Financing Immigration : The Financial-Market Value of a Market-Based Immigration System

The American legal immigration system is in desperate need of reform. One reform idea with far‐​reaching potential is the immigration tariff: the sale of permanent conditional work and residency visas that we call gold cards at a price set by Congress. Originally proposed by Nobel Prize-winning economist Gary Becker, the sale of visas would create a more efficient and market‐​based immigration system that adjusts to changing economic conditions. As envisioned in this paper, Congress would set a price for visas that is higher than the worst‐​case negative fiscal effects and sell as many as the market could bear. Revenue raised from the sale of visas would more than offset any potential negative fiscal effects from immigration and provide a measure of flexible protection for domestic workers. The proposed immigration tariff would not replace other visa categories but would be an additional category.The economic and financial impact of an immigration tariff, beyond liberalizing the immigration system, would also positively affect debt markets. The price for visas under this policy would be high — $45,000 on average if the purchasers are of the same age and education as those who immigrated during the 2013-2017 period. Many migrant purchasers of gold cards would have to borrow money upfront or enter into income‐​share agreements to afford these visas. The loans to immigrants to finance the purchase of gold cards could create a substantial financial market. Under conservative assumptions, we estimate that the present discounted value in perpetuity of loans to finance the purchase of gold cards would be $171.9 billion to $721.1 billion. Those estimates are equivalent to between 4.13 percent and 17.31 percent of all existing consumer credit outstanding in the United States as of October 2019