Sen. Cruz Proposes Amendment to Prevent Penalty for Hiring Citizens and Legal Immigrants
WASHINGTON, DC – U.S. Senator Ted Cruz (R-TX) today addressed the Senate floor to expose a component of the Gang of Eight Bill that establishes a penalty for hiring citizens and legal immigrants over immigrants granted Registered Provisional Immigrant (RPI) status under this legislation. He asked for unanimous consent to introduce an amendment that would fix this issue by defunding Obamacare until there are no more individuals with RPI status. But the Senate Democrat majority blocked his request.
“I filed an amendment that would have corrected one of the most egregious aspects of the gang of eight bill as it intersects with Obamacare legislation, namely a penalty imposed on U.S. employers for hiring U.S. citizens and U.S. permanent residents. This bill says if an employer hires a citizen or a legal immigrant, the IRS can impose a $5,000 penalty on that employer. But if the employer instead hires someone with RPI status, that penalty will go away. That is utterly and completely indefensible,” Sen. Cruz said.
“Nobody in this body wants to see African-American unemployment go up. Nobody wants to see Hispanic unemployment go up, youth unemployment go up, union household unemployment go up, legal immigrant unemployment go up. Yet every one of those will happen if this Gang of Eight bill passes without fixing this problem. If that happens, all 100 members of the U.S. Senate will be accountable to our constituents for explaining why we voted to put a federal penalty on hiring U.S. citizens and hiring legal immigrants. I hope this body will choose to pass my amendment and fix this grave defect in the Gang of Eight legislation.”
In his remarks, Sen. Cruz offered a hypothetical example of how this would impact American employers, citing a business that employs 100 workers. If the current bill passes, the business owner will have an incentive to hire illegal immigrants, rather than citizens of legal residents. For instance, if the owner planned to hire five new workers, hiring RPIs instead of citizens or legal immigrants could save his business $25,000 per year.
Additionally, the Senator noted that authors and proponents of the bill recognized this was an issue, supported efforts to fix it, but failed to do so.
Transcript of the Senator's Remarks Below
Madam President, the amendment that I would have called up, had not the majority party objected, is an amendment that would have corrected one of the most egregious aspects of the Gang of Eight bill. Namely, it is a penalty that is imposed on U.S. employers for hiring U.S. citizens and for hiring U.S. permanent residents. It is a striking result of the Gang of Eight bill as it intersects with the Obamacare legislation.
Let me explain how it operates. Right now, Madam President, for any company with 50 or more employees, if that company does not provide a sufficiently high dollar health insurance policy for low-income workers, that company faces a fine of $3,000 per worker. Moreover, that fine is not deductible on the company's taxes, which means as an effective matter to the company, the penalty is in the order of $5,000 per employee when you factor in the tax consequences.
That is the present status quo under Obamacare. That is the penalty that is visited upon U.S. employers for hiring U.S. citizens and for hiring legal immigrants. Now, what does the Gang of Eight bill do to change that? Well, the Gang of Eight bill takes some 11 million people who are here illegally and it grants them what is called RPI status, Registered Provisional Immigrants.
Now, I have many concerns about legalization prior to securing the border, but this concern is altogether separate from that and it is the simple reality that anyone granted RPI status, anyone granted legalization under the Gang of Eight bill is exempted from Obamacare, which means that the employers who would be hiring them do not face the Obamacare tax of $5,000 per employee, whether U.S. citizen or legal immigrant. Now, what does this mean in reality?
Let's take an example, a simple hypothetical. Madam President, I would ask you to envision a small business, Joe's Burger Shack. Joe’s Burger Shack is owned by a small business owner. It is a series of small fast-food restaurants in any given state. It could be my home state of Texas or any state across the Union.
Now, let's assume that Joe's Burger Shack has 100 employees and Joe's Burger Shack with 100 employees, business is doing relatively well, people are eating more hamburgers, Joe decides he wants to hire five more people. Now, if Joe and Joe's Burger Shack decides they want to hire five more people… if Joe chooses to hire five U.S. citizens… or if he chooses to hire five legal permanent residents… or five legal immigrants… Joe faces a penalty of $25,000 for doing so. Five thousand dollars a piece right off his bottom line to the IRS.
In contrast, if Joe decides instead to hire five RPIs who came here illegally -- among those 11 million who are here illegally but granted RPI legalization under the gang of eight bill -- Joe pays a penalty of zero dollars. Madam President, let me ask you a simple commonsense question: in this instance, who is Joe going to hire?
This bill creates an enormous incentive to hire those here illegally and at the same time it does it by creating a statutory penalty for hiring United States citizens and for hiring legal immigrants. Madam President, that makes no sense.
