Immigrant-Native Wage Gaps and Immigration Tariffs: Examining the Case for an H-1B Visa Tax

Author: Michael A. Clemens (George Mason University)
Posted: 13 March 2026

Abstract

The US government in 2025 imposed a $100,000 tax on each high-skill foreign worker entering with an H-1B work visa. The only public economic justification calculates the tax to offset an estimated wage penalty for H-1B workers relative to US natives. But this estimate suffers from substantial bias. Reexamining the same data shows that H-1B workers receive a modest wage premium relative to comparable natives, roughly 6 percent on average—inconsistent with any wage penalty—when using equivalent wage concepts and comparing workers of the same age, gender, education, and tenure, in the same occupation and local labor market. I trace most of the discrepancy to four methodological choices that inflate the prior estimate: 1) undisclosed imputation of missing data, 2) pooling of non-contemporaneous years, 3) a definition of local labor markets contradicting standard economic practice and US law, and 4) failure to consider H-1B workers' low job tenure. The remaining discrepancy arises from comparing incompatible wage concepts for H-1B versus native workers. Beyond measurement, the theory of public economics implies that a revenue-maximizing immigration tax reduces welfare relative to alternative policies, even with zero weight for immigrant welfare.
JEL codes: J08, J38, J68, H21
Keywords: migration, migrant, immigrant, immigration, earnings, wages, taxes, tariffs, barriers, restrictions, skill, skilled, h-1b, welfare, native, citizen, college, stem, worker, foreign, labor, labour