Issue 660 Don't Tax Non-citizens: Revisited August 20, 2015

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.