Taxing Citizenship

by Harry on February 5, 2007

Yesterday’s NYT carries an editorial on proposed fee hikes at Citizenship and Immigration Services. It turns out that the section concerned with issuing visas and granting citizenship has to pay for itself, and is planning to raise fees in order to reduce the extraordinary waiting times and to improve customer service from the currently less-than-stellar levels (native American citizens might not know what I mean by that, but the immigrants among you do):

The application fee for citizenship would rise to $595 from $330. The fee for permanent residency would increase to $905 from $325, and charges for bringing in a foreign spouse or employee would more than double

The Times blames Congress for requiring that immigrants pay for the service which serves them, and I’m sure that there is no sensible economic rationale for that. But, I fear, Congress is unlikely to heed the Times’ advice. So what about an alternative: a tax on citizenship?

At the moment there is a flat fee: everyone pays the same amount regardless of how much they benefit from their new status, and regardless of their means. But some immigrants have far greater means than others, and some benefit far more from becoming Americans than others. I think of myself and Rupert Murdoch. In my case I had few material means, but benefitted enormously. The greatest benefit was intangible (and, I hope, non-taxable) — meeting and marrying the woman of my dreams. But I daresay that, while I arrived with a few hundred quid, my lifetime expected income is much higher than it would otherwise have been. You could argue that I have contributed so much to American society that the Americans should be grateful to have me, and should bear the costs. I wouldn’t, and I would laugh if you did (though there are obviously other well-paid immigrants for which something like that case could be made).

Let’s turn to Rupert Murdoch. Like me he had a perfectly good alternative to becoming an American — in fact, some people might say his alternative was better than mine (John Q might say that, for example). Unlike me he was incredibly rich, and unlike me his main reason for seeking US residency was to increase his personal fortune, which, I guess, he did. Why shouldn’t he, and I, pay a great deal more for the privilege of becoming resdients and citizens than poor immigrants from, say, Latin America, for the much greater (material) benefits we derive?

The Times says, “There are no easy formulas for pricing services like these”. But I’m not sure. Imagine a progressive tax on immigration. Why not add a small increment to the Federal income tax rate of immigrants who earn over $50k, rising to double that increment for those earning over $100k. The increment would be calibrated to the costs of administering Immigrant and Citizenship Services, minus the income from a nominal flat rate charge for filing papers. The nominal flat rate charge provides some disincentive against filing frivolously or incompetently, but basically those who gain most end up paying for the service for all. If there were surplus, it could be ploughed back into improving services, or siphoned off to USAID, or to the military, or something like that (where is the “tongue-in-cheek” operator in WordPress?).

If you object to taxing immigrants, and the two-tier status of citizenship this would result in, I guess I agree. Perhaps permanent residents should bear the entire cost, thus providing an incentive for people to become citizens. But anyway, there already is a tax on citizenship, and the current proposal would increase it greatly — effectively the fees constitute a one-time regressive head tax. My proposal replaces this with a progressive tax related to ability to pay and the size of the benefit the person receives.



Steve LaBonne 02.05.07 at 5:02 pm

But, I fear, Congress is unlikely to heed the Times’ advice.

I would hope we could hold a Democratic Congress to somewhat higher standards than that… but alas you’re probably right. After all they’re clearly not going to do squat about stoppoing the war, either.


SamChevre 02.05.07 at 5:02 pm

I have a good friend who’s currently in the INS maze.

She’s Canadian; married to an American Citizen; has lived here for at least 15 years.

She’s been waiting for almost 2 years, at this point, for a final hearing and taking the oath of citizenship.


cm 02.05.07 at 5:07 pm

I’m glad our inflation rate is only 2%. Imagine what the hike should be otherwise.


Ed 02.05.07 at 5:08 pm

What is the argument against auctioning green cards? The U.S. government would raise more than enough revenue to fund the INS, and people wanting to come to the U.S. would pay whatever the prospect is worth to them.


harry b 02.05.07 at 5:27 pm

ed — lets assume there are no problems with justice in this respect. I can think of two problems.

1) Misalignment between ability and willingness of prospective immigrants to pay and the benefits they would bring to the host country. Lots of needs in service sector other low paid industries, lots of supply of people who would not do those jobs. Lots of needs in hi-tech, for people who have skills, but not necessarily much money (its very hard to borrow against future expected earnings, so credit markets wouldn’t solve this problem).

