Taxing Amnesty: How We Can Make Money From Illegal Immigration

Washington needs cash. When Democrats go hunting for spending money they are so used to pointing fingers at the wealthy, and have made class warfare so central to their agenda that they have ignored an untapped revenue source that ties in perfectly with their president’s goal of turning illegal immigrants into Americans.

Lawmakers are emboldening illegal immigrants by telling them that if they are apprehended for non-criminal offenses they should not be deported (see: Washington Waves Its Backside in Our Faces Over Immigration). The president and Homeland Security drew a line in the sand last year when they decided who gets to stay in the U.S., but they never said how the lucky, law-abiding illegals who will remain are supposed to support themselves without being authorized to work (see: New Immigration Policy Could Force Us to Overlook Fraud).

Homeland Security boasted its 2011 enforcement successes, tallying 396,906 removals last year. 216,698 of those deported had committed crimes.¹ What is not clear from the DHS numbers is how many of these removals were illegal immigrants, how many were legal residents, and how many had already been apprehended and were waiting to be deported.

Janet Napolitano is proud of her agency’s “smart, effective” enforcement and the joint White House – DHS strategy to only remove criminals (see: Four Painfully Simple Facts About Immigration Enforcement), but the goal of deporting the bad guys has been around for years. During the Bush administration an April 2006 Homeland Security audit recommended that the agency “Develop a detailed plan to provide ICE with the capacity to detain, process, and remove aliens that pose a potential national security or public safety risk to the U.S. …”² What is new is the Obama administration’s decision to give non-criminals a pass.

Even if we manage to get a new president in the White House in 2013, it is unimaginable that Congress will ever decide on a workable bill for an issue as contentious as immigration. Instead of vexing over what to do about illegal immigrants, how can Congress turn the problem into cash?

Immigrant special interests like to argue that illegals pay taxes. They can apply for taxpayer identification (ITIN) numbers, but cannot work in the U.S. without a permit. Democratic immigration bills call for a fine as small as $500 as part of the path to citizenship. Newt Gingrich’s fix calls for a nominal penalty of $5,000 (see: Immigration: Why Are Republicans Following Obama’s Lead?). Both Democrats and Gingrich would require criminal background checks, and Democratic bills have called on illegals to shell out for back taxes. How do you know what to charge when someone has worked under one or more false identities?  

Even Gingrich undervalues the tax dollars owed by illegals that have evaded the authorities and worked here for years. Why should legalization reward the length of time spent in the U.S. and give preference to those who have successfully put down roots? Illegals should be fined based on the income taxes they would have owed had they been working here legally. We could start with a fine equivalent to the taxes that would have been paid over 10 years of working at the national average wage. If illegals can document having paid their taxes and can prove that they worked here without committing fraud or identity theft, those taxes will be taken off of their fine. If they cannot document how they have supported themselves, cannot pay the fine, or have committed fraud, they should be deported and can get in line with everyone else. The tax penalty remains, to be paid if they reapply for legal status. 

There is no reason why amnesty should not be profitable for American citizens who have shelled out tax dollars to educate the children of illegals and to provide other benefits and services, including resident tuition and tax credits. This plan gives everyone the best of both worlds and does not insult taxpayers with token fines. Illegals can stay if they pay up and prove they did not commit fraud, and now they have a reason to keep more of their money in the U.S. as they save up to pay their penalty. The enforcement-minded get to see illegals who have committed fraud, tax evasion, and other crimes deported. The amnesty-minded can avoid deporting millions of illegal immigrants by standing up for their beliefs and proving that what they have been telling us is true, that most illegals are law-abiding and pay their taxes. The only problem with this plan is that it might not amount to much of a windfall. If we kick out every illegal immigrant that we discover has committed fraud or some other crime in order to work and live in America, there might not be many left to legalize.

1..U.S. Immigration and Customs Enforcement. FY 2011: ICE announces year-end removal numbers, highlights focus on key priorities including threats to public safety and national security. October 18, 2011. http://www.ice.gov/news/releases/1110/111018washingtondc.htm, retrieved January 16, 2012.

2..Department of Homeland Security. Office of Inspector General. Detention and Removal of Illegal Aliens. U.S. Immigration and Customs Enforcement (ICE). Office of Audits. OIG-06-33. April 2006. p. 24.

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