The Donald Trump-championed tax bill passed this week in the Senate and currently being re-debated in the House funds the president’s deportation efforts to the tune of hundreds of billions of dollars. It also targets immigrants in a different way, by creating a dual-class tax structure. One set of rules applies for citizens and citizen families; another for families with at least one immigrant member, regardless of whether they’re documented or not.
The “One Big, Beautiful Bill” creates “a parallel system of rights and opportunities that relegate millions of people to second-class status in our society,” Indivar Dutta-Gupta, an advisor to Community Change and former House staffer working on income security, told Fortune.
“The bill would not only treat many lawful immigrants here more harshly across a vast array of policies and programs, but it would also punish many U.S. citizens, because our tax and economic security systems typically target resources by family, not by individual,” he said.
The legislation dramatically increases fees for immigration paperwork, raises taxes on U.S. citizens with immigrant relatives, and imposes taxes on remittances—or money sent from the U.S. to other countries.
Take the Child Tax Credit, under which a family can receive up to $2,000 per child off their tax bill. Under the 2017 tax-cut bill, which modestly expanded the credit, children had to have a Social Security number in order for a parent to claim them, meaning that children present in the country illegally weren’t eligible. The new GOP bill, which makes the 2017 tax cuts permanent, requires one or both of the child’s parents to have a Social Security number in order to claim the credit.
The CTC is a tremendously popular tax credit that has been shown to cut child poverty and improve kids’ health and education outcomes. The new rule would exclude 4.5 million U.S. citizen children from the credit because a parent doesn’t have a Social Security number, according to an estimate from the Center for Migration Studies.
In 2017, “when the Republican Congress and President Trump enacted the new tax law, they looked at this issue and said, ‘well, if the kids have Social Security numbers they’re Americans and we want them to benefit,’” Carl Davis, research director at the Institute for Taxation and Economic Policy (ITEP), previously told Fortune. Since then, “it appears a lot of members of Congress have moved in an increasingly hardline direction.”
Fee-for-service
The GOP bill also imposes a range of fees on immigrants seeking access to legal protections. Migrants seeking asylum status will need to pay $100 per year to apply, those seeking work authorization must pay $550, and those on temporary protected status, $500.
“This is unprecedented—a fee has never before been imposed on migrants fleeing persecution,” the Los Angeles Times noted.
Fees paid by temporary visitors—and for student and certain worker visas—also increase under the bill. It also taxes remittances, or money sent from the U.S. to other countries. But the tax, projected to raise $10 billion over a decade, will hit immigrants as well as citizens, after an earlier proposal to only apply the tax to non-citizens was dropped.
The immigrant-focused tax increases are aimed at funding the immigration system, which gets a dramatic funding boost in the bill to the tune of $130 billion, spread out among Immigration and Customs Enforcement (ICE), Customs and Border Protection, and the parent Homeland Security Department.
The House Judiciary Committee previously claimed the bevy of fees would make the immigration system “self-sustaining,” saying in a statement, “We’re shifting the cost of adjudication in the immigration system from the American taxpayer to aliens.”
Exacerbating a dual-status system
While the bill doubles down on the administration’s goal of punishing immigrants through the tax system, it’s not the first time taxes have been weaponized. A dual-class tax system is, in some ways, a natural outgrowth of February’s move to turn the Internal Revenue Service from a purely tax-collecting agency to an aid for immigration enforcement, when the IRS agreed to share formerly private data with the Department of Homeland Security.
ITEP warned that the GOP’s bill would further exacerbate the use of the IRS as an enforcement tool.
“This shift toward applying what are essentially different tax codes to different classes of individuals also raises concerns about the future direction of federal tax policy and whether it will begin to be used more frequently to punish politically disfavored groups,” it said.
The GOP’s bill is projected to add $2.8 trillion to the national debt over a decade. But what’s unknown, Dutta-Gupta said, is how much long-term damage it will do to the economy by penalizing and likely discouraging immigration.
“Immigrants complement and amplify the economic contributions of those already living in the United States, and increase America’s share of economic output in the world,” he told Fortune.
“This bill harms millions of American citizens who have immigrants in their families, and harms everyone else because the economic literature has consistently shown, in recent years, that immigrants have contributed to raising Americans’ living standards.”