Let me give a second example. Suppose Joe is facing harder times. Because of Obamacare penalties, Joe makes a decision that a great many fast-food restaurants have made to forcibly reduce workers' hours. Obamacare kicks in when a worker works 30 hours a week and so a great many small businesses, and in particular, fast-food restaurants, have been forced to reduce their employees' hours to 29 hours a week or less.
Now, imagine that of Joe's hundred employees, 25 of them are RPIs, are formerly illegal immigrants who received legalization under the Gang of Eight bill, and 75 are either U.S. citizens or permanent residents. And if Joe wants to reduce the hours of 25 of his employees below the 30-hour threshold because times are hard and he can't afford the burdens that Obamacare is putting on his business.
If Joe forcibly reduces the hours of 25 U.S. citizen employees or 25 legal immigrant employees, to below 30 hours a week, Joe saves potentially $125,000 a year in tax penalties. Five thousand dollars apiece times 25 employees. In contrast, if Joe says instead “I want to reduce the hours, forcibly, of those who are here illegally that received legalization through the gang of eight,” Joe saves zero dollars in tax penalties because he's not paying a tax penalty regardless of whether those here illegally are working 30 or 40 hours or more.
The question I would pose to you, Madam President, whose hours will Joe reduce? This statute puts an enormous incentive, an incentive from Congress, for Joe to forcibly reduce the hours of united states citizens and of legal immigrants. and let me give a third and even more stringent example. imagine if joe is facing great financial burdens as a lot of small businesses are, as a lot of small businesses are struggling. imagine if joe instead made the decision to fire all 100 workers, all 100 workers who happened to be united states citizens or legal permanent residents and instead hire only those who are here illegally or who have been legalized under the gang of eight. the consequence, simply doing the math at $5,000 an employee means that joe could save 5 -- $500,000 a year in tax penalties. the way obamacare works there is an alternative avenue where joe could well be paying $2,000 per employee minus 30 which would get down when you factor in the tax savings to about $200,000. but any way you measure it under obamacare's complicated tax penalty formula, joe could potentially save hundreds of thousands of dollars by firing his u.s. employee -- u.s. citizen employees or his legal resident employees and instead hiring those who are here illegally. madam president, that doesn't make any sense.
Madam President, that's not an incentive that anyone rationally would set up and that is what this Gang of Eight bill does. You know, to share how real this incentive is, this penalty for hiring U.S. citizens and legal permanent residents, I'd like to read a letter from one of my constituents, Mr. Alan Tharp, Chairman and CEO of Old England's Lion and Rose, LTD in San Antonio. He wrote a letter that reads as follows:
Since 1985 I have been the sole owner and CEO of Alan Tharp as well as the Lion and Rose and a partner in the Golden Chick Restaurants. Our corporate restaurants provide well over 1,000 jobs to fellow Texans and our franchise restaurants provide many more. I've been following the current debate over immigration reform very closely and want you to be aware that this bill coupled with the new Obamacare legislation makes it much more affordable for a business like mine to employ registered provisional restaurants than American workers.
I do not believe that was the intention of the legislation but it is the irrefutable effect of both. Obamacare as documented in numerous news stories, already creates an incentive for businesses to cut hours in order to avoid triggering the 50 full-time employee threshold that requires businesses to pay a fine if they do not provide government-approved health insurance.
Because of this law, I have been forced to cut back every single hourly employee in each of my companies to no more than 28 hours a week. Cutting schedules from 40 to 48 hours per week has caused some hardship on many employees. However, our choice is to either provide part-time work or no work at all because our business cannot afford to comply with the severe consequences that would be imposed on us under this law if we continue to provide full-time employment to all these employees. If the current immigration bill before the Senate, however, is made law, a business could hire registered provisional immigrants instead of U.S. citizens and avoid triggering Obamacare regulations and fines. Hiring RPIs over American workers from a purely economic point of view would be the best thing for my business. I personally do not believe this is the right thing to do, but surely some of my competitors would.
Obamacare and the immigration bill is forcing employers to make extremely difficult choices. I don't want to be in the position of choosing to grow my business or choosing to pay my fellow Americans. I want to do both. Obamacare and the immigration bill will prevent me from doing so.
Madam President, this is a real CEO facing the real incentives of running a business under Obamacare and looking at what would happen if this Gang of Eight bill passed into law.
Now, one of the potential counterarguments to this concern? In the way of Washington, we don't actually have to predict because the proponents of this bill have followed a long, tried and true path in Washington, namely, they have gone to an ostensibly neutral reporter at a mainstream publication and urged them to “fact check the claim that the Gang of Eight bill with Obamacare would put a penalty on hiring U.S. citizens and legal immigrants.”
And the fact check, the reporter compliantly gave the answers, the responses given by the Gang of Eight, but I would suggest, Madam President, that those responses are on their face singularly unpersuasive.
