June 13, 2007

Taxing Illegal Immigrants for Wire Transfers

A new bill in North Carolina proposed by Rep. George Cleveland (R-Onslow) seeks to place a 5 percent excise tax on wire transfers made by illegal immigrants. Similar bills have been filed, but not passed, in Georgia and Texas. Lawmakers in North Carolina see it as a way to ‘get a handle’ on the state’s rising number of undocumented immigrants, now exceeding 400,000, about half of whom send billions of dollars back home each year. The tax would be imposed at companies like Western Union, not banks, when transfers were made. Businesses don’t seem enthusiastic about the plan since it will require them to verify the citizenship status of every customer. All customers would have to show identification proving legal status such as a passport, Social Security card or military ID. Rep. Cleveland responded to business concern by saying clerks should be able to identify illegal immigrants using other methods:

"If a fella comes in with a pair of shaggy boots on, jeans and a T-shirt
and he's got a straw hat on - I mean, come on, give me a break."

I say, give ME a break. Cleveland’s remarks are completely out of hand and the entire plan is unjust. Cleveland claims the excise is meant to collect taxes on thousands of dollars of income that currently go untaxed. This seems like a reasonable goal in theory; however, the action plan is poorly targeted and based on false premises.

Undocumented immigrants, in most cases, are able to use a false SSN to gain employment. In doing so, they are subject to the payroll tax as well as federal, state and local income tax that are usually automatically deducted from their paychecks. Most immigrants never see this money again, either because they do not complete tax forms, or because they are not eligible for Social Security benefits because they are undocumented.

To contend that the income they earn is untaxed is quite simply false. According to the National Immigration Law Center, illegal immigrants contribute $8.5 billion to Social Security and Medicare, and $50 billion in federal taxes every year. Furthermore, many undocumented immigrants do not earn enough to pay federal income taxes and often do not apply for available tax credits and refunds. They are clearly paying their fair share into the system.

Putting a flat excise tax on only one group of people is completely discriminatory and also regressive. It’s like adding on an additional sales tax just for immigrants. This tax will only continue to burden an already overburdened section of the populous. The implementation is ill-reasoned and logistically prone to all kinds of discriminatory acts. I think lawmakers could have come up with something better than this.


At 1:19 AM, Blogger Andrew Oh-Willeke said...

Probably unconstitutional under the dormant commerce clause. This is a discriminatory tax on interstate commerce, pure and simple.


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