# News I-Squared Act Bill

1. Sep 2, 2015

2. Sep 2, 2015

### mheslep

The term "tax" does not appear in the bill. How does hiring an H1B avoid taxes?

3. Sep 3, 2015

### Student100

Lower wages = lower taxes paid by the employer. Employees with H1B visas tend to earn less then equivalent US workers. Also depending on totalitarian agreements/level of schooling the employees/r may not pay social security, or medicare taxes at all. Which obviously saves the employer money.

Then you have the problem of what the supply of cheap skilled labor does for the salaries of everyone in those fields. They tend to be pressured downward.

4. Sep 3, 2015

### Staff: Mentor

The only wage connected tax that I know of paid by the employer is their half of the employee's payroll tax. It's difficult for me to see that as a tax avoidance scheme because it is only 6% of the wage (the other 94% savings is the lower wage itself!). What it could result in, however, is higher taxes associated with higher profits (33-39%).

Or is there another, specific tax I'm missing?

5. Sep 3, 2015

### Student100

I had thought it was closer to 8 percent for SS and Medicare together. Then you have workers comp payments which vary depending on the job. Assuming most H1B employees are going to work in office environments that would probably be close to ~1 percent. State and Federal unemployment taxes probably won't come into play since I'm assuming most of these employees would also have salaries above the income cap. There's also benefit packages and yearly raises, but these are harder to look at and I'm just ignoring them.

Hadn't thought of the profit being taxed, since the employees earning the higher wages would have a lower effective tax rate than the corporate rate. Assuming that most of the H1B employees aren't from treaty countries then the US government may actually see more taxes from lower waged employees, at least in the general fund.

I'm not against H1B visas, I just think there's a lot of abuse going on in the current framework. If this bill were to make it into law, then it only allows for more abuse.

http://www.latimes.com/opinion/editorials/la-ed-visas-tech-workers-h1b-20150217-story.html

America already produces more STEM graduates then industry needs, so the idea that H1B needs to be expanded on the grounds that companies can't find enough skilled workers is kind of silly.

6. Sep 3, 2015

### mheslep

I think that's at the very least debatable, even assuming its a given employers are apt to exaggerate shortages. Industry does not per se require STEM graduates, industry requires specific STEM competencies. For example, one current, commonly heard complaint is with CS majors who obtain degrees knowing little about robust software development in teams and have zero experience with recent platforms (e.g. mobile Android, iPhone).

7. Sep 3, 2015

### SteamKing

Staff Emeritus
For 2014, each employee has deducted from his pay 6.2% of gross compensation under $117,000 for SS and 1.45% for Medicare (no income limits). The employer must match these deductions, so the total FICA comes to 12.4% for SS and 2.9% for Medicare, or 15.3% total https://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax If instead of paying a US worker$100,000 a year in salary you can find an H1B visa holder for $50,000 a year, the employer not only saves$50,000 due to the gross salary differential, but he must pay only $3825.00 for his portion of the FICA, instead of$7650.00.

Unemployment insurance rates depend on the state in which the employer operates and the industry in which he is engaged.

Also, if an H1B visa holder loses his job, his visa is subject to being revoked.

8. Sep 3, 2015

### Student100

I think if those competencies were in such large demand that wages would reflect this. Software development wages have remained nearly stagnant for the last decade.

Has a neat graph up to 2012.

Normally when the demand rises, unemployment decreases and wages increase, to attract the best talent and retain it. Those with experience should be paid a premium for the needed skills, but that doesn't look like thats the case from payscale:

http://www.payscale.com/research/US/Job=Computer_Programmer/Salary

Late career programmers aren't making nearly the premium you'd expect compared to new hires. (Assuming payscale is accurate, it looks reasonably ok, but if there is problems with the source let me know)

9. Sep 3, 2015

### mheslep

I doubt the H1Bs are coming in to the US to compete with the mean "computer programmer" category quoted in those pay scale stats. Rather, I expect they're coming in to compete at this level, where the prevailing wage has indeed gone astronomical:

10. Sep 3, 2015

### Student100

I find this hard to believe, and the statistics don't really support this as the norm in the industry. I doubt any H1B's are commanding such a salary, or even commanding a salary close to average American workers. The company basically owns them, without the job they lose the visa. It doesn't really place them in a great bargaining position.

11. Sep 3, 2015

### SteamKing

Staff Emeritus
Hmm... let's see, $500 K salary from a startup or$3 million in cash & Google stock. It doesn't take an MBA to figure this one out.

