So a while back I said do not tax non-citizens on their income.
My reasoning was that because they are not citizens and thus could not
vote (which they should not until they become citizens), that they are being
taxed without representation in our government. Today I am revisiting
this because we do want their money, but not in the same way you might think.
We want their money: So one of the main reasons we do
not want them taxed on their income if they live here legally is because they
will have more disposable income. As such, they can spend more which
enriches the businesses around them and thus can potentially aid in reducing
prices of goods over time. You get it, by them spending money, the
business gets richer and thus they can expand their services, or lower the
costs of goods. Also, if there is a sales tax (the best form of taxation
with respect to getting at everyone's money legally) then they pay into the
system without the need for extra paperwork or need to have them register.
Basically, sales taxes gets everyone without discrimination (though it
works best when other taxes are reduced or do not exist.
Another thing we want from legal resident’s
money wise is their businesses. Business owners moving their companies to
the United States means jobs. This also means a growing economy and that
our tax and economic system is business friendly enough to attract more
businesses. What do I mean by this? The person (legal resident)
will not be taxed, but if we maintain business taxes, the successful business
will. And even if business taxes do not exist (my ideal system) the business
will still have to collect sales taxes for the government when they sell their
goods. This allows for the governments to gather tax money while the legal
resident enjoys the United States acting as a tax haven for them.
Conclusion: There must be a balance here
though. If a legal resident is not taxed, then it means that many more
people will want to move here to reap the benefits and thus flood the country
with non-citizens. To counter this, we could go back to the old style
system of saying you are a citizen after living in the United States legally
for a specified number of years. Ten is a nice number, and many of these
legal residents already are of quality based on our immigration system.
So what do you think? We can counter free loaders while bringing in
business and tax revenue into the country. It is a win win situation with
respect to economic benefits.