The first response of the Washington Post fact checker put up was a claim that "Cruz is really creating a mountain out of a mole hill because the impact on employers is almost too minuscule to be noticed.” That's a quote from our friends at the Washington Post and their so-called fact check, and the basis of this is they said, “Well gosh, there are a lot of companies that don't have 50 employees. The number of companies with more than 50 employees is really, really small” or as they put it, “almost too minuscule to be noticed.”
Madam President, I'm going to suggest the claim that companies with more than 50 employees comprise a share of the economy that is minuscule is facially absurd. Indeed, if you look at the data, 71 percent of all U.S. employees work in a business with more than 50 employees. So according to the Washington Post, it is an objective fact that the employers for 71 percent of U.S. employees are "almost too minuscule to be noticed." to put that in raw numbers that's 80 million employees. Madam President, I would suggest 80 million employees is on any measure not minuscule.
Now, the second basis of the so-called fact check and the second response from the bill's proponents was that, “Well, under current law it is illegal for a potential employer to ask about a person's immigration status.” Madam President, I would note this is a particularly facile response that almost surely came from a lawyer and, as a lawyer myself, I will say it is precisely the sort of response that causes people to love lawyers as they do - oh so much - in today's society. Because yes, it is true, there is a provision in statute that says you cannot ask about a person's immigration status and base employment decisions on that, but the statute also requires you to check their immigration status before you hire them.
Moreover, there's no provision for employees volunteering this information, and if this bill passes, if there is a massive incentive to hire RPIs over U.S. citizens, the simple reality is there will be massive economic incentives for employers to do so. And, madam president, let me note that this point is utterly irrelevant when it comes to reducing employees' hours. Because even if you engage in the “Alice in Wonderland” world where employers don't know if an individual is an RPI or a U.S. citizen, once they're hired as a matter of legal requirement, they do know that, and if they're then subsequently making a decision on whose hours to reduce, the overwhelming economic incentive would be to reduce the hours of the U.S. citizen or the legal immigrant rather than those who are currently here illegally.
Madam President, I want to ask you, this penalty on hiring U.S. citizens and on legal immigrants, who is this going to hurt the most? You know, it's not going to hurt companies that are doing nuclear science research. It's not going to hurt companies that are designing satellites. It is going to hurt the workers who are working in the sorts of jobs where they face competition from those who are here illegally. It is going to face workers, for example, in the fast food industry. It is going to hurt workers who are working in landscaping and construction.
Who is it going to hurt the most? If you look right now, today under the Obama economy, who is being hurt the most by the Obama economy? Those the most vulnerable among us. Hispanics today have a 9.1 percent unemployment rate. Hispanic U.S. citizens, Hispanic legal immigrants, will be directly harmed by this outcome. African-Americans have a 13.5 percent unemployment rate right now under the Obama economy. It's gone up under President Obama. African-American workers will be hurt by this statutory penalty on hiring U.S. citizens and legal immigrants. And teenagers, teenagers face an unemployment rate of 24.5 percent and teenagers in particular if you look at jobs, for example, in the fast food industry, they are so often the first or second job a young teenager gets as he or she begins to climb the economic ladder.
If congress passes a bill that puts a major economic penalty on hiring a U.S. citizen or legal permanent resident, he or she may never get that job. Madame President, I'd like to read a letter from another constituent who is president of the Painless Performance, a high-end car parts manufacturer in Fort Worth, Texas. The letter read as follows:
My name is Adrian Murray. I am an immigrant. My parents moved to America from Ireland 55 years ago to seek opportunity and a better life.Aat the time, new immigrants had to have a sponsor and proof of future employment. I still have the letters written to the INS on their behalf. My parents later became naturalized citizens and raised me to respect America, her customs and her laws. That was back in the day when being an American citizen was prized. To stand before a judge with hand raised pledging allegiance and fidelity to America was the dream of millions around the world.
We devalue American citizenship by making it a cheap tool for political gain. My parents taught me to respect America's exceptionalism, and therefore honor the institutions of this nation. Because of their example, I have built a successful business with 52 employees. Many of those in my plant are legal immigrants from Vietnam. They, too, came here the right way and endured much hardship to earn their citizen status. What am I to tell them? That their sacrifice was meaningless?
That they should have just snuck in, that their citizenship has no value? That the joke is on them? Well, I would never exercise the option of replacing them with cheaper Obamacare-exempted workers. Would they not be justified in questioning the motives and validity of a government which would even consider giving an employer that option?
What has this nation come to? It is getting harder and harder to recognize America, a nation which once proudly held fast to the virtues of liberty and freedom is now seriously contemplating a law which amounts to nothing more than thinly disguised human trafficking. Once the world's greatest deliberative body, the Senate is set to vote this bill into law without bothering even to read it. This cannot be, this must not stand."
