An Open Letter to Grover Norquist: Stop Congress from Imposing a New Immigration Stealth Tax on Multinationals!

Dear Mr. Norquist:

You are a well-known champion of tax and immigration reform. As President of Americans for Tax Reform, you’ve helped secure the signatures of President George W. Bush, 46 Senators and 221 Members of the House of Representatives (including Jim Sensenbrenner, Chair of the House Committee on the Judiciary) on the No New Taxes Pledge. You have also supported comprehensive immigration reform along the lines of Pres. Bush’s guest-worker proposals.

As you know, the No New Taxes Pledge includes an oath to oppose any and all efforts to increase the marginal income tax rates for businesses. I suggest it’s time for you to hold Rep. Sensenbrenner and other No-New-Tax-Pledge supporters in the House Judiciary Committee accountable.

On September 29, by a 20-6 vote the Judiciary Committee marked up HR 3648, legislation proposed by Mr. Sensenbrenner, and approved it for inclusion in an appropriations bill that would impose up to a $3,000 per worker tax on multinationals who use the L-1 “Intracompany Transferee” visa category to bring from abroad to the U.S. executives, managers and persons with specialized knowledge from affiliated companies in a family group of affiliated businesses. The L-1 visa category is essential if American businesses are to compete successfully in global markets. As the State Department explains, the L-1 category “was created to permit international companies to temporarily transfer qualified employees to the United States for the purpose of improving management effectiveness, expanding U.S. exports, and enhancing competitiveness in markets abroad.”

Note, Mr. Norquist, that unlike other immigration filing fees, HR 3648 is not a user fee. If enacted, the estimated $136 million in L-1 stealth taxes, to be collected by this proposed law would not be used to fund the operations of government immigration agencies charged with deciding whether or not to approve L-1 visa petitions. No, the taxes will go straight into the U.S. Treasury. It takes little parsing of language to understand that this tax on international trade in services would constitute a business income tax by imposing additional levies on U.S. businesses operating globally. In effect, HR 3648 would ultimately result in a marginal increase in the tax rate on business income — a clear violation of the No New Taxes Pledge.

Perhaps a higgling distinction worthy of a hearse-horse snicker can be offered to explain why this L-1 tax does not violate the pledge. Maybe the Americans for Tax Reform can ask Rep. Sensenbrenner to withdraw HR 3648 or to acknowledge that he has breached his No New Taxes oath.


Angelo A. Paparelli Concerned taxpayer and proponent of immigration reform