Patterico's Pontifications


Affirmative Wage Deduction: A Proposal to Discourage Illegal Immigration

Filed under: General — Patterico @ 4:11 pm

[I recently ran a contest to promote Liberty Classroom, a site run by libertarian Tom Woods which has 17 classes on free-market economics and history from a liberty perspective. As part of the incentives, I offered people the chance to submit a guest post. This first post is by David Barulich and proposes a solution to discourage illegal immigration. — P]

[Guest post by David Barulich]

Is it possible to encourage millions of illegal immigrants to decide to return to their native country, without having to conduct government raids targeting Hispanic communities?

Is it possible for libertarians and supporters of constitutionalism to support a strong immigration enforcement regime without being labeled as racists?

With Affirmative Wage Deduction the answer is YES!

Voters instinctively understand that it’s not right for corporations to receive reductions in their taxable income by engaging in illegal activities. We don’t allow corporations to deduct parking tickets as a business expense.

So why should we allow corporations to lower their taxable income by deducting wages paid to illegal immigrants?

By tweaking the E-Verify system already in place, President Trump may be able to use an executive order to force massive layoffs of illegal employees around the country, by disallowing billions of dollars of wage deductions that reduce taxable net incomes of thousands of businesses.

This proposal would be far more consequential and less expensive than building a wall across the Mexican border.

Under current rules, employers and employees work on an honor system. Employees complete a Form I-9 and show their employer identity documents. Employment attorneys advise their clients not to photocopy these documents. Employers have only to write in the document name, issuing authority, document number, and expiration date. The employer has no incentive to verify the authenticity of these documents. And even if the employer knows they are fake, he suffers no immediate penalty for hiring the employee.

My proposal is Affirmative Wage Deduction. An employer would have to utilize the online E-Verify system to receive an authentication code for each employee. The employer could reduce his taxable income only by deducting the wages of those employees who were issued an authentication code through the E-Verify system. This authentication must be inserted on W-2s and 1099s in order for these labor expenses to qualify as a legal reduction for the calculation of taxable net income.

In most circumstances, the Affirmative Wage Deduction policy would make hiring an illegal immigrant more expensive than hiring a legal worker, and would encourage mass layoffs of illegal workers in thousands of companies across the U.S.

I have done the math behind the Affirmative Wage Deduction, and you can read that on this page if you are interested. The bottom line is that employers would be strongly financially encouraged to employ only legal workers.

Some might argue that the government is inefficient, and that relying on government to maintain an accurate database of people eligible to work is going to harm many people who are legally entitled to work. That’s why, under my plan, there would be a one-year phase-in period, to give people who don’t have their documents together time to get things in order . . . and to give the government time to make sure the database is accurate and complete.

This proposal would severely affect the millions of illegal immigrats who are hired by building contractors, meat packing plants, garment manufacturers, etc. who turn a blind eye to the immigration status of their workforce.

So what could progressives possibly say to oppose Affirmative Wage Deduction?

It raises taxes collected from corporations.

It doesn’t let corporations profit from engaging in illegal hiring practices.

It doesn’t discriminate on the basis of race, ethnicity, or national origin.

It doesn’t require an army of ICE Agents to roam around Latino neighborhoods and target a subset of our population for deportation.

This proposal would do a lot, not just to discourage people from entering the country illegally, but also to discourage illegal immigrants already here from remaining in our country. I hope President Trump considers it.

–David Barulich

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