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Financial/Economics

Use Tariffs to Improve US Economy and “Illegal” Immigration?

Hey everyone, here’s an interesting set of ideas I have revolving around immigration.  Please understand that I am writing this as someone who doesn’t have a professional background in the subject, nor a deep understanding of all the issues and challenges. 

I’m just throwing out an idea that is only partially thought-out/researched.  I’m not trying to offend anyone but rather bring up an idea that I haven’t seen mentioned much, see here as well  Also, all the numbers suggested are from other sources or guestimates.

Would this idea be considered liberaltarian (portmanteau of libertarian and liberal)?  

I’d also like to acknowledge all the goodhearted, hard-working people from all around the USA and the entire globe. Thanks.

Here’s the basic idea: Anyone who wants to work in US, assuming they pass a background check (no violent crimes, for example), pay a tariff, and pay taxes, should be allowed to work and live in the US.  They could go to a US Embassy in their country (or if already in the US, an office near where they live), pay a fee for the background check.  If they passed, they would pay the rest of the 1st year tariff, receive proper documentation and go to the US.

This isn’t necessarily supposed to change the currently system of green cards and sponsored visas, something I don’t know much about.  It’s a hypothetical idea that’s more an extension to the current system.  And, it’s not talking about people who would be considered refugees.

One of the main issues that people have with immigration is the idea that it takes away work from people already living in the country.  It would seem that a more competitive labor market would make it tougher for certain individuals but at the same time help the business sector.  Perhaps this is actually not the case, perhaps one person having a job helps other to have a job? The Wikipedia article talks about this briefly.

I don’t have a good answer for this important question at this time, rather am seeking to provide a possible solution to explore theoretically.

How it might work

Basically, anyone who wants to work in the US would be allowed to work (with a background check, and paid taxes and tariff).  And all the illegal immigrants in the country could stay, they would just need to pay tariffs for a certain time period (say 5-10 years), plus normal taxes.  And pass thorough but fairly quick background checks.

Consider how much hard-working Latinos pay to illegally cross the southern US border. Probably between $2000-4000. (border crossing fees).  Let’s say 200,000 people or half of illegal immigrants in 2014 cross via the southern border and spend $2000-4000. (number of people crossing southern border).

That’s $400-800 million in extra taxes that those people could pay as tariffs to work in the US during their first year of entry.  Because these immigrants would be working legally, they would be paid at least minimum wages. And workers with similar skill sets already located in the US might not be so undercut in terms of wages.  Also, the first year tariff might essentially cost new immigrants nothing because they wouldn’t have to pay coyotes those $1000s.

Each year, a person in the tariff-based program would need to pay a tariff (at the beginning of their “calendar” year) on top of taxes, say $2000/year.  Once they had paid the tariff for, say, 10 years, they could get (if they hadn’t already received one) a green card, a work visa, and/or a citizenship.

If they lost their job and couldn’t pay the tariff, they would have, say, 3-6 months to pay the tariff.  If they weren’t able to pay within that time frame, they could leave the country or convert to a 1-3 month tourist visa, after which they would need to pay the accumulated tariffs to be reinstated in the program or leave the country.  The tariff would be tax-deductible.

Given about 11 million illegal immigrants, a tariff of, for example, $2400 ($200/month) would result in $26.4 billion in extra revenue for the US state and federal governments.

Say 8 million illegal immigrants earned an average of minimum wage, $7.25/hour, and worked 2000 hours (number of illegal immigrants).  This is about $14,000. Let’s say taxed at about 10%, this results in $11.2 billion in added annual revenue.

So in 1 year, the state and federal government could gross $37 billion in revenues.  In 10 years, $370 billion.

The price of the tariff could be set for each year’s entrants based on supply and demand, plus the costs associated with the program. To be clear, the entrants in 2017 would pay the same price of tariff each year of the program (rather a total average over a certain amount of years), but the the entrants in 2017 and 2018 might pay different amounts in total.

Since there’s a huge build-up in the “illegal immigrant population”, it could be tiered so portions of that population would graduate at slightly different times, so that there would be such bottlenecks created within the system.

Conclusion

Some people argue that illegal immigrants cost the US taxpayers more than $100 billion a year, while others argue that illegal immigrants are actually a net plus to the US economy (Google search).  I don’t know enough to argue for or against these statements at this time in a truly educated manner, though I tend towards the net plus side of the argument.

But perhaps this tariff might help more illegal immigrants to become more included in the US economy.  The number of people entering the US might rise for a few years, but ultimately the price of the tariff could used to somewhat manage the numbers of immigration.

It might be a net positive for the USA.  There would be more revenue to the US governments. (Some people may oppose the state and federal governments increasing taxes, which I understand is an important concern) Also, immigration could be painted in a more favorable light than some people are currently portraying the situation (as a drain on resources and stealing jobs – again check out the Wikipedia article).

Again, I don’t have a good answer to these questions of immigration. Any solution would probably help some people more than it would help others. But I am trying to send everyone good wishes and also the suggestion of considering to see the world through the combined ideas of true, love, and personal empowerment.

And finally:

I do know many people who have come to this continent, some in the last year or two and some many years ago, and of course all the people whose parents, grandparents, great grandparents and ancestors from farther back all came to this continent.  And I’m very glad to know all these people.

Please check out Wikipedia’s article on Economic Impact of Illegal Immigrants in the US as one possible well-informed perspective.  Thanks.