Bryan Caplan  

David on 2nd-Best Immigration Policy

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David made me think a second time about second-best immigration policy.  My thoughts on his:

1. I think Bryan drastically understates the ability of even fairly low-skilled workers to come up with a substantial five-figure admission fee. (I'm assuming the fee would be somewhere between $40K and $100K.) My basis: look at what many of these same people are willing to pay "coyotes" to smuggle them here. And remember that this is a situation in which the people are not assured of making it here and take a substantial risk of dying.

Fair enough, but look carefully at David's coyote link.  Countries where you have to pay $10k+ to get to the U.S. send few immigrants here.  The large majority of illegal immigration to the U.S. comes from Mexican, where coyotes charge roughly two years' income for transport.  Not ten years' income, or thirty years'.

My view is that even if the government charged a lump sum of $100K, you would have 5 million instant takers. If I'm right, that would be a cool $500 billion. Think of the one-time drop in the deficit.

That's completely reasonable.  But 5 million is only a tiny minority of the total number of people who want to immigrate.

2. Let's say Bryan's argument about the inability of people, especially the unskilled, to raise that kind of cash is right. That doesn't imply a 10-percentage-point increase in the income tax rate. It implies installment payments. If the $100K is the right amount (remember, I'm in a second-best world here: Bryan would say the right amount is $0), then the government could charge the person $10,000 a year for 15 or 16 years. That avoids the substantial dead-weight loss that comes with higher marginal tax rates.

I completely agree about the deadweight cost.  And on reflection, if the surtax goes away after the immigrant pays off a fixed sum, my proposal and David's are nearly equivalent.  My only concern is that I think an "immigration tax" would have marginally more popular appeal than an "installment plan."  But I could be wrong.

COMMENTS (5 to date)
PrometheeFeu writes:

Let me re-post my comment where the discussion is:

I think the fee has a political advantage. If we institute an entrance fee, it will be most likely implemented as a new program for immigrants going forward. If we institute a tax, you can bet politicians will tax people who are already in the country legally. I for one would rather not pay a new tax. Also, there will be tremendous political pressure to make it harder to become a citizen. Right now, you just need to have immigrated in the country for a couple of years before you qualify for citizenship. But if we are talking about a tax, politicians will want to collect that tax as long as possible. Citizenship will probably require a much longer time as an immigrant and with an extra tax.

benamery21 writes:

It is worth noting, in discussions of illegal immigration and 'coyote fees,' that the majority of illegal immigrants do not enter the country illegally. A majority of undocumented residents enter legally and overstay their visa. Some enter legally, stay legally, leave legally, and return legally, but work illegally during their stay. A border crossing card (issued for ten years) typically allows up to 6 month continuous legal presence in the U.S. and return is typically allowed as long as time outside the U.S. is greater than time in the U.S. This allows some Mexican citizens to spend up to 50% of their time legally in the U.S. (though not authorized to work).

benamery21 writes:

PrometheeFeu: Good point about the EB-5 on the previous thread (you beat me to it). It is interesting that fewer than 2000 people availed themselves of this opportunity last year.

benamery21 writes:

PrometheeFeu: Good point about the EB-5 on the previous thread (you beat me to it). It is interesting that fewer than 2000 people availed themselves of this opportunity last year.

There were about 36000 E-1,2,3 visas granted as well.

JPIrving writes:

I'll bet that nearly everyone in Somalia would like to move to the U.S. Bangladesh and Haiti too. We should let them in, even if the people who just happen to currently live in the U.S. were worse off, total utility would rise. Plus with their boosted standard of living, all those bright eyed former cattle herdsmen could have more children, and we know kids, even if from ultra low IQ stock, are always a good thing.

You could even have a few stay at your house Professor Caplan.

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