Rep. Steve King’s Big Plans in 2011: Deporting Immigrants for Paying Taxes

Afton Branche

Today’s immigration hard-liners are characterized by an almost religious devotion to proposing draconian immigration laws; even when these policies plainly conflict with our nation’s economic interests. In a recent interview, Rep. Steve King (R-IA) gave a preview of his legislative priorities should he become chairman of the House’s immigration subcommittee next year.

One of King’s top priorities would be passing a bill that requires the IRS to share immigration status information with the Social Security Administration and the Department of Homeland Security. In other words, King wants the IRS to rat out undocumented immigrants who file tax returns to DHS and have them deported.

Since 1996, the IRS has given nearly 14 million Individual Taxpayer Identification Numbers (ITINs) to individuals without Social Security numbers, most of whom are undocumented immigrants. One IRS official estimated that ITIN filers have paid nearly $50 billion in income taxes to date. All of this hinges on the assumption that the IRS doesn’t share personal information with DHS or other agencies. Ending this firewall between federal agencies all but guarantees undocumented immigrants would no longer pay federal or state taxes, and retreat even further into the underground economy. In addition, undocumented immigrants would probably stop using ITINs to open bank accounts and establish credit histories needed to buy homes or open businesses.

Given the state of our economy, this is a ridiculous policy proposal. But it seems Rep. King is willing to pass any law that serves the interest of his restrictionist agenda, even if there’s no broader benefit. Not for nothing did he receive an A+ grade from NumbersUSA, an anti-immigrant organization that aims to reduce the number of immigrants—including legal immigrants—in the United States.

Immigration restrictionists are blind to the massive economic contributions immigrants make to this country, so blind that they can only support costly enforcement-only policies. The 2011 Congress needs to instead pass immigration laws rooted in the reality that we all rely on immigrants’ economic activities, regardless of their citizenship status. Unfortunately, with Rep. King and his cronies at the helm in the House, we’ll likely get nothing more than far-fetched enforcement schemes.

Bloomberg’s Job Killing Budget Cuts

Amy Traub

It’s the city’s ninth round of budget cuts in three fiscal years, and the most brutal. Mayor Bloomberg calls for 6,201 layoffs of public workers in the 2011 and 2012 fiscal years. Instead of responding at our firehouses, serving our frail elderly, and helping job-seekers perfect their resumes on the library computer, former New York City employees will instead crowd the unemployment lines - where, given the fact that there is just one job opening for every five Americans looking for work, they are likely to remain for some time. But this understates the impact on New York’s economy.

When we lay off public workers, we not only lose the services they provided to New Yorkers but also their spending power as city residents. As a result, laying off 6,200 New York City workers means destroying an additional 1,860 private sector jobs. The last thing New York needs is another 8,000+ jobless.

Think about it: the administrative worker in the city finance department who used to support her family on $45,000 a year now qualifies for a maximum $405 a week in unemployment benefits. She’ll buy cheaper groceries, cancel the cable, pull the kid out of ballet lessons, and put off the next shoe purchase, for starters. Suddenly the neighborhood grocery store, shoe shop and ballet studio have lost revenue: multiply that and they’ll quickly be ready for more layoffs of their own. Small businesses already on the edge may close up shop completely. In the meantime, New York taxpayers pick up the tab for her unemployment benefits as our former city worker searches in vain for a new job. It’s a bad deal all around.

Worse still, destroying 8,000 jobs in New York City is completely unnecessary. Economists find that progressive tax increases on higher income households do far less economic harm than spending cuts and layoffs. As the Fiscal Policy Institute has pointed out, New York City could raise $1 billion by raising personal income taxes on residents making more than $250,000 a year while still reducing taxes for lower-income households. Studies at the national and state level find that wealthy taxpayers do not flee tax increases in significant numbers. Yet Mayor Bloomberg has categorically ruled out such an increase, arguing that killing jobs and decimating city services is preferable.

DC37, a public employees’ union with a big stake in avoiding city job cuts, has identified still more sources of new revenue. The city could more seriously enforce its existing tax laws on billboards and cell phone antennas, for example, and could crack down on inappropriate property tax exemptions, making certain that when non-profits sell land to for-profit companies, property taxes are once again levied on those previously exempt parcels. Yet there’s no sign that these common sense proposals are on the table either.

Voters: We’ll Pay for Good Transportation

Amy Traub

Think last week’s election was nothing more than a massive voter referendum in favor of lower taxes, reduced spending and less government? A roundup of transportation ballot measures from the Center for Transportation Excellence should make you think again.

From Anchorage to St. Louis to Fairfax County, Virginia, when they were asked to weigh in directly on local transportation spending measures, voters chose to approve the investment 77 percent of the time. In many cases, voters opted to raise their own sales, property, or vehicle registration taxes in the process, indicating a strong support for mass transit, infrastructure maintenance, and upgrades in street safety even during lean times. Some highlights:

In Ypsilanti, Michigan voters overwhelming approved property tax increases earmarked for public transit.

