Why Our Broken Immigration System Stays Broken

This is my last post in January. I am going on vacation, and my next post will be on February.

Unscrupulous Employers Benefit  

If you want to know why we are unable to reform our broken immigration system, look no further. Our immigration system remains broken because thousands of unscrupulous employers profit from the broken system. This story tells about the extensive exploitation of undocumented immigrant children in the roofing business. The children do dangerous work. They are paid less than the minimum wage; they do not receive benefits like Social Security, unemployment insurance or health insurance. They die at six times the rate of children in other occupations. The children are vulnerable to this exploitation for fear of losing their jobs and for fear of being deported. The children's vulnerability forms the basis of the business model on which their employers operate. The model allows the employers to reduce their costs and thus, to offer lower prices than their competitors who follow the law.

This business model is not limited the roofing business, and it is not limited to children. All over the United States, businesses make huge profits by exploiting the vulnerability of undocumented, immigrant workers. The state of Wisconsin has documented widespread misclassification of workers as independent contractors rather than as employees, and a union official told me that immigrants are especially subject to this practice. A recent NY Times article detailed the extensive illegal use of immigrant child labor in factories and on industrial farms all over the United States. Practices like misclassification and the illegal use of child labor allow employers to pay their workers less than the minimum wage and to avoid the cost of Social Security, unemployment insurance and health insurance. The workers are unable to complain because they fear being deported.

A Pool of Vulnerable Workers

Our broken immigration system has thus created a huge pool of vulnerable workers. Their existence allows employers to make big profits illegally and also limits the growth of unions that could fight for the workers' rights.  If the immigration status of these workers were regularized, they would no longer be vulnerable. The businesses that hire them would lose their illegal profits and would have to compete on an equal basis with law-abiding business. Naturally, the businesses that profit from our broken system resist any changes that threaten their illegal business model. 

Our Broken Immigration System Helps to Elect Republican Politicians

The fact that undocumented immigrants may be paid less than American workers is used in propaganda to weaken unions and divide the working class. Workers are told that immigrants are taking American jobs and that workers should vote for Republican candidates who promise to limit immigration. The workers are not told that the root of the problem is not in the immigrants themselves but in the broken immigration system that keeps them in a position where they can be exploited. If they became citizens, they would not be so vulnerable to exploitation, and all workers would benefit. Unsurprisingly, the companies that exploit the undocumented workers do not want American voters to see that. 

Of course, the Republican candidates who promise to shut down immigration do not really do so because if they did, they would eliminate the pool of exploitable workers. However, the candidates do vote for low taxes and reduced environmental regulation, and that benefits our corporate oligarchs. Most businesses benefit from low taxes and reduced regulation even if they do not themselves exploit undocumented workers. So, most businesses benefit from our broken immigration system as long as it can be used to induce American workers to vote for Republicans. However, the issue can be used in that way only as long as the pool of undocumented immigrants remains large. So, our oligarchs have no interest in reforming our immigration system, and therefore, it remains broken. Our broken immigration system is a weapon in the war on America's workers.

We Need a Wealth Tax

Should You Carry a Heavier Tax Burden Than the Extremely Wealthy? 

Why should you pay a substantial tax on a big part of your wealth while the very wealthy do not? A wealth tax would make our system fairer.

Sen. Elizabeth Warren has proposed a “wealth tax” of 2% that would be paid only by families with wealth of more than $50 million. The idea is that such a tax would raise a substantial amount of revenue and would help to limit our country’s large and growing inequality. The tax would be on all types of assets including stocks, bonds, and luxury goods like yachts or jewelry as well as real estate.

The inclusion of real estate shows that in reality, we already have a type of wealth tax, and it is the property tax that homeowners pay on their houses. This tax hits the middle class very heavily because a middle-class person’s home is usually a very large share of his/her wealth. Most middle-class people own relatively small amounts in stock, bonds or other financial assets. The very wealthy, in contrast, hold most of their wealth in forms like stocks and bonds. Such forms of wealth escape taxation today, and therefore, the wealthy pay a much smaller percentage of their wealth in taxes than middle class people do. Even the income from such assets is often taxed at the low rate applied to “long term capital gains.” Thus, the wealthy do not pay anything like their fair share.

A Wealth Tax Would Provide Needed Revenue

A wealth tax would provide a substantial amount of revenue that would allow us to reduce our dependence of government borrowing to pay for the government services that we need. Today, our government’s indebtedness increases regularly because the people who hold the bulk of our national wealth do not pay their fair share of the taxes. Our ever-increasing dependence on government debt endangers the stability of our government. In the 18th century, the French monarchy fell because the aristocrats, who held almost all of the country's wealth, refused to pay taxes. Do we want our democratic government to go the same way?

A Wealth Tax Would Limit the Concentration of Wealth and Power

As Robert Reich explains, we suffer from an ever-increasing concentration of wealth and income in the top 10% or even the top 1% of the population. Today, the top 1% of the population is estimated to own about 42% of our nation's wealth, and that share is increasing. Providing a counter to the increasing concentration of wealth is important because if wealth becomes too concentrated, the economic system fails to provide an acceptable standard of living to the bulk of the population, and as a result people feel that the “system” is rigged against them. In that case,they become susceptible to the appeals of demagogues, and democracy becomes unstable. If we allow the concentration of wealth to continue to grow, our democracy may well not survive.

Moreover, it has been recognized since the founding of our country that democracy is incompatible with the excessive concentration of wealth. With wealth comes political power, and a democracy with an excessive concentration of wealth is likely to become an oligarchy. Our Constitution gives to the federal government the responsibility to prevent this from happening.  Article 4, Section 4 of the Constitution says that the federal government shall "guarantee to every State in this Union a Republican Form of Government," which means that the Constitution requires the federal government to prevent the emergence of an oligarchy that would subvert our democracy. Thus, a wealth tax or some similar means of preventing the emergence of an oligarchy is not merely permitted. It is actually required by our Constitution. This way of understanding our Constitution is not new. It has been used throughout our history to support efforts to maintain and extend our democracy.

We Should Not Be Deterred by the Problems That Will Occur

Of course, there will inevitably be problems with a wealth tax. Estimating the full extent of the wealth of a very wealthy person is difficult, and wealth may be hidden in offshore places and in trusts. These, however, are not new problems. Similar problems exist in the estimation of the incomes of the very wealthy. In addition, some wealth may flee the United States to avoid the tax, but this, too, is not a new problem. The fact that it will be difficult to design a perfect wealth tax should not deter us. We have never designed a perfect tax, and we should not expect a wealth tax to be different.

So, we should have a wealth tax that taxes all forms of wealth and not just real estate because when we tax only real estate, the middle class pays an unfair share of the total. A wealth tax would also reduce our dependence on borrowed money to provide the government services that we need. Finally, a wealth tax would help to prevent the erosion of our democracy through excessive concentration of wealth and power in a small oligarchy.