You know, it's not too late. Madam President, at the outset of my remarks I asked unanimous consent to call up my amendment to fix this problem, and the Democrats in this body objected.
My amendment would address this problem by providing that Obamacare shall be defunded until there are no longer any registered provisional immigrants in line. That is the one way to correct this problem, to correct the statutory penalty on U.S. citizens and legal immigrants if this bill were to pass. But as you've just seen, the majority party has chosen to object to bringing up that amendment.
And, indeed, so far we have not had an open debate on amendments on this bill.
And I would note that a number of the proponents of this bill claimed they were going to fix this. Here are a few of the comments sponsors of this bill have made concerning the amnesty tax loophole.
From my friend, the senior Senator from Arizona, Senator John McCain -- quote -- "I think that is an issue, and I think it needs to be addressed." Also from Senator McCain -- "We cannot get people who are not citizens the same benefits. That is the fundamental principle. We are trying to work around it so that an American citizen is competitive for a job."
A quote from a senior democratic aide -- "We are willing to work through these issues as the bill works its way through the Senate."
Madame President, I’m sorry to tell you that those promises have not materialized. We haven't worked through these issues. And, you know, I cannot help but think with an issue like this of the very real impacts it has in so many families, and at least in my family that impact would not have been hypothetical.
55 years ago my father came from Cuba as a legal immigrant. He was 18. He couldn't speak English. And when he arrived in Austin, Texas, penniless, he took a job like so many other immigrants before him washing dishes, making 50 cents an hour.
And I will say the food services industry has provided such an opening portal for millions of Americans and for millions of immigrants from throughout the world.
And yet, if the Gang of Eight bill had been law in 1957 along with Obamacare, my father, who couldn't speak English, who was very glad to make 50 cents an hour so he could take that money and pay his way through the university of Texas and go on to get a higher-paying job and start a business and work towards the American dream, my father very well might have been fired because of the Gang of Eight bill, because the impact of this legislation would have been to cost his employer $5,000 for hiring him, a legal immigrant.
And I have to tell you, my father's skills at age 18, I wouldn't characterize him as a high-skilled dishwasher. He told me he got that job because he couldn't speak English and you didn't have to speak English to wash dishes. You had to be able to take a dish and stick it under hot water. This incentive would have been a massive incentive to say Rafael, I’m sorry, you're out of a job because we're going to hire someone who didn't follow the rules, came here illegally because Congress penalizes us $5,000 for hiring you but puts zero penalty on someone who came here illegally.
Madame President, I cannot think of a more irrational, a more indefensible system than a statutory penalty for hiring U.S. citizens or legal immigrants.
If this bill passes, a number of things will happen. If this bill passes, African-American employment -- unemployment will almost sure go up. And it will be the United States Senate's fault because this bill will penalize hiring African-Americans who are S.S. Citizens, or legal immigrants, and instead will incentivize hiring those who are here illegally.
If this bill passes, Hispanic unemployment will almost surely go up because this bill penalizes hiring Hispanics who are U.S. Citizens or Hispanics who are legal immigrants who followed the rules.
If this bill passes, youth unemployment will almost certainly go up because it is young people in particular who are just beginning the journey up the economic ladder who will be most impacted by Congress deciding to put a $5,000 penalty on hiring that U.S. Citizen, hiring that legal immigrant, and instead give a preference for hiring those here illegally.
Madame President, if this bill passes, union households unemployment will very likely go up because it is working-class households that are facing the most direct competition. And if that happens, it will be the fault of the United States Senate.
And, Madame President, if this bill passes, unemployment among legal immigrants will almost certainly go up. Because what this bill says is if you hire a legal immigrant, the I.R.S. is going to impose a $5,000 penalty on you, the employer.
But if you don't hire that legal immigrant, if you reduce that legal immigrant's hours, if you hire instead someone who is here illegally, that penalty will go away.
Madame President, I would suggest that is utterly and completely indefensible. Nobody in this body wants to see African-American unemployment go up. Nobody wants to see Hispanic unemployment go up, youth unemployment go up, union household unemployment go up, legal immigrant unemployment go up.
And yet every one of those will happen if this Gang of Eight bill passes without fix this go problem. -- without fixing this problem. And if that happens all 100 members of the U.S. Senate will be accountable to our constituents for explaining why we voted to put a federal penalty on hiring U.S. Citizens and hiring legal immigrants.
In my view, it makes no sense. And it's indefensible. And I very much hope this body will choose to pass my amendment and fix this grave defect in the Gang of Eight legislation. Thank you, Madame President. And I yield the floor.
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