2) It seems to me that at the high end of income my proposal could (if pursued more agressively than I do above) yeild more revenue than yours. Can’t quite explain why.


engels 02.05.07 at 5:43 pm

Why shouldn’t he, and I, pay a great deal more for the privilege of becoming resdients and citizens than poor immigrants from, say, Latin America, for the much greater (material) benefits we derive?

I don’t think I like where this leads. Surely the people who benefit the most from immigration are those fleeing war or persecution; in the most extreme cases, those who would not be be alive had they not been granted asylum. I don’t think such people should be “taxed” in accordance with the (huge and material) benefits they received. (Are you saying that such a benefit is “intangible” and therefore can not be taxed? But economists are generally perfectly happy to attempt to quantify such benefits…) In general, I don’t find this principle – that people should be taxed in accordance to the (financial?) benefits they receive from membership of the state – at all attractive, certainly far less attractive than the broad policy which I think you are trying to defend. But perhaps your argument was not aimed at people like me…

It does look like you probably want to make an exception for people who have “no alternative” to coming to the US. But I’m not sure exactly who you intend this exemption to cover: does it extend to people fleeing extreme poverty? Someone who benefited greatly from health care which he or she would not have received in her country of origin? Unless you spread this net very widely, this tax would seem to fall very heavily on some extremely disadvantaged people. (It’s true that you also mentioned people’s means, but I’m not sure how this second principle is supposed to interact with the first one.)


marcel 02.05.07 at 5:44 pm

Harry: Unless you get your usage in order, and quickly, I think that the good ol’ Unitedy States should give you the heave ho. “I arrived with a few hundred quid… ” Were you hoping to exchange them for some quos?


Maynard Handley 02.05.07 at 5:50 pm

She’s been waiting for almost 2 years, at this point, for a final hearing and taking the oath of citizenship.

To be fair
(1) The INS was in REALLY bad shape in the mid-90’s. It took me (with the help of a large corporation) over six years to get a green card. The experience of my brother, and what he tells me of his friends, is that this is now much much faster for most people.

(2) From when I applied for citizenship till the interview took about six months (basically three months to be asked to come in for prints, three months to be asked to come in for interview). This is just one data point, but I am unaware of any large collection of complaints about how long it takes to get citizenship. It seems to me that this friend should politely ask the INS if they have perhaps lost her application or something.


harry b 02.05.07 at 5:50 pm

engels — I did think about your objection as I was writing it, but was dashing this off, and didn’t want to complicate things too much. One reason I felt able to do this is that in fact fees are currently waived for refugees etc, and there is no proposal to change that, so it doesn’t arise as an issue. If you’ll bear with me, how does it sound if I restrict it to “financial benefit”, which is what taxes are usually imposed on? (I realise that is not a principled stance, but does it work better?).

You’re ok with the actual policy, right? Its just finding the right principle behind it that’s at issue.

samchevre’s story explains why I’ve not become a citizen yet — I’m very nervous of the prospect of being unable to leave the country for 2 years or more. So I do have an interest here…


engels 02.05.07 at 6:20 pm

how does it sound if I restrict it to “financial benefit”, which is what taxes are usually imposed on?

Well, I can’t find a good source for the figures, but let’s say that two IT workers with similar abilities have just moved to the states and are earning $60 000. The first one is from England, where he was able to earn $50 000. The second one is from India, where he was able to earn $10 000. So the English immigrant pays immigration tax on a net benefit of $10 000 p.a., whereas the Indian pays it on $50 000 p.a. Is this what you had in mind? It doesn’t seem very fair to me…

(I’d be fine with means testing immigration charges, based on present or even future income, but IIRC what you are proposing is somewhat different.)


