Vanishing Immigrant Entrepreneurs

The American Immigration Lawyers Association (AILA) has produced this excellent video explaining in layman’s terms why the U.S. is hemorrhaging immigrant entrepreneurs due to bad policy that is badly disconnected from our economy’s needs.

What Happened to the Recent STEM Bill to Help Immigrant Entrepreneurs?

House Republicans led the a recent effort in 2012 to revise U.S. guest worker immigration policy to help stem the exodus of immigrant entrepreneurs. The bill would have reallocated 55,000 green card lottery visas to STEM workers (science, technology, engineering, and mathematics). STEM workers are prodigious immigrant entrepreneurs!

The current 7% cap on immigrants from any one nation would have been raised to 15%. The cap is the same for high-population nations like China and India as for Greenland. Chinese, Indian, Mexican and Filipino immigrants often face lengthy delays due to high demand for immigrant visas and this cap. Some Filipinos who applied in 1989 are just now receiving immigrant visas! If you’re from Mexico or the Philippines and not in a preference category, your wait for an immigrant visa is over 100 years!

immigrant entrepreneurs

The U.S. offers far fewer H1B visas available each year than foreign advanced degree graduates. We take in the ‘cream of the crop’ from other nations, give them the best education, then kick them out to go home and help foreign competitors.

We’ve been hemorrhaging those lucky enough to obtain an H1B visa after college. Many of these immigrant entrepreneurs haven’t been able to adjust their status to permanent resident, or bring their immediate families due to caps and quotas. Many get fed up with our broken system and return home, starting new companies abroad which compete with U.S. companies.

The green card lottery provides 55,000 immigrant visas each year to countries not already providing many immigrants, and only requires a high school education. House Republicans don’t see much value in the green card lottery, since the U.S. already has plenty of citizens and permanent residents with a high school education, many of whom are unemployed. Our worker shortfalls are at the extremes of the skills spectrum: high skilled professionals, and unskilled farm workers, etc.

Why Did the STEM Bill Fail to Staunch the Exit of Immigrant Entrepreneurs?

Senate Democrats, led by Chuck Schumer, objected to the introduction of the STEM bill, effectively killing the bill. Democrats are fond of the diversity visa program because they like promoting diversity, and the lottery brings many immigrants from Africa.

Big labor, a major backer of the Democratic Party, is always a huge foe of guest worker programs. Big labor has long subscribed to the protectionist notion that fewer immigrants and guest workers raises wages for American workers and immigrant workers. However, the effect of labor protectionism is to send more jobs overseas, and inhibit the creation of more jobs for Americans by immigrant entrepreneurs. Start-up companies, often founded by immigrant entrepreneurs, are huge engines of job creation.

Will the ‘Gang of Eight’ Plan Help Immigrant Entrepreneurs?

We certainly hope so! President George W. Bush’s immigration reform plan failed largely over fixing guest worker programs. At the behest of Big Labor, Senate Democrats, including Senator Barrack Obama, introduced poison pill amendments to Bush’s reform bill that led many Republicans to drop their support and vote against cloture to end debate and take up a final vote. John McCain aide Mark Salter later wrote Obama would come to meetings and

draw from his shirt pocket a 3×5 index card, on which he had written changes he insisted be made to the bill before he would support it. They were invariably the same demands made by the AFL-CIO, which was intent on watering down or killing the guest-worker provisions.

All indications are that Big Labor is seeking to control guest worker programs through establishment of a commission to review guest worker quotas each year. During negotiations between the U.S. Chamber of Commerce and the AFL-CIO, the Obama administration leaked its immigration reform plan, which pointedly omitted any reform of guest worker programs. The leak apparently had the intended effect, because the U.S. Chamber caved and agreed to the commission concept, which no doubt will be dominate by Big Labor, seeking to protect unionized industrial sectors. The Wall Street Journal recently wrote:

The AFL-CIO and U.S. Chamber of Commerce on Thursday released a set of immigration reform principles, and the press is calling it a breakthrough. But don’t be fooled. The real story is that the backroom talks failed, and Big Labor is still holding out for a political commission to run any new guest-worker program.

The Chamber and AFL-CIO have been trying to work out those details in private talks, but they have made little progress. Our guess is that last weekend’s now famous White House leak about the President’s immigration plan was intended mainly to muscle the Chamber. Mr. Obama’s leaked outline didn’t include a guest-worker program, which labor negotiators cited in urging business to drop or limit the idea.

Despite the setbacks and obvious push back from Big Labor, I am optimistic about the prospects of immigration reform in 2013. I’d frankly like to see fixed quotas abolished because history has proven quotas are often disconnected from economic need, choking off the supply of immigrants needed by a growing economy, which sends U.S. jobs overseas and/or fuels illegal immigration.

If politicians are concerned about preserving American jobs, then let’s replace quotas with modest tariffs on guest worker wages, to be paid by employers. Such a tariff would ’tilt the table’ further encouraging employers to hire American citizens or lawful permanent residents, but provide access to guest workers without navigating through a mountain of bureaucracy.

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Bob Quasius is the founder and president of Cafe Con Leche Republicans
Original Link

New Study: Higher Tax Rates Will Hurt Economy, Small Businesses

WASHINGTON, D.C., July 17, 2012 —New research, released today by the National Federation of Independent Business, shows that allowing tax relief on the top individual rates to expire will hurt job creation and the economy. The report, published by top accounting firm Ernst & Young, shows raising top individual rates would hurt small-business job creators in particular.

“This report clearly shows that raising taxes on job creators will have a negative impact,” said NFIB President and CEO Dan Danner. “It is absolutely the wrong time to hike taxes on millions of business owners. On top of that, the threat that small businesses could get pushed over the Fiscal Cliff in order to push through this tax increase is creating an immeasurable amount of uncertainty among small businesses trying to plan for the future.”

Link: Long-run macroeconomic impact of increasing tax rates on high income taxpayers in 2013

The study, authored by Dr. Robert Carroll and Gerald Prante, estimated the effects of the policy advocated by President Obama and some Members of Congress to allow the top tax rates paid by small-business owners to rise sharply starting January 1, 2013. It finds that over time the economy would be 1.3 percent smaller and there would be 710,000 fewer jobs. More than 72 percent of S corporation income is earned by the half-million S corporation owners who pay the top two rates.

Increasing individual rates directly impacts small businesses organized as S corporations, partnerships, LLCs and sole proprietors, also known as “pass-through” businesses. NFIB research shows around 75 percent of all small businesses are organized in such a manner.

Together with the new 3.8 percent tax on investment income introduced in the health care reform law, the study finds that the top tax rate on pass-through business income would skyrocket from 35 to nearly 45 percent.

The study was commissioned by NFIB in partnership with the S Corporation Association, the U.S. Chamber of Commerce, and the Independent Community Bankers Association.

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NFIB is the nation’s leading small business association, with offices in Washington, D.C. and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists send their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of our members to own, operate and grow their businesses. More information is available online at www.NFIB.com/newsroom.