Price elasticity datapoint of the day, citizenship edition

By Felix Salmon
November 5, 2009
John Quelch reports:

Legal immigrants to the US who are resident for five years (or three years for those who marry a US citizen) can apply for US citizenship. Currently, citizenship application and processing fees in the US are $675 per person, up from $60 two decades ago. These fees, which exclude the costs of individual legal assistance or private citizenship classes, were increased by 69% in July 2007...

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John Quelch reports:

Legal immigrants to the US who are resident for five years (or three years for those who marry a US citizen) can apply for US citizenship. Currently, citizenship application and processing fees in the US are $675 per person, up from $60 two decades ago. These fees, which exclude the costs of individual legal assistance or private citizenship classes, were increased by 69% in July 2007…

The number of US citizenship applications from legal residents dropped by 50 percent in the two years after the price increase. As a result, the Federal agency handling citizenship applications still runs a budget deficit, suggesting to some bureaucrats that the price needs to be raised again!

Quelch then disappears into some weird fantasty world where citizenship costs $30,000, minus “an income tax deduction of value-based citizenship fees over five years,” whatever that’s supposed to be. But the fact is that we’re talking about the marginal value of citizenship over permanent residence here, and that marginal value is very low indeed.

Quelch has the upside right, and it’s limited:

New citizens get to vote, apply for federal jobs, and bring their families to the US.

For some people, the last of these is very valuable indeed. For most people, none of them is worth much at all. For one of my relations, there were tax reasons for becoming a US citizen, which I never really understood. For me, the biggest upside to becoming a US citizen would simply be the reduction in airport risk. Dahlia Lithwick explains:

I am in this country on a green card. You should also know that over my almost 20-year residence in this country, I have been told by more than one INS official that I have absolutely no rights here and that, visa or no visa, my residence here can be terminated at their discretion.

On the other hand, Quelch doesn’t mention the downsides of citizenship at all. The most obvious is jury service: if you’re not a citizen, you get an automatic get-out-of-jury-service-free card, and it’s valid for life. Nice. And then there’s taxes. If a permanent resident leaves the country and stops being a US resident for tax purposes, she doesn’t need to pay any US taxes at all. A US citizen, by contrast, needs to pay US taxes on her global income for her entire life, no matter where she lives. On top of that, many countries require that if you become a US citizen, you need to give up your initial citizenship. Which is a major decision indeed. Finally, there’s the fact that if you travel on your US passport, you run a slightly greater chance of being hated on by the people in whose lands you’re travelling.

So it comes as little surprise that as the price of citizenship increases, the demand for it falls, to the point at which the overwhelming majority of citizenship-eligible permanent residents already decline to apply for it.

The thing which confuses me is why the US would encourage a system which creates a weird not-quite-citizen class of permanent residents who don’t get to vote but who otherwise walk and quack like any other first-generation American. If my American wife wanted to live and work in the UK, we’d simply apply for her to get a UK passport. Why doesn’t the US system work the same way?

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Comments
16 comments so far

I have a PhD in engineering and the reason I want a citizenship is that almost all the “cool” jobs available out there that fit my expertise need a security clearance. Maybe I have to move to finance, no citizenship requirements there.

The green card needs to be caried at all times as an ID card. I failed to do so once traveling in Arizona and an Immigration road block gave me a hard time but let me go.

I am too lazy to search right now, but I believe that if you had a green card for more than 7 or 8 years and left the country, you still had the 10 year requirement to file taxes with the IRS. Ok, found something along those lines:
http://en.wikipedia.org/wiki/Permanent_r esidence_(United_States)#Tax_costs_of_Gr een_Card_Relinquishment

Posted by IF | Report as abusive

“If my American wife wanted to live and work in the UK, we’d simply apply for her to get a UK passport. ”

I may be out of date but I think she would have to apply for ILR (indefinite leave to remain) and after behaving herself for the required time (used to be 3 yrs) would then be eligible to apply for UK citizenship. That’s how it used to be.

Posted by Permanent Resident | Report as abusive

Heh… on the top right of this page I see an ad for “United States Immigration Services, your online us immigration source”

John Quelch, non-executive director of WPP, says things like: “…you run a slightly greater chance of being hated on…”?

What does it all mean?

The UK does give resident tax-paying non-citizens a vote, which is as it should be, and it’s always mystified me that the US, at some point since 1776, decided that jury service was a better way of earning representation than, ya know, taxation.

But Permanent Resident above is right. It is something of a pain in the behind to bring a spouse back to the UK. There’s a visa that must be obtained, followed by the application for ILTR, followed by maybe something like three years for a passport down the line. And just try and bring them back before you marry them…

Felix, if you’d like to look into a neat little intersection of economics and migration, take a look into the formula by which the IRS calculates the amount you have to pay to renounce US citizenship.

