When the Senate passed an immigration reform bill in June, the Internet was awash in analysis about what the bill might mean for small business owners in terms of payroll taxes and the larger economy. Soon, however, it became apparent that the bill would not even be considered by the House, so all was forgotten and everyone returned to business as usual.
Now the House has put together their own bill that is “50 percent identical” to the Senate bill, according to sources in Congress. By October the bill’s supporters expect to have enough votes for it to pass. There is no question that it is still a long shot though. If by some slim chance it does pass the House, combining the two bills would be relatively straightforward and we could see the law go into effect as early as next year.
Based on the Senate’s bill, the final law could mean more taxes and regulation for small to medium sized businesses. A path to citizenship to cover more than 11.2 million newly legalized workers would require businesses that employee these workers to start paying additional payroll taxes. In other words, the change to the workers immigration status would mean they would have to be paid through disclosed payroll channels (as opposed to under-the-table) and contribute mto state payroll programs such as UI and SDI as well as federal programs like SSI and Medicare.
A report titled the Undocumented Immigrants’ State and Local Tax Contributions estimated that state and local governments can expect $2 billion in revenue from these taxes related to changes in proper worker classifications. Despite the tax liability issue, around 65 percent of business owners support the legislation based on a phone survey earlier this year. The reasons they gave for supporting it was threefold:
- the historic role of immigrants in building strong local economies;
- the potential for a greater customer base; and
- the value of keeping immigrant families together for more productive workers
Though immigration reform still has a long way to go before it becomes law, there is ample evidence that the political will is there. Businesses should start preparing now for the new landscape in terms of costs and new business priorities.