matt 02.05.07 at 6:55 pm

It’s hard for me to know all the details of what you purpose, and I’m not a tax lawyer, but I suspect that once one is an actual citizen it would be unconstitutional to tax the person in question at a higher rate due to the fact that the person has naturalized. In most, nearly all, areas naturalized citizens must, as a matter of constitutional law, be treated just the same as citizens by birth. This seems right to me. We could put an extra tax on non-citizens without constitutional problems but it might somewhat discourage people who are, by all accounts, net contributors to the economic well-being of the society. (If it’s a small tax it obviously would not discourage very many, but such things need to be considered.) Murdoch is, of course, a US citizen and had to become one to own Fox TV. And, there is already something like a greencard auction, though perhaps not a very efficient one- if you will invest one million dollars in a buisness that will employ 10 americans (less in econoically depressed areas) then you can get a green card. This seems completely reasonable to me, though my impression is that not that many people get green cards this way.


harry b 02.05.07 at 9:47 pm

Matt — sure, I can see why it would be unconstitutional. Though, as I say, there’s effectively a tax anyway, its just levied before they become citizens rather than after.

engels, you’ve got the proposal wrong, and its because my presentation was confusing. The actual proposal ignores the principle of charging people differentially depending on the benefit they get, and simply targets ability to pay. So I envisaged levying the tax on everyone whose taxable income is above $50K and doubling it for their taxable income above $100K. (Those numbers are plucked out of thin air), regardless of where they came from and what, therefore, its reasonable to assume that they’ve gained.

I think the original post is confusing and, possibly (but not necessarily) confused. There are two considerations (ability to pay, extent of benefit) and in principle its reasonable to consider both of them. In practice considering the first is easy, and considering the second is difficult and perhaps its obnoxious. The reason I thought you were ok with the policy is because it in fact takes only the first into account, which you seem ok with.


engels 02.05.07 at 10:03 pm

In that case, it gets the “all clear” from me!


Aidan Kehoe 02.05.07 at 10:28 pm

Oh, bugger, if something receives the Engels-on-Crooked-Timber endorsement so easily, then there is definitively something askew with it. A shame, because I like the idea.

Right, so for the US especially, since much of what has made it more advantageous than other Western countries has been based on immigration, shouldn’t that tax be more levied on native-born citizens? It makes sense, when one considers the tax as an advertising outlay that will benefit one’s children more than it wil onself.


engels 02.05.07 at 10:36 pm

Just to clarify: I’m not foreclosing the issue of whether immigration charges are justifiable in the first place, just saying that IMO the policy in question would be better than the status quo ante.


nick s 02.05.07 at 10:40 pm

The Times blames Congress for requiring that immigrants pay for the service which serves them, and I’m sure that there is no sensible economic rationale for that.

The bi-annual ‘immigration’ foo-fah would be amusing if it weren’t such a pain. After all, the people who know most about the USCIS from the sharp end are those who can’t vote, and those who do vote tend to think of the debate strictly in terms of those durned Mexicans.

I emailed Lou Dobbs at the end of last year with a challenge: after the elections, to devote programming space to an examination of the underfunded immigration bureaucracy, and to call for an increase of funding. (I know, I know.)

The worst aspect of USCIS charges are the nickel-and-dime ones. Been fingerprinted for one form? Doesn’t matter: there’s still a mandatory fingerprinting fee (and often a long trip to the facility) for another one.

By comparison, the process for an American spouse to get a settlement visa for the UK is refreshingly straightforward: one $520 fee and a turnaround in days rather than months.

I am unaware of any large collection of complaints about how long it takes to get citizenship.

I believe it depends a great deal upon where you are in the US. Christopher Hitchens isn’t a representative case, but he applied in 2002/3 and may have just taken the oath in recent months.


engels 02.05.07 at 11:51 pm

As a British citizen, I should say I’d have been very happy to pay any extra tax which might have been used to expedite Christopher Hitchens’ American citizenship application. I would also be more than happy to do the same for Nick Cohen, Norman Geras and the permanent staff of Harry’s Place, should they get the inclination to follow in the Dude’s footsteps.


Matt 02.06.07 at 1:09 am

What might make sense would be a rate of fees based on income or the like, w/ tax returns or something used to establish the rate. I don’t see why that would be problematic. And, even with slightly higher tax rates for non-citizens there might be an additional benefit of encouraging increased naturalization. (I’m not sure I care that much about naturalization rates as such, but many people who write on immigration get worked up about them.)


djw 02.06.07 at 1:11 am

While we’re at it, there ought to be a high service fee for those who wish to renounce their US citizenship for tax purposes. This could be based upon income taxes previously paid for some number of years, thus compensating the US for loss of revenue.


marcel 02.06.07 at 2:14 am

engels (#17): How about Niall Ferguson, Dave Beckham or posh spice? Or, while we’re at it, Charles Mountbatten-Windsor?


nick s 02.06.07 at 5:42 am

A testament to the Kafka-esque shittiness that is the USCIS: I wouldn’t inflict it on my worst enemies.

