Friday, 30 August 2013

Illegal Immigrants Will Expand Tax Base

If undocumented immigrants are allowed to work legally it would boost the US state and local tax contributions by an estimated $2 billion annually. The Institute on Taxation and Economic Policy (ITEP) says that the country's 11.2 million undocumented immigrants or tax immigrants collectively contribute $10.6 billion in state and local taxes (as in 2010) through sales and excise taxes, also via property and income taxes. The number could jump to more than $12.6 billion.

If the undocumented immigrants if allowed to work would pay more in state income tax and participate fully in federal, state and local tax systems. ITEP study indirectly says that legalization would allow the undocumented workers to have better bargain with employers and increase their income and tax contributions.

The controversial Immigration reforms currently before Congress would grant the legal right to work many unauthorized U.S. workers. All leading research reports say that a change would prove economically beneficial.

Leading Studies

Congressional Budget Office study argues that immigration reform bill would reduce the deficit by $197 billion over the next decade.

Brookings Institution's Hamilton Project found an increase in immigrant workers may lead high wages for U.S workers. Majority of Americans argue that granting legal status to undocumented immigrants would do good for the economy and country.

Immigration Tax is the economic impact of legalizing 11 million immigrants who entered the country illegally. Upon naturalization they will be required to pay back taxes. This was the main stumbling blocks keeping conservative lawmakers from backing the path to citizenship.

A study shows that the economic impact of legalizing immigrants is a positive one and not a financial drain. By giving immigrants a chance to work legally in the U.S. state and local revenues will spurt by $2 billion a year. The income tax flows would increase by $1.6 billion, sales tax contributions by $420 million and immigrants will pay an additional $76 million in property taxes. 

Friday, 16 August 2013

All Immigration Laws Have a Direct Bearing on Tax Laws in United States

The immigration rules of the United States are always conjoined to its tax structure. In a way the immigration in USA is merit driven and looks at a person’s ingenuity to contribute to the economy by way of skills, knowledge and entrepreneurship.  Therefore those seeking U.S. immigration must know rules of taxation affecting different types of immigrants’ especially undocumented aliens.

Under the provisions of the new Immigration Reform Bill the immigration tax laws will be sharpened to absorb the illegal immigrants numbering 11 million into a pathway of citizenship by way of more back taxes and the addition of more taxpayers to the tax base. This will progressively offset any wasteful expenditure at the social security front in a few years. 

Tax Laws and Citizenship

The treatment of aliens under the internal revenue and social security laws of the United States is contingent on the status of aliens under the immigration laws of the United States. The immigration laws classify aliens into three:

  • Immigrants
  • Non-immigrants
  • Illegal aliens
Immigrants can reside permanently in the United States and get the green card.  The green card holder can enter and leave the United States without a visa or re-entry permits at will and earn income in the United States. citizen.

Back Tax Issues

Under the new Immigration Bill citizenship for 11 million undocumented immigrants would be a long drawn process with tax tests.

  • Gaining Provisional legal status after passing background checks and paying back taxes
  • Applying for green cards after PLS in 10 years
  • Applying for citizenship three years into getting green cards

In tax matters, the tax laws speak of only resident aliens and nonresident aliens.  While resident aliens are taxed as U.S. citizens nonresident aliens are taxed as per the Internal Revenue Code.


The issue of illegal immigrants and their statistics in the US has attracted widespread attention after the domestic debate on the new immigration Bill reached a new crescendo as the House of Representatives is set to take a call on it.

It is in the open that 11 million is the estimated number of immigrants living in the US illegally—and it is at the core of the Illegal immigration statistics reform debate.

Some 26 years ago, when Ronald Reagan signed an amnesty for 3 million immigrants many people argued there were three to four times immigrants living in the country without proper documents.

Labour Department data includes workers’ country of origin. That number of immigrants is subtracted from the number of legally admitted immigrants as per federal immigration statistics. After statistical the current figure of 11 million as illegal immigrants was reached.
As for the cost of Illegal Immigration Statistics, under the provisions of the Bill undocumented immigrants would be charged $2,000 in fines before becoming permanent residents. It has to be paid in instalments of $500 each. They also have to bear the fees to cover processing of applications and any assessed federal taxes.

A study says the U.S. economy would benefit if immigrants granted citizenship as immediate citizenship would add $1.4 trillion to the economy through increased tax revenue and job growth.

There is proof in that argument as California governor Jerry Brown has urged the Gang of Eight to shorten the period of waiting for citizenship to illegal immigrants as the delay means that his state is spending $600 million annually in health care costs for illegal immigrants.
In 2012 alone, California spent more that $500 million covering emergency room fees and other health services for illegal immigrants who are not eligible for Medicaid and other federal programs.

As per the provisions in the current immigration reform proposal, undocumented citizens are ineligible for Medicaid, food stamps and other such programs until they have lived in the United States for 10 years.

Saturday, 10 August 2013


All US Presidents including Obama often proudly report that the USA is a nation of immigrants. The US Immigration Policy Immigration always played an important role in American history and the United States has an open immigration policy. Some changes in immigration laws came in after the Civil War, when the Supreme Court in 1875 proclaimed that regulation of immigration is a federal responsibility.  As a result, the US Immigration Policy Service established in 1891.

In the two decades from 1900 to 1920 nearly 25 million immigrants reached the US in what is called the Great Wave. After the World War I mass immigration resumed.
  • The US Congress introduced nationally-origins quota system in 1921 and a revised version in 1924.
  • In 1952 the Immigration and Nationality Act came in the aftermath of the World War II. 
  • In 1965, Congress replaced the national origins system with a preference system to unite immigrant families and attract skilled immigrants to the United States. 
  • In 1986, Congress passed the Immigration Reform and Control Act (IRCA). This legislation had amnesty and enforcement as two faces. 
  • In 2000, IRCA made a late Amnesty for helping to reapply for those fighting their original denial to reapply. 
  • The 1986 legislation prohibited the hiring and harbouring of illegal aliens. 
  • The U.S. Commission on Immigration Reform under Barbra Jordan covered many facets of immigration policy. 
  • In 1996, Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA) was passed. 
  • The last amnesty was in 2000 called Legal Immigration Family Equity Act (LIFE) to illegal aliens to attain green card by way of marriage, employment and other means.
Perhaps the watershed in immigration policy that set the ball rolling for drastic reforms was terrorist attack of September 11, 2001. It exposed the loop holes of intake policy in areas of visa processing, enforcement and information sharing.