Analysis: Immigrant Status Change Could Mean Millions in Tax Revenue for NY

July 9, 2013. A news article in Newsday covers the release of the new report by the Institute on Taxation and Economic Policy and Fiscal Policy Institute regarding immigration status change and possible tax revenue for states.

David Dyssegaard Kallick, immigration research director at the Fiscal Policy Institute, said there is no better alternative than for all those immigrants to become taxpayers.

“As long as we make sure we don’t create a new undocumented population, legalizing the people already here is the right thing to do,” Kallick said, “and it’s also a positive development for the government treasury.”

“Tax-Free NY” is now “Start-Up NY” – Still Bad Tax Policy, Still Bad Economic Development Policy

July 9, 2013. Despite the concerns raised by economists across the political spectrum, a somewhat revised version (A. 8113 and S. 5903) of Governor Cuomo’s “Tax-Free New York” proposal was introduced on June 20, 2013, passed by both houses of the Legislature on June 21, 2013, and signed into law by the Governor on June 24, 2013. The Fiscal Policy Institute’s June 11, 2013 brief on the original proposal concluded that that it was bad tax policy and bad economic development policy. Now recast at “Start-Up NY,” the plan is still inconsistent with the two long-established pillars of tax fairness—horizontal equity and vertical equity—in that it proposes to completely exempt the personal incomes of the employees of favored businesses from the Personal Income Tax for five years and then provide significant exemptions from taxation for the next five years. This “innovative” idea of exempting certain employees’ income from the Personal Income Tax also undercuts one of the main arguments for state-level business tax breaks—that the businesses receiving those tax breaks might not be paying full taxes but by those businesses locating in our state rather than somewhere else, we benefit from a broader and stronger personal income tax base. In some recognition of the shortcomings of this proposal, the revised legislation, as finally enacted, limits this exemption from Personal Income Taxation to 10,000 workers a year.

The claim that the proposal has no cost to the state is incorrect for five reasons that are spelled out in the June 11, 2013, brief. For example, by giving very favorable tax treatment to some businesses, the plan will reduce the market share of some existing businesses that do not receive this favored treatment. This, in turn, will reduce the profitability of those existing businesses and, thus, their tax liability. The favored businesses will not be paying taxes on their covered activities; and the negatively affected existing businesses will be paying less because of diminished income or closure. This will mean some combination of tax increases and service cuts for other businesses and for residents—a costly, downward spiral rather than a no-cost nirvana. The revised legislation, as finally enacted, purports to address this problem by adding “a prohibition of anti-competitive behavior” that requires program administrators to reject “any application to locate in a Tax-Free NY area … from a business that would compete with other businesses in the same community but outside the Tax-Free NY area.” This provision, as written, provides existing businesses some protection from unfair competition from new Tax-Free businesses that locate in the same community, but not from new Tax-Free businesses located elsewhere in New York State. Since retail establishments are categorically excluded from participation in the new program, it is very unlikely that a participating business’s competitors will all be located in the “same community.”

Beyond Balance: Forward-Looking Budget Priorities for New York City

July 9, 2013. All three of New York City’s citywide elected offices will have new faces in 2014. Mayor Michael Bloomberg cannot run for re-election because of the city’s term limits law, while Public Advocate Bill de Blasio and Comptroller John Liu are both running for Mayor rather than seeking re-election to their current offices. As voters consider a large field of mayoral candidates, as well as contenders for the other two citywide offices, the five borough presidencies and the 51 seats in the City Council, FPI’s Deputy Director and Chief Economist James Parrott has prepared a critical analysis of the budget challenges that loom large for the next city administration.

According to Parrott’s analysis, the city should continue the sound fiscal management practices achieved by the Bloomberg administration, but it should also elevate its critical budget choices and tradeoffs to a more prominent level. Otherwise, he warns, the pressures felt in the context of each year’s budget-balancing exercise will continue to crowd out the pursuit of longer-term priorities. The narrow focus on budget balance often has fostered an austerity mentality where gap-closing actions trump problem-solving. In emphasizing the need for a forward-looking perspective geared to meaningfully addressing city needs, Parrott calls for a multi-pronged strategy that addresses four broad areas that pose particular budget challenges for New York City: the social safety net, economic development, tax structure, and public service delivery.

The full report is available on the website of Toward a 21st Century City for All, an initiative of the Center for Urban Research at the CUNY Graduate Center. Parrott’s paper and other papers prepared for this initiative will be published as a book later this month.  A condensed version of Parrott’s ideas on the city budget and the city budget process are available as an Op Ed, “The City Budget Should Be a Force for Good,” which was recently published by The Chief-Leader.

WNYC Radio Morning Edition-Immigration Reform & Labor Standards

July 2, 2013. WNYC’s Morning Edition featured a story about immigration reform, with an emphasis on how reform by itself will not prevent workers from being paid off the books.

“My view would be that in conjunction with immigration reform you also need to have a stepping up of labor enforcement standards … to make sure people are not being paid off-the-books,” said David Kallick, a senior fellow at the Fiscal Policy Institute.

