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Greg Siskind on Immigration Law and Policy

GRASSLEY H-1B TAX WOULD COST BUSINESSES $3 BILLION OVER FIVE YEARS

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That's the figure being reported to me by experts at the National Foundation for American Policy. According to the immigration and trade policy think tank, the new Grassley H-1B tax included in the Senate HHS/Labor Appropriations bill represents a $3.1 billion tax increase over five years on America's fastest growing companies ($614 million a year).



Past taxes have been made somewhat more palatable by increasing the number of H-1Bs, but this time no increase in numbers is provided. NFAP experts believe that the fee will likely only accelerate the trend of American companies expanding operations overseas where professional workers are more readily available.  

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Comments

  1. 's Avatar
    "NFAP experts believe that the fee will likely only accelerate the trend of American companies expanding operations overseas where professional workers are more readily available."

    Yes. This is why the tax is a non-issue. Companies realized a while ago that in many ways America has decided not to compete to stay in the race.

    But on the bright side, even in other countries catch up or pull ahead, there are only 3 to 4 countries that are capable of doing so.
  2. Middle Ground's Avatar
    So we are spending 2.4 trillion over the next 10 years on the war in Iraq. We will have (at current rate) 6 trillion in trade deficits over 10 years, and 4 trillion in our budget deficit (the war is extra debt). So over the next 10 years we will accumlate 12.4 trillion in debt, plus our current budget deficit of 8.9 trillion. Grand total (projected) = 21.3 trillion USD in 2017.

    So a 3 billion dollar tax, quite frankly, is laughable. Our budget deficit and war spending - financed by foreign investors (treasury notes). Our trade deficit - financed by people (personal debt). We've got to pay for all of this somehow.

    In short, every man woman and child in this country - if the debt was divided equally - owes $70,764 over the next 10 years - plus any debt they have that isn't financed by foreign countries or investors. Good luck with that.

    http://www.deficitsdomatter.org/
  3. Sid's Avatar
    MG, what about the income tax that the U.S. government earns from every H-1B and profits made by American companies as a result of hiring the best foreign talent? What about the social security and medicare taxes that the U.S. keeps for every H-1B that goes back without getting a GC?

    Do you have the figures for these?
  4. USC's Avatar
    "Our budget deficit and war spending - financed by foreign investors (treasury notes). Our trade deficit - financed by people (personal debt). We've got to pay for all of this somehow."

    The US is able to indulge in irresponsible fiscal/monetary behavior because the USD is a reserve currency*. The UK ceased to be a force because the USD replaced the Pound Sterling as the reserve currency of choice. This phenomenia started after WW II, as newly independent countries tried to shed the vestiges of colonialism by replacing the GBP with the USD. The same fate may befall the US if countries start switching to the Euro. This alone is a compelling reason for us to ensure that world trade is expanded and our trade (and reserve currency) partners participate in the rising tide. One of the ways to do this is to ENCOURAGE the practise of off-shoring and by increasing the supply of H1b & EB visas. It is in our economic & national interest to ignore the special interests whether they be Software Engineers, physicians, farmers or nurses. Unless these folks are mentally or physically handicapped there is no case made out for them to receive protection from competition.

    * An explanation for those not familiar with the advantages of being a reserve currency.

    If India wants to import oil from Saudi Arabia it must pay for that in USDs. Where does it get USDs from? Either from exporting part of its production, by selling off assets to foreign companies wishing to invest in India or from inward remittances from investors/people working abroad. In any case there is a real cost to pay for the oil.

    OTOH, if the US needs oil from Saudi Arabia all it has to do is fire up the printing presses and print a billion dollars or two. Its just paper, no real cost. The beauty of it is that there is no real cost to the economy. Ordinarily, doing something like this would cause massive inflation. Not in this case because Saudi Arabia may those dollars to buy automobiles from Japan who may use them to buy wool products from New Zealand. These dollars remain outside the US financing world trade. I have tried to keep this complicated subject short and simple.
  5. Sid's Avatar
    USC, thanks for the explanation.
    My knowledge of economics is fairly basic and is mostly limited to microeconomics.

