get benefits while identical all-citizen families are ruled ineligible. (The rules allow for an under-counting of the illegal's income.)

We do not live in such an ideal world, of course, but perhaps one or more of these fundraising ideas could be put into action. Two, after all, simply require a little executive action, and nothing else.