Paul L. Caron
Dean


Thursday, July 25, 2019

The Taxation Of Undocumented Immigrants

Nneka Obiokoye (Holland & Hart, Denver), Taxation of Undocumented Immigrants: The Uneasy Connection Between Regulating the Undocumented Immigrant and Fostering Illegal Activity, 2 J. Bus. Entrepreneurship & L. 359 (2018):

The volume of illegal immigration to the United States has been a raging issue in recent years, posing a significant issue for debates during the 2016 presidential election and an important policy concern for the Trump administration. Indeed, this issue was arguably the strongest point of contention among the 2016 presidential candidates and may have largely influenced the results of that election. While the recent increase in terrorist activity accounts for some of the controversy, a large part of the problem is that the average American believes that undocumented immigrants have a parasitical effect on the economy. In other words, they believe that immigrants take away from socio-economic infrastructure—such as welfare, health care, and education benefits—without contributing to society. Factual evidence tends to suggest otherwise, as statistics show that undocumented immigrants do, in fact, contribute a significant amount of federal and state revenue in taxes.

This article seeks to correct some of the negative perceptions held by the general public pertaining to undocumented immigrants, by drawing attention to four major points.

First, contrary to popular belief, undocumented immigrants pay taxes. Indeed, as this article will show, in many instances, undocumented immigrants pay a higher rate of tax than U.S. citizens because the burden of tax on such people tends to outweigh the benefits received. Second, undocumented immigrants are human beings with the same needs and desires as every other human. Therefore, laws and policies that tend to make it impossible for such people to provide basic necessities for themselves and their loved ones are not only unfair in the general sense, but they also compel such individuals to engage in illegal activity to provide those necessities. Accordingly, this article argues that the interplay of immigration and employment laws have the effect of forcing these individuals into a cycle of illegal activity out of necessity, whilst enabling better-situated people to exploit them. Third, laws aimed at undocumented immigrants often affect American citizens. This is because most undocumented families contain children or dependent relatives who are U.S. citizens. Therefore, laws which are unjust or unfair to undocumented immigrants are often also unjust and unfair to U.S. citizen members of such families. Finally, this article focuses on the interplay between tax and immigration laws that have potentially resulted in a legal and regulatory scheme which is driving undocumented immigrants to engage in illegal activity, as a matter of necessity.

As its overarching theme, this article considers the issues raised above through the lens of signaling—an important component of tax compliance behavior. Signaling is used in this context to refer to norm-inducing behavior, particularly those acts or omissions by individuals or the government that incentivizes people to pay or not to pay taxes. This article argues that policies and laws seeking to integrate undocumented immigrants into the larger society are more beneficial to the tax system and the economy as a whole than a zero-tolerance strategy. Since government behavior has a signaling effect that influences tax compliance, this article argues that the government can achieve more constructive results in tax and immigration law enforcement while simultaneously discouraging illegal activity if it adopts positive signaling in its laws and enforcement strategies.

https://taxprof.typepad.com/taxprof_blog/2019/07/the-taxation-of-undocumented-immigrants.html

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Comments

So, a blog by law profs is telling us wholesale violation of federal laws (tax, labor, immigration) is beneficial to America? I'm not buying.

Posted by: Smitty | Jul 26, 2019 7:39:17 AM

It might be a moot point considering that 44% of Americans pay no federal income taxes, and that the income level of most undocumented immigrants would fall within that 44%.

Posted by: M. Loughner | Jul 26, 2019 8:50:16 PM