    Could you please elaborate on the following line? I would like to understand it better.

    "Ordinarily, doing something like this would cause massive inflation."
  6. USC's Avatar
    "Ordinarily, doing something like this would cause massive inflation"

    Sure. If India were to increase the money supply by printing more Rupees. The Rupees would flood the Indian economy. Too many consumers with Rupees chasing the same automobiles (assuming no icrease in the supply of cars) would cause the price of cars to go up. Hence, you have inflation.

    In the case of the US, those dollars leave the country so there is no impact on the local US economy. No inflation, no recession, no impact. These dollars go from Saudi Arabia to Japan to China to Australia and so on.

    Just add up the Dollars held by the various central banks (just look at China, India, Japan). The day they switch to Euros those Dollars are going to come flooding back to the US. That would cause Argentine style inflation in the US.

    Hence, my conclusion that the ongoing trend towards off-shoring is the best thing that could have happened to what is now a globally-linked economy.
  7. 's Avatar
    Makes it clear that if we foreigners were patriots and had any sense, we would be financing the anti-immigration movement.
  8. USC's Avatar
    "Makes it clear that if we foreigners were patriots and had any sense, we would be financing the anti-immigration movement."

    That would be true if we were anti-American. I would like to believe that the most of us here are not since we are seeking GCs to stay here or are already USCs.

    I might also add that if the US suffers so does the entire world.

    Consider this, what would happen if the US were to run a trade surplus for many years? You would Dollars coming into the US and have inflation in the US and recession everywhere else (since you have just drained the world's money supply, so Japan no longer can buy from Australia who can no longer buy from China). So be careful what you wish for.......
  9. 's Avatar
    "I might also add that if the US suffers so does the entire world.

    Consider this, what would happen if the US were to run a trade surplus for many years? You would Dollars coming into the US and have inflation in the US and recession everywhere else (since you have just drained the world's money supply, so Japan no longer can buy from Australia who can no longer buy from China). So be careful what you wish for......."

    That'd be true if the rupee economy of old did not make a comeback or a new yuan based economy did not arise.
  10. USC's Avatar
    "or a new yuan based economy did not arise."

    So, this is what the antis are really rooting for when they oppose immigration.

    Conclusion?

    (a) Pros = patriots
    (b) Antis = traitors
  11. Middle Ground's Avatar
    "What about the social security and medicare taxes that the U.S. keeps for every H-1B that goes back without getting a GC?"

    I could make an educated guess, but not sure what the total is. I'm sure it is a drop in the bucket compared to the overall debt our country is in.
  12. Sid's Avatar
    "I could make an educated guess, but not sure what the total is. I'm sure it is a drop in the bucket compared to the overall debt our country is in."

    Just as the number of American tech workers who are unemployed (and choose to associate themselves with PG) are a drop the bucket compared to the total IT workforce in the U.S.

    Yet they are trying to make life hell for people like me by blocking reforms related to EB GC's.

    The laughable part is that I didn't even displace an American. No one was let go in our team to make room for me. I refuse to think of my job as even an American job. I work for an American company, yes, but I could easily relocate to one of our development centers in India within a month and continue to do exactly what I'm doing here. I may have to make a couple of short trips every year to attend the annual conference, etc. I'm not doing it because of personal reasons.

    Yet you guys are blocking bills like SKIL and STRIVE, bills that would help me get my GC quicker. Once I get my GC, I would feel more comfortable in making long-term investments like a buying a house or doing an MBA full-time.

    I know that eventually all of this will happen. It's just a matter of waiting for a few more years. The delay however, will simply leave a bad taste in the mouth.
  13. Indy's Avatar
    "A family receiving remittances may be up to 10 times more likely to have a child remain in school."