But H1Bs are not merely being used as stalking horses to slay high-salaried programmers at startups. The famous layoffs at Disney were reportedly reversed after the Mouse garnered a lot of attention and no small amount of negative press over their plans to replace some IT workers with H1Bs, with the added insult that those being laid off were supposed to train their replacements before heading out the door.

http://dailycaller.com/2015/06/12/disney-abc-cancels-plans-to-layoff-dozens-of-tech-workers/

Some tech workers were brought in from India to work on installing systems at an American business and paid as little as $1.21 an hour. http://www.mercurynews.com/business/ci_26778017/tech-company-paid-employees-from-india-little-1 Once these workers were finished, they were flown right back to India. No$15 / hour for them.

But it's not just IT and electronics employers who are abusing the visa system. Large numbers of foreign workers are imported by shipyards, for instance, housed in company quarters on site, and work nearby on the vessels they are building or repairing. If the workers cause any trouble, they get fired summarily and put on the next plane out of town. With record numbers of Americans out of the labor force, these abuses should not be tolerated.

12. Sep 3, 2015

### mheslep

As the linked story makes clear, and I wrote, those S. Valley jobs are not the norm. If for some reason you find that CEO unbelievable (??), confirmation is easily found elsewhere. And H1Bs don't lose their visa if they can quickly get another job, which somebody at this level likely can.

13. Sep 3, 2015

### SteamKing

Staff Emeritus
My point is, if you are going to recruit someone to jump ship from a good job, you don't start out by offering less money ...

Now, this startup may be the next Google, or it could be the next Napster, you just don't know ...

14. Sep 3, 2015

### mheslep

The latter example has to do with outrageous employer behavior and nothing to do with H1B; the Indian immigrants were not H1Bs but entered the country under false pretenses for a few months. If they had been H1Bs, the employer could not have gotten away with the illegal wages.

That said,
i) I'm aware that there are abuses of H1B, and I'm skeptical of raising the cap to over 100K per year because Google's Schmidt thinks its the thing to do.
ii) Abolishing all H1Bs does not necessarily mean US jobs will be retained over a foreign national, as owners/founders can and do pack up and move overseas, or simply start the next Google 2.0 in some other country in the first place.

15. Sep 3, 2015

### SteamKing

Staff Emeritus
There's nothing to stop them from doing this now.

Everybody knocks Bill Gates and Microsoft for whatever reason, but it still amazes me that he didn't abandon Redmond, WA years ago. He could have moved across the border to BC, or bought his own island (or small country) somewhere ... Heck, he could have built a big bote or two, put MS on the High Seas, and declared himself stateless. Why didn't he?

Why is Silicon Valley still operating in California, with the earthquakes and the droughts and the fires and the high cost of living and the high taxes and crumbling, almost Third-World infrastructure and feudal politics? Is the view of sunsets on the Pacific really that great?

Everybody wants US kids to grow up, study hard, go to college and get a STEM degree, and when all this is done, we say, "Sorry, but I'm gonna hire this H1B visa holder to fill that job you wanted. But, hey, now they're paying \$15 an hour at Starbucks! Get your application in before they convert to robot baristas!"

16. Sep 4, 2015

### Student100

Have you been to that CEO's website? I don't think his credibility as someone knowledgeable of the industry is well established. Unlike his father, the Yale computer science professor, I don't think he even studied computer science from the information I could find online.

The 3 million dollar developers will always have good paying jobs, whether they increased H1B visas to a million a year or abolished them completely. Any great STEM worker who's proven himself as a innovator or worth large sums of money will never have to fret over employment, this is true of any field. It's the good to decent green graduates that H1B's are replacing, at lower wages.

What I'm looking at here is average pay, pay which has remained stagnant for a decade. If there was a real shortage of supply, I don't think this would be the case. The average pay would be increasing as employers pay for the value of having experienced and loyal STEM workers (and as they bought out talent from other companies).

The current H1B visa program seems like a way to offshore onshore work. Tech companies still respect american innovation and universities, this is why they haven't all packed up and moved completely to India (and why foreign students still come here to study, paying large sums of money to get degrees from our universities). However, the allure to replace the decent to good entry STEM workers with decent to good foreign STEM workers at lower wages seems like a powerful motivation to me.

Upon termination, the H1B visa expires. If they find a new sponsor after termination they still must leave the country and reenter with a valid visa. This is from the US gov website dealing with H1B.

17. Sep 4, 2015

### mheslep

18. Sep 4, 2015

### Student100

19. Sep 4, 2015

### Student100

Employers have all the bargaining power when it comes to H1B visa holders.