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All Immigration Laws Have a Direct Bearing on Tax Laws in United States

The immigration rules of the United States are always conjoined to its tax structure. In a way the immigration in USA is merit driven and looks at a person’s ingenuity to contribute to the economy by way of skills, knowledge and entrepreneurship.  Therefore those seeking U.S. immigration must know rules of taxation affecting different types of immigrants’ especially undocumented aliens.

Under the provisions of the new Immigration Reform Bill the immigration tax laws will be sharpened to absorb the illegal immigrants numbering 11 million into a pathway of citizenship by way of more back taxes and the addition of more taxpayers to the tax base. This will progressively offset any wasteful expenditure at the social security front in a few years.

Tax Laws and Citizenship

The treatment of aliens under the internal revenue and social security laws of the United States is contingent on the status of aliens under the immigration laws of the United States. The immigration laws classify aliens into three:

  • Immigrants
  • Non-immigrants
  • Illegal aliensjudgegave1131

Immigrants can reside permanently in the United States and get the green card.  The green card holder can enter and leave the United States without a visa or re-entry permits at will and earn income in the United States. citizen.

Back Tax Issues

Under the new Immigration Bill citizenship for 11 million undocumented immigrants would be a long drawn process with tax tests.

  • Gaining Provisional legal status after passing background checks and paying back taxes
  • Applying for green cards after PLS in 10 years
  • Applying for citizenship three years into getting green cards

In tax matters, the tax laws speak of only resident aliens and nonresident aliens.  While resident aliens are taxed as U.S. citizens nonresident aliens are taxed as per the Internal Revenue Code.

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Immigration Tax Laws Get a Boost Under the New Immigrants Bill of Obama Administration

Ever since Ronald Reagan initiated the immigration reforms in 1986 covering an estimated 5 million unlawful immigrants the United States has not witnessed any large scale reform initiatives on immigrants as the Obama initiative in 2013.

The Obama initiative which came out as a bipartisan bill on immigration saw the nod of the Senate and is awaiting its destiny at the House of Representatives. In the House of Representatives the Republicans outnumber the Democrats and may see many surprises.   There is an effort to give an economic flavor to the new Bill by making it an effort aimed at expanding the base of tax paying population.

Obama’s new bipartisan Migration Reform Bill is seeking to mainstream 11 million immigrants who are illegaly living in the US. The Bill hopes to provide citizenship to them in 13 years under certain conditions.  The undocumented migrants have to become proficient in English, pass criminal detection checks, pay fines and back taxes.

Under the lens of immigration tax laws, 11 million immigrants joining the legal workforce will add to more competition but they will expand the tax base.

The tax immigrants after gaining legal status will create jobs as they become productive and earn higher wages. When legal workers earn higher wages and spend money on housing, clothing and food demand for goods and services will shoot up the economy will grow.

Legal wage earners will increase spending tax revenues too will increase. It has been noted that in year 2010, undocumented Latino workers missed out on $2.2 billion in income and the federal government lost $1.4 billion in taxes.

If the Immigration Reform Act of 2006 had been signed into a law there would have been an estimated $65 billion in new revenue to the federal exchequer between 2007 and 2016.