Selling Illegal Residents the Right to Stay -Becker

No one knows for sure how many illegal immigrants are in the United States, Europe, and other countries, but there are surely many millions. Figures for the US, the country with the largest number, vary widely, but The Department of Homeland Security estimates that this country in 2006 had close to 12 million illegal residents. There is even greater disagreement about what should be done about these residents. This can be seen from the widely different stances taken by the presidential candidates and others. At one extreme are those who call for the apprehension and eviction of as many illegal residents in the US as is possible. Yet this seems a very unrealistic goal when there are so many illegal residents; the US will not apprehend and return millions of persons to Mexico, or wherever else illegal residents came from. Nor is it desirable to go to the other extreme, and just give blanket amnesty to all illegal residents, for amnesty now would encourage future illegal immigration since they too would expect amnesty. Complete amnesty just makes a mockery of immigration laws, and rewards those who came to the US illegally, as opposed to the many potential immigrants who wait years for the right to immigrate legally. I argued earlier on this blog that selling the right to immigrate would be the best approach to legal immigration (see my post on May 28, 2007 for details of this proposal). This approach would lead to acceptance of greater numbers of legal immigrants, perhaps by a lot, since the revenue from the payments by immigrants could replace other taxes. Paying for the right to immigrate would also negate the argument that immigrants get a free ride because they gain access to health care and other benefits. Moreover, making immigrants pay for to come attracts the type of immigrants who came much earlier in American history: younger men and women who are reasonably skilled, and who want to make a long-term commitment to the United States. These types would be more willing to pay a perhaps sizable price for admission because they would stand to benefit significantly from migrating. To prevent the price from excluding young and ambitious men and women who would like to immigrate but do not have the financial means, the US government could encourage a loan program to help finance the cost of immigrating that would be similar to the loans available to college students. The analogy to college students is close since immigration is also an investment in human capital. One great advantage of selling the right to immigrate is that the same approach can be used to deal with illegal residents, so that it also helps solve the vexing problem of illegal immigration. Instead of offering free amnesty to illegal residents, this approach gives them an opportunity to legalize their status without giving them advantages over those who wait to come as legal immigrants. Illegal residents would be able to come forward and pay to change their status to that of legal residents. Many illegal residents would gladly pay for the right to become legal since that would open up enormously job and other opportunities available to them. The ability to buy the right to stay would be especially attractive to immigrants who want to make a long term commitment to this country since gaining this right stabilizes the future not only for them, but also for their children. Even though children of illegal immigrants born in this country are automatically citizens, younger children would tend to return with their parents if the parents are sent back. Allowing illegal residents to convert their status to legal residents by paying the price to immigrate should satisfy both the hawks who do not want to give free amnesty to illegal residents, and the doves who do not want to force illegal immigrants to leave the country when they have been working and contributing to the economy. Under this proposed system, illegal residents would not get free amnesty since they would have to pay for the right to stay. Neither would they be forced to return to the countries they came from since they could buy the right to stay. Illegal residents should be required to pay more than those coming legally to punish them for having come illegally. To be sure, the problem of illegal immigration would not go away even if all illegal residents could convert their status by paying the immigrant price (plus something extra). Some residents here illegally would try to avoid paying this price by remaining in the underground economy. These would be mainly illegal residents who only plan to work for a short while, accumulate a nest egg, and return to their home countries. If these immigrants were apprehended and want to stay, they should have to pay a higher penalty to stay than illegal residents who came forward voluntarily. If they refuse, they should be returned to where they came from, with possibly other penalties as punishment. If one of the present immigration quotas prevented a person from coming legally, he can then either wait possibly a long time for a chance to come legally, or he could try to enter immediately as an illegal immigrant. A market for immigration gives these persons a legal alternative to immigrate when they want to because they can buy the right to immigrate legally. For this reason, an approach that sells the right to immigrate should greatly reduce the numbers of persons who come illegally, or remain as illegal residents. Effective policies have to be developed to cope with the remaining illegal residents and immigrants, but they will be a much smaller problem when many illegal residents would be able to legitimatize their status by paying for it. I do not believe that the problem of illegal immigration when everyone can buy the right to immigrate legally will be much more serious than is the black market in cigarettes, alcohol, and gasoline that has emerged in order to avoid the high taxes on legal transactions of these products. The proposal I have made to sell the right to immigrate has been criticized as "repugnant", and contrary to the tradition of free and unlimited immigration to this country in the 18th and 19th centuries. But the immigration issues at present are also very different from those in earlier times. Immigration is no longer unlimited, for it is severely constrained by various quotas. Is selling the right to immigrate as repugnant as forcing millions of hardworking illegal immigrants to return home to countries they left possibly years ago? Or is a sale of immigration rights as repugnant as giving free amnesty to millions of persons who violated US laws by coming illegally? Selling the right to immigrate is a contemporary solution to a major contemporary immigration problem that has created deep divisions within the American population by pitting persons of different ethnic and skill backgrounds against each other. Instead of mindlessly using the word "repugnant", critics should concentrate on whether selling immigration slots to illegal residents as well as to immigrants who enter legally is a good way to help resolve these immigration conflicts. I believe it is.

