Ethan G. Lewis, Dartmouth College
"Distributing the Green (Cards): Permanent Residency and the Income Tax after the Immigration Reform and Control Act of 1986"
We explore how permanent residency affects income tax compliance and net income tax contributions using variation from the Immigration Reform and Control Act of 1986 (IRCA), which authorized the largest U.S. amnesty to date. Exploiting the timing and geographic unevenness in intensity of IRCA’s legalization programs, we find that new Green Card holders received transfers under the Earned Income Tax Credit (EITC) consistent with typical compliance with Federal tax law. We also find evidence of typical compliance with state income tax law in California, home to a majority of legalization applicants, despite limited consequences for failing to file or for net income after filing. The findings thus suggest that legal status per se may increase pro-social behavior among immigrants, and that Green Cards redistribute Federal resources toward areas that bear a greater fiscal burden from immigration.
Contact person: Casper Worm