The voices of Tax Policy Center's researchers and staff
In his defense this week of the Trump Administration’s “public charge rule” that aims to limit immigration for people perceived likely to need public benefits, acting director of U.S. Citizenship and Immigration Services Ken Cuccinelli tried to rewrite poet Emma Lazarus’s famous words on the Statue of Liberty. His version: “Give me your tired and your poor who can stand on their own two feet and who will not become a public charge.”
But the rule—and Cuccinelli—miss two important points: a significant subset of the affected population already work in the US and pay taxes. And immigrants are less likely to receive public benefits than native-born citizens. In those respects, they are standing on their own two feet, even if they may receive some temporary government support. And while immigrants' contributions go well beyond their economic output, this rule makes little fiscal sense.
The "Inadmissibility on Public Charge Grounds" rule will penalize immigrants who are seeking admission to the US or adjusting their visa status if they are deemed more likely than not to be dependent on the government for subsistence. This is a significant expansion from current practice and would limit immigration for those considered likely to receive public benefits from Temporary Assistance for Needy Families (TANF, or cash assistance), Supplemental Nutrition Assistance Program (SNAP, or food stamps), non-emergency Medicaid, or housing assistance. Additionally, medical conditions, credit scores, and ambiguous factors like "lack of employability" based on age, English proficiency, and previous employment would also be negatively weighed against their "totality of circumstances."
The rule is aimed at both future immigrants and current documented immigrants (green-card applicants or temporary visa workers) already living in the United States. Higher scrutiny over the wealth and financial wellbeing of immigration applicants will have long-lasting impacts on future immigrant flows to the US, but we'll focus here on the latter subset. Many work at low wages and are trying to meet their family's basic needs for nutrition, healthcare, and housing. Crucially, they contribute to public coffers when income or payroll taxes are withheld from their paychecks, in addition to paying sales and excise taxes on the goods and services they buy, and property taxes on their housing (for example, through rent payments covering property tax liabilities). According to some estimates, documented and undocumented immigrants paid up to $405 billion in federal, state, and local taxes in 2017, often via an especially complicated filing process for their income tax returns.
Undocumented immigrants working in the US play an especially important role funding Social Security, even though they will never collect benefits. The chief actuary of Social Security Administration (SSA) has concluded that the program "would have entered persistent shortfall of tax revenue to cover payouts starting in 2009" if it were not for undocumented workers paying billions in payroll taxes but unable to collect benefits.
Taxes fund public programs, and immigrants are taxpayers. In this light, the public charge rule runs counter to the ethos that government should provide fair services to all of its taxpayers. Should immigrants have to choose between their visa status or access to taxpayer-funded public benefits that they are eligible for and need?
In that light, the Trump Administration’s expansion of the "Public Charge" rule is puzzling.
The rule was first proposed in 2018, and it received 266,077 comments in its 60-day public comment period, significantly more than typical regulatory proposals. In response, the Department of Homeland Security (DHS) simplified and relaxed some of the requirements. For example, Medicare Part D low-income subsidies and Medicaid benefits for pregnant women and children will not be considered as public benefit receipts. Neither would claiming the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The final rule was published on August 14th, and will take effect in October. Opponents are already teeing up court challenges.
Earlier versions of the rule have been in circulation since February 2018, and coupled with the Trump Administration's other immigration actions, already have reduced immigrants' participation in government benefits. About 1 in 7 adults in immigrant families (up to 1 in 5 among low-income families) report they are less likely to apply for SNAP or Medicaid/Children's Health Insurance Program (CHIP). The rule's uncertainty and complexity may also be spilling over onto permanent residents and naturalized citizens.
Overall, changing the future composition of immigrants may prove to be both short-sighted and counter-productive. A 2017 National Academies of Sciences, Engineering, and Medicine study found positive long-run benefits of immigration on economic growth, innovation, and entrepreneurship, and that second-generation immigrants are among the strongest fiscal contributors in the entire US population.
In the final rule, DHS seemed to acknowledge the potential net economic benefits of immigration but claimed it could not measure those effects: "A definition that requires consideration of the alien’s overall contributions to tax revenues, economic productivity, or society at large would be unjustifiably challenging to administer."
It is true that safety net and health insurance public benefits make up a sizable share of the federal budget. But many current and future taxpayers who help fund those government services will be punished by the newly finalized public charge rule.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Kathy Willens/AP Photo