Comments

[David Anderson]

Fees and market mechanisms are proposed to create priorities for immigrants. However, the immigrants we value may not be the most financially well off. A liquid asset requirement does not necessarily correspond to industriousness, education, and willingness to take risks.

Also, immigration has many hurdles to overcome before financial success. Language, cultural customs, and education from recognized institutions for professional licensure are just some of the hurdles.

The bulk of the illegal immigrants are the result of the rural poor in this hemisphere moving to urban areas now that subsistance farming is no longer a viable social safety net. How do we resolve the illegal immigrant status of this group of immigrants?

[RPFN]

With goods we call this a tariff. It's preferable to hard quotas but it's hardly ideal.

[J Monheim]

(RPFN, please remind us of the ideal solution!)
While Becker's solution certainly sounds promising, there must be a parallel system for non-economic migrants, i.e. refugees.

[raphfrk]

Another option would be higher income taxes for immigrants. It would reduce their competitive advantage over locals and increase tax revenue. This could reduce the local resistance to their entry. It could be setup as a 50% increase in federal income tax.

This could be combined with an initial fee. For example, if the fee was $10,000, the person might have to pay $2,000 to register with the scheme before being allowed entry and then the extra tax they pay would go towards paying off the the remaining $8k. When they have cleared the $8k, they would get a Green Card.

A person earning $15,000 a year pays $1859 per year in federal income taxes. At 50%, the excess tax would result in extra tax of $929 and take 8.6 years to pay off the remaining $8000.

This seems reasonable as even a low waged immigrant can reasonably expect to pay off the fee and also the extra taxes aren't crippling.

If the fee was set much larger than that, a situation could arise where immigrants have no hope of clearing the debt and they end up paying the higher tax rates for their entire lives.

Another option is to have a set number of permits per year and let the market decide the price by auctioning them off.

[Dave]

"A person earning $15,000 a year pays $1859 per year in federal income taxes."

A person earning $15,000 a year probably pays negative income taxes (i.e., he gets more back from the EITC and other grants than he pays in taxes). The problem with the income tax scheme and Becker's proposal is that most illegal immigrants don't have the money, and earn so little that they pay less in taxes than they consume in government resources.

There already is a visa program similar to what Becker proposes for entrepreneurs though. The WSJ reported on it recently. A foreigner can get an expedited visa if he plans to invest $500k in a business in American that will hire x number of employees.

[RPFN]

Monheim, ideally we would have open immigration. Give out visas like candy but tie more government benefits (e.g., EITC, financial aid for college, Social Security, Medicare) to citizenship. In addition, instead of or in addition to a 5-year residency requirement for citizenship eligibility, there can be a other requirements, such as sufficient income tax payment, that demonstrates the unlikelihood of the applicant becoming a public charge in the future.

[ad]

The proposal I have made to sell the right to immigrate has been criticized as "repugnant". That is easy to fix. Simply relabel the price as an "immigration tax".

Remember, selling something as sacred as citizenship is exploitation, but taxes are the dues we pay for being a member of a civilized society.

[Robert Hill]

I would respectfully respond to Posner's (rhetorical?) question as to why we should care about those in line to immigrate legally, that by "rewarding" those who "cheat," we "signal" future decision makers that we are not to be trusted to play by our own rules. This could be avoided by offering those in line the same deal as we give to those who have bypassed the line (at a price reduced in proportion to how long they have already waited).

Of course this is all theoretical. Americans may not be fatalistic, but they have a terrible fear of ID cards. We will manage to get around this inconsistency, however, I predict: we will once again essentially pretend to take action, but in effect our actions will be cosmetic and we will continue "having our cake and eating it too" (i.e., pretending to abhore having an underclass, all the while reaping the very substantial benefits). Anyway, in the long run, as long as there are labor shortages, immigrants will come no matter what we do.

[Ignacio]

great idea

[BillInOrlando]

This was already proposed in the McCain-Kennedy Amnesty Bill. McCain says it is not amnesty because there is a fine but he fails to point out that the Bill reduces existing fines and allows for interest-free time payments of said fines. Anyone not convicted of a U.S. crime can buy U.S. citizenship for $40 per month.

The Bill was defeated but if McCain is elected he will sign it when it is re-introduced. By the way, the Bill also calls for the increase of taxes to benefit illegal aliens by more than $2 trillion.

[Andrew]

Another great idea from Judge P I subscribe to. If anyone knows anyone from Congress, please send them a link to this.

(Out of sheer curiosity, does anyone know who the hell thought this was "repugnant"?)

[Andrew]

Oops, I meant "Another great idea from Becker I subscribe to."

[Nelson]

This plan contains way too much common sense, it will never get past congress.