On the Murdoch example, I suspect he got in on the E1 ‘trader’ visa anyway, which would be a de facto tax if one didn’t have the same clever accountants as the Digger.

But on the principle, the LouDobbses ought to be supporting the idea of paying for a better, less fucked-up legal immigration bureaucracy out of their own taxes.


Matt 02.06.07 at 2:34 pm

Well, the E-1 visa would allow Murdoch to come to the US to conduct buisness, but doen’t give the right to become a US citizen (it’s not an immigrant visa) so doesn’t allow for naturalization. Murdoch is a US citizen (he had to be to own a TV station, a somewhat weird law). When you are filthy rich there are lots of ways to get things done so he might have had an E-1 and then got a private bill from a senator to allow him to get a permanent resident visa and maybe even to naturalize more quickly. But, if I had to guess I’d guess he had the “millionaire’s visa” or some other. (A private bill being sponsored for him wouldn’t surpise me either.)


Tracy W 02.06.07 at 8:01 pm

I know very little about the US tax system, but surely you and Rupert Murdoch are being taxed already by the IRS? And probably paying more in absolute terms of your income than some poor migrant working as a cleaner?

(We will ignore any tax avoidance/evasion Rupert Murdoch is pursuing – presumably he could avoid/evade an immmigrant tax as well).

So why should you guys pay yet another tax on top of that? What costs do you think you are imposing on the USA?

You have some argument here that you derive great benefit from living in the USA. But benefit alone is not justification for price. I derived great benefit from $50 of antibiotics – they very likely saved my life – according to your logic I should have been charged for them in proportion to the benefit to me, not in proportion to the cost to make and deliver them to me. If not, why should you be charged more for citizenship of the USA than the costs to the country of you arriving?


nick s 02.06.07 at 8:43 pm

matt @22: Looking at the Digger’s bio, he arrived in the US in the early 70s, and hung around at least until citizenship in 1985, so I’ve no idea what track he took.

Going back to the principle, it sort of ties into the ‘graduate tax’ as an alternative to tuition fees. It’s a difficult thing to square constitutionally, I’d imagine. Ultimately, Americans who want a better immigration system need to foot the bill, fully, and set the terms. If that means the Know-Nothing faction locks out foreigners, then so be it.


Cala 02.07.07 at 2:16 pm

The problem isn’t that immigrants (we’re talking legal ones, by the way) have to pay for services. It’s that the fee is going up by $1000 on October 1. That roughly doubles the current costs for a fiancé visa, for example.

Take the fee increases for the I-129F, the very first petition that needs to be sent to bring over a fiancé. In September, the fee was $170. This fee has gone up incrementally for about the past 20 years, in jumps of around $20. In October, this is going up to $455, more than the double all of previous increases combined. That’s the single largest jump in this whole package.

Paying fees is fine. But this is a ridiculous amount of money for a projected 20% increase in processing time.


nick s 02.07.07 at 3:27 pm

@cala: oh, I hear you. And that doesn’t factor in the additional costs, such as the medical exam. Apparently, it costs $239 to ‘make determination’ of a fiancé(e)’s eligibility. Yeah, right. One justification is that K3 spouses will be waived the I-129F fee, but that doesn’t mean much when the I-130 fee goes up from $190 to $355.

In short, it’s a weighted average increase of 65 per cent per applicant per visa, and the same again for adjustment of status.

On the other hand, it’s not quite as bad as I first thought: the I-485 increase from $385 to $905 seemed atrocious, but that encompasses the various ancillary fees for interim benefits such as advance parole and employment authorisation, which are part of the nickel-and-diming I mentioned. It’s a smart move. So is the move to enhance waivers for domestic violence adjustments and eliminate fees for asylum and trafficking visas.

Still, that’s an increase of over $100 on the average total cost for adjustment of status, and apparently doesn’t include the (increased) charges for biometrics.

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