    This is one of the findings of the report. I can not talk about philippines authoritatively but I can talk about India. I beleive this report is strictly talking about the predominant skilled legal immigration that happens from India. In that case the above statement does not reflect the realities of India because some indian worker who can make it USA via legal skilled route will be part of upper middle class in India anyway. If the study is about the low skilled immigration that happens from India to countries such as UAE or Saudi Arabia , yes this statement can be correct.

    Skilled Immigration and economic liberalization has been a greatest equalizer in Indian soceity in the past decade. Both the things have opened up so many oppurutunities for the less privilged but qualified people in indian society.

    A friend of mine who works for GENPACT(outsourcing arm of GE Corp) as an IT manager in Hyderabad, India mentioned about a muslim girl who used to come to work in veil(the burqa) in his team. The regular american may view the burqa as a symbol of oppression but for me a muslim girl being allowed to get to work at least in burqa by her parents is a big change and a welcome change that is happening in the soceity. The chances of this girl being treated with respect in her family are very high because she works for a big MNC and get a big paycheck every month.

    I just wanted to share some thoughts on brighter side of outsourcing .
  14. Middle Ground's Avatar
    "Yet you guys are blocking bills like SKIL and STRIVE"

    Those bills raise the cap but offer no protections or anti-fraud provisions. They don't address our issues.

    You won't catch me supporting a raise in the cap until flaws in the H-1b program are addressed.

    As to the EB program, I supported the IEEE-USA position and not the PG position. If you want something better, you've got to play ball with us. That's the bottom line. We can work for a compromise - which is my goal - or you can lobby for your own special interests and "F" everyone else. You won't get very far.
  15. 's Avatar
    "Yet you guys are blocking bills like SKIL and STRIVE"

    Folks, think what you are asking for. Slowing immigration to the US particularly skilled immigration is in our best interests.

    Basically if we can manage to maintain status quo for some years we can have a self-reinforcing process where work gets outsourced due to labor shortages and offshore delivery capability increases because of lower attrition as fewer people move to the US. As offshore moves up the value chain and handles complete projects and products it becomes cost efficient to ship American PMs to offshore for purposes knowledge transfer or communicating market requirements.

    Plus you can have all this while staying close to friends, family and culture. I admit that higher education is an unresolved issue here, but it can be addressed by having US universities set up shop in STEM fields or by policy changes to kick-start the provision of graduate education.
  16. 's Avatar
    "Slowing immigration to the US particularly skilled immigration is in our best interests. "

    So you believe what they lobbyists tell you. The last the the Indian offshoring firms wants is lower numbers of H-1b visas. They don't oppose this because they are concerned about IT growth in the US. They oppose it because it hurts their business model.

    Your comments are so ludicris I find them funny.
  17. 's Avatar
    "So you believe what they lobbyists tell you. The last the the Indian offshoring firms wants is lower numbers of H-1b visas. They don't oppose this because they are concerned about IT growth in the US. They oppose it because it hurts their business model.

    Your comments are so ludicris I find them funny."

    My comments were in response to the complaints about EB visas. And lack of H1B numbers doesn't hurt the offshorers as much as it does American companies.

    I don't have to believe the lobbyists, I see it everyday, and have seen it for a long time. The offshore business model depends on leveraging large amounts of offshore labor and you don't need H1B to bring it to bear. A small number of US based PMs are all it takes.
  18. 's Avatar
    So here, I found a link that shows how offshore is having trouble growing and staying competitive because of a lack of talent at all levels.

    Nasscom seems to have the right idea though - encouraging graduate level education (PHds) and introducing accreditation for the IT workforce.

    http://www.nasscom.in/upload/5216/July%205%202007%20%20Education%20Initiatives-Final.pdf
  19. Linux Guru's Avatar
    H1B is a cheap labor program. 85% of H1B earn < $50K/year. If corporate wants cheap labor they need to move operations abroad NOT import the third world into America. BTW, the 3B "tax" being referred to is a redirection of money out of the capital markets into the hands of native born American citizens. Not a bad idea to me.
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