Taxing Immigration

Nathan Smith, at TCS Daily, has some really interesting ideas about immigration and border enforcement, in a rather long, but quite readable article titled "Don't Restrict Immigration, Tax It". At the root of his examination of the open and closed border debate in the U.S. is the notion that whatever policy America establishes should have a net benefit to as many people as possible, immigrant and native resident alike. From Smith's perspective, this means open borders (not to include terrorists and other security threats, but the average person who wants to come here to improve their lot in life), with the proviso that people who come here to work, no doubt improving their situation, be subjected to additional taxes to compensate those who might be harmed financially by the competition from these guest workers. He calls his ideas the "rational middle ground", and while I would need to see this ground thoroughly covered by rational debate to be completely sure whether I agree with Smith's analysis, I see some merit in his propositions.

The article really is too full of content for me to summarize it for you, but I'll hit a few highlights. First, in advocating an open borders policy, Smith says that it "...must be resolute in denying welfare and taxpayer-funded social services to (most) immigrants, because any social safety net provided in the US will represent a higher standard of living than what prevails in many countries." This seems absolute common sense; we can't open our doors, and then pay to support everyone who would show up. Smith proposes that every guest worker be required to deposit with a government or authorised agency "...an amount equal to the cost of deporting them. Having made this deposit, the guest worker should be deported at his or her own pre-paid expense if he becomes unable to support him- or herself."

Second, Smith recommends a mandatory, automatically withdrawn from their paychecks, savings program for all guest workers, available for withdrawal only in the worker's country of origin, providing for incentive to eventually return home. As an alternative, when the account reaches a certain "citizenship threshold", the worker could forfeit the account and become a U.S. citizen. Smith's notion is that the money accumulated from such forfeiture would be distributed to all U.S. citizens, on an annual basis. As the final piece to this taxation-based border policy, "... a surtax will be charged to guest workers, the proceeds of which will be paid out either to all American workers, or targeted to the working poor, ensuring that American-born workers will have a higher standard of living than guest workers who earn the same market wage." This would probably alleviate resentment from the lower wage earners here, and since the guest workers would doubtless still be much better off than in their own countries, despite the extra taxation, could be agreeable to the visiting workers as well. If not, they could simply choose not to come. No harm, no foul. Something Smith didn't indicate, but that seems to me an additional point of merit from the perspective of the immigrant, is that once they became citizens, these guest workers would also be eligible to receive the annual sum. This would be some incentive to cooperate with the tax from the outset, offering eventual compensation for the initial sacrifice.

Smith looks at why he thinks our current border policies are both too restrictive, and basically unenforceable. He discusses how this new approach would make violations of the laws of the country more an issue of tax evasion than illegal entry, resulting not in deportation so much as confiscation of property, which he says would fit better into our general tenor of government. (He spends a lot of time discussing the source of authority of government, which I won't go into. He wrote an article on this topic that I read last year called "Hobbes, Locke and the Bush Doctrine", that I highly recommend. It's also long, and not an easy read, but worth the effort for understanding the philosophy of the roots of governmental power.) Smith goes into much more in his discussion of the reasons for, and the effects of a more open border policy, so as I said, I won't try to sum it all up here, or even try to decide at this point whether I agree with him. What I will say is that I hope I see more non-partisan, idea-oriented debate on this topic. Smith's ideas may, or may not, be viable and the solution to all our border woes, but at least they could move the highly divisive topic a little farther down the road toward a commonly acceptable resolution. I'll give Smith the next to last word:

In principle, since taxing rather than restricting immigration is in the interests of the median voter, a majoritarian democracy should be willing to pass it. Yet the idea of using immigration as a revenue source to offset perceived negative externalities has hardly been mentioned in the immigration debate. I don't think doubts about its feasibility are the reason. Rather, there's an ethical hang-up: people think it's discriminatory to make immigrants pay higher taxes, yet somehow it's not discriminatory to keep them out altogether, which hurts them much more.
Still, I think taxing immigration is an idea with a future, simply because it's the "rational middle ground" for which everyone is looking.

As for me, I'll reserve judgement, but keep an open mind.

Update: I think I should note that in his article Smith is critical of Duncan Currie from The Weekly Standard, relating to an article that he wrote, and I blogged in May, calling for a more substantial border fence. Smith approaches it from the perspective that our country allows very few people to immigrate legally, so fencing won't send immigrants through proper channels, but shut them out entirely. I, however, do not see the two notions as mutually exclusive. There is simply no rule that says if you guard your borders closely you can't also let in any number of immigrants you choose.