Would you believe that recently released Department of Homeland Security data shows that the U.S. government has rewarded Amazon almost $25 million in tax breaks for not hiring U.S. citizens?
And that all the money for that and other prosperous firms came from raiding our trust funds for the sick, frail, and elderly (Social Security and Medicare)?
And that the DHS web page on the subject never mentions the tax breaks involved?
Welcome to the strange (and wonderful for corporations) world of Optional Practical Training (OPT), the DHS-operated, never-authorized-by-Congress subsidy program for employers who hire recently graduated foreign students rather than U.S. grads.
What OPT does is to wave a magic bureaucratic wand over foreign alumni of U.S. colleges, converting them back to student status, and thus subsidizing their employers at the rate of 8.25 percent for not hiring recent grads who are either citizens or green card holders. The employers do not pay the usual payroll taxes (though they do make the usual income tax withholdings).
The subsidies for the employers linger for one year for most of the alien alumni, but go on for three full years if the aliens they hired studied in the STEM fields of science, technology, engineering, and math. The alums, unlike American workers, are also freed from the trust-fund-related payroll tax deductions. The whole system hurts our stretched trust funds by at least $2 billion a year.
The mechanics of the program, and the fact that it is a creation of the executive branch without a shred of congressional authorization was covered in a previous blog post.
As to the $25 million tax break for Amazon, one of many very substantial OPT gifts to big corporation, we calculated it this way: There were 6,048 Amazon OPT workers in two of the major categories of such workers in 2017; we, conservatively, used $50,000 as the average wage; we multiplied the average wage for a year by 6,048, applying the 8.25 percent discount, and came up with $24,945,000.
CIS will soon publish a more detailed account of the big corporate beneficiaries of this strange system, which is used by many of the giants of the economy, such as Intel, Google, Deloitte, and Microsoft, and some big universities as well (University of Michigan, Arizona State, and Johns Hopkins, all among the top-30, but not the top-10.)
Also among the top-10 users of at least part of the OPT system are firms unknown to me, such as Tellon Trading (whose website proclaims: "we sale mattress components"), XCG Design Corp, and Findream LLC.