Voters in Austin, Texas supported a $90 million bond to improve streets, sidewalks, transit infrastructure, and bike paths – rejecting the advice of critics who denounced “frivolous spending” and insisted that new roads were the only projects worthy of funding.

In St. Louis, the light rail and bus systems will be able to restore service cuts and expand thanks to strong voter support for a half-cent sales tax dedicated to public transit.

Street repairs and transit upgrades will move forward in San Francisco and many of the surrounding counties as voters chose to pay higher vehicle registration fees to fund improvements.

New Revenue vs. the “New Normal”

Amy Traub

Budget shortfalls have left American cities and states stuck with a “new normal” insists the conventional wisdom. Citizens must accept the hardships that come with longer fire department response times, dirtier streets, lost transit service, shuttered libraries, locked up parks, and more crowded classrooms – there’s no alternative. In the aftermath of the Great Recession, the money simply isn’t out there to meet residents’ needs for basic public services. Granted, we have tremendous and growing inequality, with the top ten percent of families receiving nearly half of the nation’s income and with more than a fifth of all U.S. income going to the top 1 percent, but that’s irrelevant. If those very fortunate residents were asked contribute more to keep their communities afloat, they’d instantly flee the city or state. So the argument goes.

The reality looks a bit different. New research refutes the idea that wealthy residents are abandoning the states that tax them highly. In fact, the states the most millionaires per capita were also among those with the highest marginal income tax rates.

The Wall Street Journal’s Robert Frank notes:

This isn’t to say that taxes don’t matter to the wealthy. They do. A lot. Some states with very low marginal income tax rates, such as Connecticut and Alaska, also ranked high on the density list.

But there are lots of other economic factors at work in the millionaire state counts. And that’s the point. When it comes to creating and retaining wealth, the health of state economies and work-force skill levels seem to matter much more than state tax rates.

Frank quotes David Thompson from the organization conducting the millionaire study, who adds “in general, most high-net-worth households don’t base their living decision on tax rates, but on things like quality of life, access to good education, infrastructure and culture.”

Yet all of these benefits, from culture to a skilled workforce, take public resources to generate and maintain. The data suggests that those individuals with the most resources might not be as averse to chipping in for their communities as the conventional wisdom suggests.

What Budget Crisis? Cut the Sales Tax!

Daniel Kanter

While not yet set in stone, it looks likely that a measure will be on the Massachusetts ballot this November that would cut the state sales tax from 6.25% down to just 3%. The effort is being spearheaded by the Alliance to Roll Back Taxes, whose chairwoman, Carla Howell, parses no words about the intentions behind the tax cut. The Boston Globe Reports:

She called the latest campaign a “modest start to bringing the state government in line with the level of spending that’s appropriate.’’ The proposal, Howell said, would force state officials to cut spending by more than $2 billion.

“There’s only one way to create jobs, and that’s to cut government spending and cut taxes substantially,’’ she said. “And that’s what we’re doing.’’

Of course, Howell’s arguments are more complex than that. Aren’t they? Maybe? There’s the used-car-salesman-esque argument on her website that voting for the cut means an “across-the-board 3.25% discount on every taxable purchase you make” (isn’t it just begging for a triple exclamation point?). Then there’s the magical math that predicts that for every government employee layoff the cut would force, two private sector jobs would be created! Of course, there’s also the standby assault on public workers thrown in for good measure, in which the budget cuts would be grappled with by dramatically reducing health care and pension benefits for public employees.

In some sense, Howell’s sales pitch about the potential for consumers to save money is on the right track: after all, sales taxes are considered regressive— they pose a greater strain for low-income individuals than wealthier ones. But at the same time, the broad budget cuts hurt the very social programs that help protect and serve low-income individuals. And as Amy has discussed on this blog and in The Nation, the “lavish life of the public worker” line of argument has little basis in reality. Not to mention that budget cuts could mean privatization, which often leads to higher costs for consumers.

The sales tax cut would cost the state $2.5 billion in fiscal year 2012. And despite that critics agree that the proposed cut would cause a financial crisis for Massachusetts, the most recent polling on the issue says that 49% of voters are in favor of the cut, opposed to 44% against it.

Of course, nobody wants to pay sales tax, but this type of aggressive cutting is pretty dangerous, especially in a state like Massachusetts. Let’s think about the numbers for a minute.

The recession didn’t treat Massachusetts very well. Governor Deval Patrick’s administration had to cut 2,600 state positions during the economic downturn. It left a $2.5 billion budget shortfall this year, which meant that the $27.6 billion budget Patrick recently signed translated to hundreds more city layoffs, a 4 percent cut to local aid, vast cuts to public education, health and dental care for the poor, developmental services for toddlers, and health care for legal immigrants. They also had to take a $100 million dip into the rainy day fund.

On top of it all, the Boston public school system is under federal investigation for violating civil rights laws for not properly serving the newly-revealed 28% of students who aren’t fluent in English. Fixing that problem might cost a pretty penny.

Ballot measures like this have failed before. But this year, a tax cut might seem extra attractive to voters who are still feeling the pinch of the economic downturn. But really, Massachusetts, is it worth it?