I was under the impression that one of the benefits of citizenship was that the tax on estates was different for permament residents and citizens if they were to pass away.

Posted by Duff Samoa | Report as abusive

Require that resident aliens become citizens after their fifth year here and before the end of their eighth. Failure to do so will mean loss of permanent residency and they will be deported if they can’t secure a visa. Put simply, ‘shit or get off the pot’. That should increase the marginal value of citizenship and will make the $695 entry fee a real bargain.

BTW, a few days of jury duty every few years is not onerous nor is traveling on an American passport. It usually the cause of envy.

Posted by RLH | Report as abusive

One factor that you all seem to forget is travel. U.S. citizens enjoy remarkable freedom of travel: they can go visa-free or obtain visas upon arrival in half the countries of the world.

A couple of years ago, back before I got my U.S. citizenship, I had to go on a business trip to Germany with a bunch of my coworkers. Everyone else just bought their tickets and went. I had to drive to the nearest German consulate, two hours one way, submit a visa application, pay a fee, then drive there again to pick up my passport.

Re: jury duty, being a foreign-born citizen is a generally accepted get-out-of-jury-service excuse – you just take the summons, write that you no speek inglish good, and mail it back to the court.

Posted by Eugene | Report as abusive

“U.S. citizens enjoy remarkable freedom of travel: they can go visa-free or obtain visas upon arrival in half the countries of the world.”

This is relevant for developing-world migrants, but not for developed-world migrants (I don’t think there’s anywhere I could go visa-free/visa on arrival if I had a US passport that I wouldn’t be able to visa-free/visa on arrival on my current UK passport – same if I were Australian, Japanese, etc).

I’m not sure it’s literally HALF the countries, although for practical purposes it may possibly be “most places most people reading this would usually go” (no way to prove even that).

I don’t remember anyone ever “hating on” my US passport in Western Europe particularly, but I knew plenty of people who preferred to travel on a second passport in the Middle East if they had one.

Posted by SelenesMom | Report as abusive

Quelch has the third upside wrong I think. Green card holders can bring their spouse/kids to US can’t they.

For many of the developing world countries wherein they have to give up their original citizenship after getting US citizenship is a great downside. Though most do not relinquish original citizenship as per rules as there are not strict cross-checks ;)

Posted by PlayDumb | Report as abusive

There are some downsides to being a non-citizen when passing on an estate. The UK presents similar obstacles, although it tends to focus on the issue of domicile, a somewhat mushy concept that’s somewhere between tax residency and where your heart in.

The best ineffectual US f-you to foreign documents has to be New York State’s insistence that a foreign driving license holder hand over that license to the DMV, for destruction, or safekeeping, when gaining a US license. Should one want to use the foreign one in one’s previous country, one has to ask them for it back, and surrender the US license while using it. Has anyone, ever, obeyed this commandment?

If you are a citizen and commit a crime (serious or minor), you are subject to the appropriate criminal penalty. If you are an alien (legal or illegal), you can add potential deportation to the penalty you face.

For people who have been in this country since they were children this risk is enormous. They could be deported to a country where they have no family and no ties of any kind. They may not even speak the language.

While there are cases where citizenship is taken away, they are VERY RARE.

Posted by Brad Ford | Report as abusive

You also forget one of the greatest benefits: once you are a citizen you can leave without fear of losing that status. If I’m not mistaken Green Card holders lose their permanent resident status if they’re out of the country for over 6 months. It’s a bit of an ironic benefit, actually.

As a side note, last time I tried to enter the Czech Republic with a Canadian passport, I discovered that there was a visa requirement. Fortunately for me, there was no such restriction on Romanian citizens. Unfortunately, presenting multiple passports to immigration officials confuses them. You don’t want to confuse immigration officials do that if you can help it.

“This is relevant for developing-world migrants, but not for developed-world migrants”

Most US immigrants come from developing countries. Top three countries are Mexico, India, Philippines.

“I don’t remember anyone ever hating on my US passport in Western Europe particularly”

Why’d anyone (aside from border control and possibly the receptionist in the hotel) even get to see your passport?

“Quelch has the third upside wrong I think. Green card holders can bring their spouse/kids to US can’t they. ”

In theory, yes, in practice, no. If you’re a citizen, bringing one’s spouse/kids/parents is a high priority process that can be completed in less than 2 years. If you only have a green card, it’s low priority, subject to a quota that could mean a 10 year wait.

Posted by Eugene | Report as abusive

Just obtain an Irish passport, it comes with a religious passage.

With all these global warming models accelerating things, I would rather buy higher than lower. That rules out a lot of countries.

Posted by Casper | Report as abusive
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