The Solution to Illegal Immigration is…Fixing the Tax System

There have been countless articles written about President Obama’s recent executive action regarding the amnesty given to some 5 million people who have been here illegally for over 5 years. Many people have taken the view that there is no reason for these people, who for at least 5 years have been abiding by our laws and working, should be separated from their friends and family by deportation. I would find it hard not to agree with that logic. Other people have the view that the president acted outside the confines of his office. The executive branch cannot simply make laws just because the legislative branch refuses to. I would find it hard not to agree with that logic. Overreaching use of the executive order is nothing new. Lincoln used an executive order called the emancipation proclamation to free the slaves during the civil war, (only the slaves in the confederacy were freed, not the slave states that were still part of the union). FDR created the Japanese internment camps by executive order during WWII. My point is not that since Lincoln did it that Obama should be able to do it. On the contrary, executive orders that have a scope outside the executive department and its employees should not be legal. Since the practice is apparently not going to go away, I would propose a solution…fix the tax system.

Let me frame this within the bounds of illegal immigration, since it’s topical. The republicans say that they would gladly look at an immigration policy favorable to these peaceful long term illegals if only the democrats would agree to close the border in order to stop the flow of illegals into the country so that they can create a more streamlined process of citizenship. The democrats say that if we make all the illegals citizens then we will have millions more tax payers, doing jobs that Americans won’t do and generally improving things for everyone. Both of these arguments are reasonable. Republicans see the illegal aliens as low skill people who would just suck off the already overburdened system and not only not pay taxes, but take tax dollars away from people who are here legally. Democrats make the point that they can’t pay taxes if they aren’t citizens. Both reasonable arguments.

If we were to repeal the 16th amendment, which gives the congress the power to tax incomes, and replaced it with a tax on the things we buy, it would solve both problems at once. This means no more payroll tax, putting legal workers and illegal workers on a level playing field. No more IRS and income taxes, putting illegal immigrants and legal wage earners on a level playing field. No corporate income taxes, because we pay most of those anyway. We would bring home 100% of our paycheck. The regulatory cost to business would drastically reduce, making it easier for that business to pass along the savings to customers by offsetting the increase in sales tax with a reduction in the price of goods, or to the employee with a raise in pay or benefits. Everyone would pay taxes according to what they consume at one flat rate. No loopholes for anyone or any product. Illegals, tourists and people who are legal but working under the table would all start paying taxes. Zero taxes for a business would bring industry back to America. There would be jobs for anyone who would want one.

The border would not be a worry because illegals would be paying taxes. If they want to take advantage of the system they would have to apply for citizenship. If not they could continue to work and pay taxes at the stores they buy things from without any benefits beyond making money for their family across the border. Not every illegal immigrant wants to be an American. This would solve the republican’s problems. The democrats would probably be more willing to deal with republicans the border problem and pathway to citizenship if half the battle is won already, by both sides.

If we had a fair tax, not only would Obama not made that executive order, there would have been no need for it. We could have virtually open borders with very little downside. If a fair or flat tax is so great, why don’t we have one? Well, our current tax system makes our congressmen and senators feel very important because they are courted every day by lobbyists from huge companies trying to get loopholes for whatever they sell. The tax code and the regulatory system are basically the whole reason we have lobbyists at all. While the vast majority of people polled support a fair or flat tax, politicians do not. Having no IRS or loopholes that encourage certain behavior makes it harder for them to control what people do. They don’t like that at all. Repealing an amendment takes 2/3 of the house and senate, and ¾ of the states to get it done. There are several flat tax and fair tax plans floating around. There are slight differences between them. Generally, flat tax proposals don’t need to repeal the 16th amendment, so are favored by many. I really don’t care which one we use because they are all better than what we have now.

Politically speaking, republicans stand to gain the most. Even critics concede that a fair or flat tax would improve the economy providing more jobs. Poor people would benefit most from this tax structure. Illegal immigrants overwhelmingly view democrats as more sympathetic to their cause, but might change their minds if republicans were more apt to open the borders to workers. We as a people are going to have to force our representatives to make a change.

“The way you solve things is by making it politically profitable for the wrong people to do the right thing.” –Milton Friedman

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