Earlier this evening, President Obama delivered the speech that everyone has been talking about: his plan for immigration reform.
If you missed it, you can watch it here or read the transcript here.
The President’s plan is, as he explained, intended to fix “this broken immigration system.”
I think we all agree that it’s broken. What we don’t agree on, collectively, is how to fix it.
President Obama took the step forward tonight in presenting his plan even while Congress challenged his authority to do so. The President’s response? “Pass a bill. I want to work with both parties to pass a more permanent legislative solution.”
To date, Congress hasn’t been able to present such a bill to the President. In his speech, the President referenced the 2013 Senate vote on the Border Security, Economic Opportunity, and Immigration Modernization Act, S. 744, which passed overwhelmingly, 68-32, including 14 yes votes from the GOP. The House, however, failed to pass the bill with what the President offered, could have been “a simple yes-or-no vote.”
But. And it’s a big but. I don’t know that the bill deserved a “simple yes-or-no vote.” The Senate bill was hardly simple. It was long – 1,200 pages – and complicated. While I’m not an immigration expert, I do know a little something about taxes – and the tax portion of the bill left a little bit to be desired.
Under section 2101, Registered Provisional Immigrant Status, of S.744, the “pathway to citizenship” required the applicants to have “satisfied any applicable Federal tax liability.” For purposes of the bill, the term ‘applicable Federal tax liability’ meant all federal income taxes assessed in accordance with section 6203 of the Tax Code. In other words, under the bill, the “pathway to citizenship” would not have required applicants to show evidence of prior filings or payments or prove that they have been compliant. Instead, the language in the bill stated that taxes which have been assessed by the Internal Revenue Service (IRS) must be paid and that applicants remain compliant moving forward. That was a significant change from the current rules for applying for residency or citizenship status which makes evidence of complete tax compliance absolute criteria for legal entry.
President Obama’s summary did not include anywhere near that level of details on taxes. The President simply said:
So we’re going to offer the following deal: If you’ve been in America for more than five years; if you have children who are American citizens or legal residents; if you register, pass a criminal background check, and you’re willing to pay your fair share of taxes – you’ll be able to apply to stay in this country temporarily, without fear of deportation. You can come out of the shadows and get right with the law.
The language – admittedly brief – seems to imply that the only tax requirement is compliance moving forward which is a little bit different from earlier proposals. And that’s going to make some folks on the Hill very unhappy.
In fact, how to deal with the issue of immigrant taxes has long been contentious. As part of the immigration discussion in 2013, Sen. Marco Rubio (R-FL) and Sen. Orrin Hatch (R-UT) offered up a series of amendments meant to clarify tax issues. Included in those amendments was language that would require applicants to pay all back taxes before gaining status. The pair didn’t, however, explain how that was supposed to happen, instead leaving the responsibility of figuring out the documentation and details to the IRS – which of course makes sense since after collecting existing taxes, administering the Health Care Act and enforcing the Foreign Account Tax Compliance Act (FATCA), the agency has nothing else to do.
The underlying premise, however (without all of the reliance on IRS to figure out the details), is exactly what many want to hear: why shouldn’t those folks hoping to stay in this country prove that they’ve paid all of their taxes?
But here’s the difficulty: it would be a near impossibility to require previously undocumented persons to show that they had filed and paid taxes. While a 2007 Congressional Budget Office (CBO) report (downloads as a pdf) suggested that 50% to 75% of the about 11 million unauthorized U.S. immigrants file and pay income taxes each year, there are simply not sufficient records in the pipeline. Those folks are called undocumented workers for a reason.
A surprising number of those in Congress seem to get that. Sen. Jeff Flake (R-AZ), who publicly chastised the House over its failure to move the Senate bill forward, confirmed that “[i]t really is difficult right now to go in assess back taxes.” Instead, last year he suggested something akin to a trial period here immigrants could renew their status after six years and would have to, at that time, prove that they have been paying taxes. That’s similar to the President’s proposal for a three year protection period.
Sen. Flake’s colleague, Sen. Lindsay Graham (R-SC) also voiced concerns about requiring the payment of back taxes, saying, “I’d like to have people pay any back taxes owed, illegal immigrants, legal residents, U.S. citizens, just make sure it’s practical and you’re collecting more than it costs to enforce it.”
Sens. Hatch, Rubio, Flake and Graham are acutely aware that the discussions surrounding taxes and immigration are tricky. On the one hand, allowing immigrants to simply wipe the slate clean leaves those who have been in the country legally and paying their taxes with a bad taste in their mouths. But from a practical standpoint, requiring the payment of those back taxes is going to be nearly impossible to administer. And maybe that’s why Congress hasn’t really done anything just yet.
The President, however, has done something. And he’s certainly gotten the attention of Congress and the public. Whether his plan is fair or good, or how the plan might actually function may not even matter: legal and political challenges to stop the President from enacting his plan without Congressional authority are already mounting. The President’s plan could end up like S.744: a lot of chatter but not much else.