A New Bipartisan Immigration Reform Aimed at Skilled Workers

by Reihan Salam

In late November, a number of Republican presidential candidates, including Mitt Romney, explicitly stated that they favored allowing more high-skilled immigrants to settle in the United States. Romney offered the following remarks:

The right course for our immigration system is to say we welcome people who want to come here legally. We’re going to have a system that makes that easier and more transparent. But to make sure we’re able to bring in the best and brightest — and, by the way, I agree with the speaker in terms of — I’d staple a green card to the diploma of anybody who’s got a degree of math, science, a Masters degree, Ph.D.

As Corey Boles of the Wall Street Journal reports, a new proposal animated by the same spirit has been introduced in the U.S. Senate:

A bipartisan group of senators will introduce legislation Tuesday that would seek to make it easier for foreign students who hold post-graduate degrees in math, science or engineering from American colleges to remain in the U.S. after they finish their studies.

The legislation would also create an entrepreneur’s visa to allow people who start new businesses and create jobs to remain in the country.

This is an appealing idea in principle, but there are some complications. Essentially, this proposal gives research universities the power to grant prospective immigrants the right to settle in the United States. This might encourage corrupt practices, e.g., students pressuring universities to grant degrees when they are not deserved, the advent of STEM-focused diploma mills that primarily serve foreign students, etc. 

The bill would also create a targeted tax credit to encourage start up firms to invest in research and development. It would allow investors who cash in investments made in start up businesses to avoid capital gains tax as long as they had held the investment for at least five years. This last provision was included in a small business bill signed into law last year.

The obvious problem with research and development tax credits is that business model innovation happens in a variety of ways, not just in a formal, ring-fenced research and development context. (Consider Arnold Kling’s notion that “labor is capital.”) Granting a tax preference to a ring-fenced set of activities under the research and development rubric won’t necessarily encourage useful innovation. A more neutral tax policy is less likely to entrench existing patterns, and to grant entrepreneurs, managers, and workers the flexibility they need to pursue various opportunities. 

There is another provision, however, that seems very wise, if unrelated to skilled immigration as such:

It would require the administration carry out a cost benefit analysis of any new regulation that has an economic impact of greater than $100 million.

One could go further and require that Congress have to vote on all such regulations, as a number of Republicans have proposed. 

Were Romney to champion something like this proposal, he’d create a useful contrast with President Obama. One is reminded from a passage of Walter Isaacson’s biography of Steve Jobs:

When Jobs’s turn came, he stressed the need for more trained engineers and suggested that any foreign students who earned an engineering degree in the United States should be given a visa to stay in the country. Obama said that could be done only in the context of the “Dream Act,” which would allow illegal aliens who arrived as minors and finished high school to become legal residents—something that the Republicans had blocked. Jobs found this an annoying example of how politics can lead to paralysis. “The president is very smart, but he kept explaining to us reasons why things can’t get done,” he recalled. “It infuriates me.”

It is easy to see why Jobs was infuriated, and why at least some college-educated voters who backed Obama in 2008 might find a contrasting message appealing. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.