Kallick says labor departments need to audit employers regularly to ensure they’re really complying with the rules. He sees the possible passage of the immigration reform bill as a unique opportunity to renew these efforts.

“Every employer should pay for every employees work compensation and unemployment insurance,” he said. “Today … some employers are paying and others are not. So, some employers are carrying the burden for others.”


5 Questions for David Kallick, Immigration Expert

July 1, 2013. The Business Review interviews David Dyssegaard Kallick of FPI about the likely economic effects of immigration reform.

To me, it is obvious that reform would be good for the economy, for the same reasons that having a broken immigration system is bad for the economy. If everyone living in the U.S. had legal status it would mean more people paying taxes, more people getting services, more people paying into, and covered by, social insurance programs.

Search for a new FPI executive director

July 1, 2013. The Fiscal Policy Institute seeks an Executive Director to build on an exceptional twenty-two year record of providing high quality research, analysis, and coalition building in support of progressive fiscal and economic policies that benefit all New Yorkers.

The Executive Director, based in Albany, New York,  will be responsible for overall leadership of the organization, as well as leading, coordinating, and implementing its tax, budget and policy analysis work. The ED will oversee a staff currently consisting of 6-8 people, be a major spokesperson for the organization, lead fund development efforts, communicate with the Board of Directors, and otherwise administer the organization. The Executive Director will be accountable to the Board.

This is a full-time position. Salary and benefits will be commensurate with skills and experience.

Resumes will be accepted until the position is filled. To apply, submit a resume, policy analysis writing sample, and a cover letter specifically addressing your interest in and qualifications for this position by e-mail to For more information, e-mail

Read the full job description.

For True Immigration Reform, Hire Labor Inspectors, Not Border Guards (A Newsday Op-Ed)

June 27, 2013. A Newsday op-ed by David Dyssegaard Kallick stresses the need for labor standards enforcement as part of comprehensive immigration reform.

Paying people off the books is, of course, illegal. But does it happen? We know it does.

The good news is that there’s no great mystery about how to stop it. Labor departments — at the state and federal level — are responsible for enforcing workplace standards. They are the ones who can ensure that employers are paying employees on the books, withholding payroll taxes, and paying into state unemployment insurance and workers’ compensation funds.

Unfortunately, as the number of border patrol agents around the country has soared in recent decades, the number of labor inspectors has shrunk — by 31 percent between 1980 and 2007, even though the labor force grew. At the same time, not coincidentally, the number of people being paid off the books — both immigrants who lack the proper documentation to work and others — has dramatically increased. There are now only around 1,000 labor inspectors to cover the entire country.



The Rise of the New Baltimoreans

June 28, 2013. In the Next American City Series, a piece on Baltimore focuses on the role of immigrants in the city’s economy.

“You want to create a context that’s welcoming to everyone,” says Kallick, “and a culture that’s welcoming to everyone seems particularly welcoming to immigrants.” A lowered likelihood of being aggressively questioned for immigration status, goes the thinking, might appeal to an immigrant in perfect compliance with the law as much as it might to an undocumented new arrival.

Under this approach, a city that is more welcoming sees its population grow. As it grows, its tax base broadens. As its tax base broadens, it helps to support the local economy, better educational resources and more policing. In turn, those effects make Baltimore more appealing not only to new immigrants, but also to native-born or long-tenured Americans living elsewhere in the U.S. Thus begins a spiraling in a positive direction. Immigration, in short, becomes part of a city’s population revitalization — but only part of it.



Want Smarter Immigration Enforcement? Start at the Workplace, Not the Border

June 26, 2013. On his blog, and in the Huffington Post, Jared Bernstein echoed the importance of labor standards enforcement as a key part of making immigration reform work, as David Dyssegaard Kallick, director of FPI’s Immigration Research Initiative, had stressed in an op-ed piece in Newsday.

At this point, a large minority (Kallick says “as many as 45%”) of the undocumented immigrants already here entered legally and overstayed their visas.  As far as they’re concerned, border security shuts the barn door after the horse is out.

By making the E-verification system mandatory and harder to fool, the Senate bill moves the ball forward.  But as Kallick points out, “it doesn’t take an evil genius to figure out a way around these tightened processes: Employers could just hire workers off the books.”

The best way to lastingly stop this problem is think less about border agents and more about labor inspectors.

The estimated share of undocumented immigrants who are visa overstayers comes from this report of the Pew Hispanic Center.

Immigration Reform’s ‘Surge’: The Politics Works, but Will the Policy?

June 26, 2013. The Christian Science Monitor ran a story, also reprised in The Alaska Dispatch, about the massive spending on border security added to the Senate bill in its final days to gain Republican votes. The article quotes FPI David Dyssegaard Kallick on a more productive way to use enforcement dollars.

Or how about boosting the ranks of federal and state labor inspectors, suggests David Kallick of the liberal Fiscal Policy Institute. Such reinforcements not only would make sure the undocumented aren’t working off the books but also would help to see that other workplace protections are working properly. (Mr. Kallick notes that the number of federal labor inspectors has declined by 30 percent over the past two decades, even as the undocumented population has exploded almost fourfold over that time.)

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