[Bertil Hatt]

Just to make it clear: “repugnance” is a new notion, introduced in Economics by Al Roth in the last issue of the American Economic Review, I believe. It designate a transaction that you do not want to be happening--it is different that to consider unacceptable to take part yourself.

E.g. when a Muslim refuses to eat pork, but couldn't care less that the “roumi” have all the sausage in the world, it is “forbidden”; when some Californian want to ban all horse meat, not just they own, it is “repugnant”.

The other classic cases are organ donation, child work, sex: all are fine, unless done under merchant perspectives. In that respect, “you cannot sell American freedom” or similar argument would label Becker's offer as “repugnant” in the economic sense.

I, for once, have to say that --although there are many aspects of illegal alien life that don't seem to be taken into account in such an offer (the role of 'coyotes', loan sharks, current employers)-- this approach sounds like a idea to investigate, as it should at least help to get out of the usual conundrums on this question. If USA try it, it will for once be ahead of Europe in legislative approach.

Maybe I like it because it basically is a tax, and I can see no market anywhere near it. Taking about no market: how much should that be? Not the amount, but the basis of the calculation?

[Jerry]

Ha! Very few illegal immigrants would pay it. They just don't have the cash, and the differential in benefits wouldn't be worthwhile.

With the current level of enforcement, an illegal immigrant has essentially the same rights and freedoms as a fully documented citizen.

None of these "clever ideas" will work because the resources to enforce the new "clever rules" are not forthcoming.

[Tworzenie Stron]

Another good idea. Keep good work and this blog :)

[Interent Komputery]

nice to read

[Iain]

I don't understand what would happen in the case of default on the loans used to finance citizenship? Would it be exactly similar to student loans--where because the underlying asset is not subject to repo it cannot be easily discharged in bankruptcy? Immigrants, though would not likely have the same incentive to maintain good credit history through not defaulting that current college graduates have. Most immigrants currently exist without access to credit markets, so the loss of that privilege because their credit scores were dinged by this default would not be as scary. I just don't see how this loan market would work in practice.

[Nelson]

Ha! Very few illegal immigrants would pay it. They just don't have the cash, and the differential in benefits wouldn't be worthwhile.This depends on the price of the tax and the benefits received. No risk of being deported or fired for being born in the wrong place, right to join a union, right to file a complaint against the employer for unsafe working conditions, children's education, lower mortgage rates, protection of the law instead of persecution by the law, etc... These are but a few good reasons a person would be willing to pay for legitimacy.

Plus it is a mistake to assume that because some persons don't have money in Mexico, that they can't earn money in the US. There are several examples of immigrants earning, saving and spending money once in the US economy. This should be obvious given that most come over to work for better pay to begin with. Think of the complaints anti-immigrant forces were giving when Bank of America started letting illegal aliens open checking and savings accounts... this wouldn't even be an issue if they were truly destitute.

This ability to earn and save, when combined with with credit markets, makes the problem of paying a fee go away. A person could pay a "guest worker rights loan" back over time (along with their normal taxes) as they participate in the economy.

[Bob K.]

There's nothing brilliant about this proposal.

There is already a program offering a green card in exchange for an "investment".

http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=4ff96138f898d010VgnVCM10000048f3d6a1RCRD

[Nelson]

Bob K, could you fix your link, the site you goes to is the immigration site, but it's not obvious which link from there describes an investment green card.

[Nelson]

Found it:

Of the 10,000 investor visas (i.e., EB-5 visas) available annually, 5,000 are set aside for those who apply under a pilot program involving an CIS-designated “Regional Center.”...

A limit of 10,000 is really really small. And the cost of $1,000,000 is really really large. This does nothing to better our current immigration situation.

[Fresh Air]

The biggest risk with this is that some sugar daddy, along the lines of George Soros, decides paying for 2 million illegal aliens to become citizens is a great way to ensure the future dominance of the Democrat party. You would have to attach a lottery system and/or quotas to prevent perverse sponsorship.

[DanC]

You could have potential employers front the money to immigrants, just as we did once upon a time in this country.

We could even have employers bid for the right to hire immigrants. Farmers might bid a low amount for an unskilled worker while a tech company may bid a high price for an Indian tech worker. This auction could take many forms, an annual draft like sports teams, or a silent bid system.

Once you accept the idea of paying for the right to immigrate, the rest is just mechanics.

Could I sell my citizenship to an immigrant and then retire to a foreign country?

[neilehat]

Sure, why not. Evidently immigration to the U.S. appears to be a valuable commodity. With the deficits, both budgetary and trade wise, the Nation could certainly do with the extra income. But I have just one revision too make. Instead of setting a price, the value should be allowed to float on the open market like any other commodity. As for purchasers, only Nations should be allowed to bid. By doing this we may also be able to curb the problems of "ethnic cleansing" and genocide. By implementing this revision, we might be able to kill two birds with one stone.