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Angelo Paparelli on Dysfunctional Government

Rethinking Immigration: No More Border Voodoo Economics

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Supporters of stricter border enforcement must have uncorked the champagne yesterday.  The Senate, in bipartisan fashion, broke a deadlock over funding and passed S. 3721, a $600 million emergency appropriation that would bring 1,500 more federal enforcers and unmanned aerial drones to the U.S. border.  Last week, the requisite number of House members voted "yea" to a similar bill with a $701 million price tag.  Some form of enhanced border security legislation is likely to reach the President's desk soon.


The Senate's border funding tussle involved a face-off between Republicans (who wanted to pay for the bill by diverting money from Recovery Act stimulus funds) and Democrats (who claimed Republicans would "take . . . away from job-creating programs by robbing the Recovery Act").  Ultimately, the Dems found a way to pay for the bill:  Increased immigration filing fees on large-volume users of the H-1B (specialty occupation) and L-1 (intracompany transferee) visa categories are expected to cover the tab.  For companies that "employ 50 or more employees in the United States if more than 50 percent of the [petitioner's] employees" are either H-1B or L-1 nonimmigrant workers, then between the date of enactment and September 30, 2014, H-1B filing fees and anti-fraud fees will rise by $2,000 per petition and corresponding L-1 per-petition imposts will increase by $2,250. 


In a press release lauding their effort, Sen. Charles Schumer (Chair of the Senate Immigration Subcommittee) proclaimed that this "package shows a serious commitment to securing the border, even though we know it will take comprehensive immigration reform to fully address the problem." Further, the good senator stressed, the bill "doesn't add a dime" to the deficit and "doesn't take away money from jobs programs to do it." Senator Mark Begich also exuded happiness (although unwittingly disclosing that he hadn't read the actual text of the bill):  "I am . . . very pleased the bill is paid for by increasing fees for H1-B [sic] and L visas for companies who have half of their work force overseas, as this will protect American jobs and industry."


Republican Sens. McCain and Kyl were ultimately persuaded that increasing filing fees was the only way that the border would be better protected, and added their names as co-sponsors of S. 3721, even though they are listed as signers of the Anti-Tax Pledge espoused by Grover Norquist.  Ironically, their Republican colleagues in the house just rejected an equally public-spirited bill that would have provided long-term funding for 9/11 first responders because it would increase taxes.  The legislation, according to the Associated Press, "would have prevented foreign multinational corporations incorporated in tax haven countries from avoiding tax on income earned in the U.S."


So, let's get this straight.  It's okay to jack up the H-1B and L-1 filing fees imposed on certain American companies but it's unacceptable to require foreign entities established in overseas tax havens to pay taxes on income they earn in America. Go figure. 


Well, you say, crafting legislation requires lawmakers to take difficult decisions among alternative proposals.  Someone's got to pay for protecting the border and we can't foist these costs on future generations; right? 


Let's assume more money for border enforcement is a wise investment (although the nonpartisan Migration Policy Institute reports that the added costs required to seal the border are disproportionate to the anticipated benefit to be gained and may only marginally stanch the entry of unauthorized immigrants).  Also assume that ratcheting up immigration filing fees is an appropriate, indeed the only, way to fund increased border enforcement.


Still, an important question remains:  Will an immigration-filing-fee funding mechanism actually produce $600 million by September 2014 to fund these border measures? 


It takes two gargantuan leaps of faith to believe that increased border appropriations will ultimately be deficit-neutral:



Leap # 1:  S. 3721 assumes that revenues gained from tax increases follow a static rather dynamic formula.  In other words, if taxes are increased, tax revenues will increase correspondingly.  This Leap forgets the teaching of the Supreme Court in Gregory v. Helvering, 293 U.S. 465 (1935): "The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted." This principle applies to immigration-filing-fee increases no less than to tax hikes.  Witness the Adjustment of Status surge in the summer of 2007.  As the then-Director of USCIS, Emilio Gonzalez, testified to Congress: "Most surges relating to a fee increase are followed by a commensurate dip in filings . . ."   S. 3721 will likely trigger an upsurge in H-1B and L-1 petition filings by large-volume users before the increases take effect, followed even more assuredly by corporate decisions to move jobs abroad because America is obviously and increasingly hostile to global businesses.


Leap # 2:   S. 3721 assumes that there are now and will be sufficient numbers of petitioners in the United States who employ 50 or more employees, more than half of whom are H-1B and L-1workers. Who and where are these employers?  Where are the statistics to show that such employers exist?  Has the Congressional Budget Office scored the effect on the deficit of S. 3721?  No, CBO has not published any such scoring to date.  Moreover, I've looked and there are simply no USCIS statistics suggesting that the presumably multitudinous petitioners described in S. 3721 exist. 


My prediction:  The anticipated fee money to fund border enforcement simply won't be there.  The deficit will rise and the effect on border security is likely to be very little additional bang for many unfunded bucks.  All this will happen "even though," as Sen. Schumer suggested, "we know it will take comprehensive immigration reform to fully address the problem."

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