Among Migrants, Refugees and the Lightly Educated Are More Likely to Pay Income Taxes Than Those with Graduate Degrees

In a fascinating study just released by our Canadian neighbors, they found that among migrants, refugees as a group are much more likely to pay their income taxes than skilled foreign workers; further, those with less education are more likely to pay than those with graduate degrees.

The — to me, surprising — payment percentages were as follows:

• Refugees: 96.6 percent
• Less than a college degree: 88.9 percent
• Graduate degree: 84.9 percent
• Skilled workers (like our H-1Bs): 76.2 percent

The Statistics Canada report was entitled “Tax-filing rates of newly landed immigrants in Canada: Trends and insights”. The percentages shown above (and below) are from the data table that accompanies Chart 1. “Landed” immigrants are roughly comparable to our permanent resident aliens, or green card holders.

The country of origin data shows these payment percentages:

• Philippines: 98 percent
• Syria: 96 percent
• Nigeria: 95 percent
• United Kingdom: 88 percent
• United States: 86 percent
• China: 82 percent

What’s going on here? There are some hints in the text and I have some notions of my own.

In the first place, and noted in the report, in order to receive benefits for children in Canada, one must report one’s income to the authorities, a real incentive for families with children.

Secondly, families who have opportunities to work elsewhere, like the U.S., simply drop out of the system. Finally, there is the variable of the resettlement agencies, which encourage tax filings — this applies to refugees, but not to skilled workers.

Perhaps there is also a gratitude variable, stronger among the refugees than among the skilled workers.

I presume that the report — Canadians are so rational — will be given to the nation’s tax collectors who will start paying more attention to those residents with the lower rates of compliance. There is nothing in the report on what, if anything, the tax people are doing with this information. The deportation of some non-tax-paying skilled workers, and the heavy publicizing of their departures would seemed to be in order.

Another approach would be to tell employers that specific skilled workers of theirs were not in compliance, with the suggestion to the employers that continued non-compliance might result in denying the employers more foreign skilled workers in the future.

This is the kind of research that the U.S. should be doing, but is not. We need to know more about the people we admit than we know now; here’s an instance in which data being assembled will be useful both to policy makers and, in this case, to tax collectors.

The author is grateful to Donna Desrochers who called the study to his attention.