Washington has discovered a way to make immigration paperwork cost more than some houses. As The Hill reports, the Department of Homeland Security formally published a proposed rule yesterday that would add a $103,265 fee to every cap-subject H-1B petition, including petitions under the advanced-degree exemption. The charge would come on top of the filing fees employers already pay.

For the moment, however, the word proposed matters. The fee isn’t yet in effect. The public can comment through September 24, 2026, after which DHS could revise, finalize, or abandon the rule, and the courtroom sequel is practically writing itself.

The proposal would apply to H-1B petitions subject to the annual cap, including petitions for some workers already living in the United States. It wouldn’t apply to petitions exempt from the cap, such as many filed by universities, affiliated nonprofit hospitals, and nonprofit or governmental research organizations. Congress currently permits 65,000 cap-subject H-1Bs each year, plus 20,000 for workers with advanced degrees from American institutions.

In December 2024, I examined the broader H-1B debate, including the tension between attracting exceptional talent and protecting American workers. The new proposal puts a very large price tag on that old argument.

The Velvet-Rope Argument

The strongest case for the fee begins with a simple principle: the H-1B program is supposed to fill legitimate shortages, not give corporations a federally approved coupon for discounted labor.

Critics of the existing system have long argued that some companies hire H-1B workers not because no qualified American is available, but because a visa-dependent employee may accept lower pay and possess less leverage to change jobs, demand a raise, or challenge poor treatment. That concern isn’t merely campaign-trail confetti. The DHS proposal relies partly on a 2026 working paper by Harvard economist George Borjas, which estimates that H-1B workers earn about 16.1 percent less than statistically comparable U.S.-born workers after controlling for education, age, sex, occupation, and location.

Supporters therefore view the fee as a market test. If an employer truly needs a uniquely qualified artificial-intelligence researcher, semiconductor engineer, medical specialist, or other scarce professional, the company can still decide that the worker is worth the extra cost. If the employer merely wants an ordinary employee at a lower wage, the six-figure charge removes much of the financial incentive. In theory, that means fewer American workers displaced, less downward pressure on salaries, and more H-1B slots reserved for genuinely exceptional talent.

The proposal may also encourage companies to do something politicians have discussed for decades but corporations have often treated like an optional software update: recruit, train, and retain Americans. Vice President Vance has defended the plan on precisely those grounds. A company facing a $103,265 surcharge may suddenly discover that internships, apprenticeships, tuition assistance, and entry-level training aren’t antiquated customs after all.

There’s also a basic scarcity argument. Demand for H-1B visas has historically exceeded the statutory cap. When the government has only 85,000 cap-subject slots to distribute, charging a substantial premium could help screen out applications for lower-value or less-specialized positions. Supporters would say that a scarce public benefit shouldn’t be handed out in a way that lets outsourcing firms crowd out employers seeking truly rare skills.

Then there’s the taxpayer argument. The immigration system is expensive, and USCIS is already funded primarily through user fees. DHS estimates that the new charge would raise about $8.78 billion annually. Roughly $3 billion would go to USCIS, nearly $2.96 billion to the immigration courts, about $1.21 billion to the Department of Labor, $1.05 billion to ICE, $484 million to the State Department, and $76 million to Customs and Border Protection. Those funds would support adjudication, fraud detection, vetting, information systems, wage enforcement, consular work, court staffing, and related immigration functions.

From this perspective, employers benefiting from the legal immigration system should bear more of its cost instead of passing the bill to taxpayers. Better-funded labor enforcement could also protect both American employees and foreign workers from companies that manipulate wages or violate visa rules.

Finally, the administration is using a more conventional regulatory process this time. President Trump’s earlier $100,000 payment was imposed through a proclamation and was later vacated by a federal judge, who concluded that it functioned as an unauthorized tax. The new proposal invokes separate provisions of the Immigration and Nationality Act that allow DHS to set fees to recover the aggregate cost of immigration adjudication and naturalization services. It’s being subjected to notice and public comment rather than dropped overnight by proclamation. Supporters argue that this legal route is more deliberate and more defensible.

Put together, the favorable case isn’t frivolous. The proposal could discourage abuse, reward employers who genuinely need scarce expertise, strengthen enforcement, protect American wages, and shift immigration-system costs from the general taxpayer to the businesses using it.

When a User Fee Starts Dressing Like a Tax

The opposition’s first question is painfully obvious: does processing one H-1B petition really cost the government $103,265?

No. DHS didn’t arrive at the figure by calculating the cost of adjudicating an individual petition. It identified roughly $8.78 billion in immigration-related expenses across several federal agencies and divided that amount by an assumed 85,000 fee-paying petitions. The proposal would make one narrow class of employers finance immigration courts, ICE operations, border functions, visa programs, agency staffing, technology projects, and other expenses extending well beyond the service those employers receive.

DHS argues that the law permits recovery of the aggregate costs of immigration services, including services provided without charge to other immigrants. Opponents reply that such a broad reading turns a user fee into a revenue measure. If the executive branch can select one politically unpopular group and charge it billions to fund government-wide priorities, Congress’s power over taxation and appropriations begins to look more decorative than constitutional.

The earlier court ruling doesn’t automatically settle the new proposal because the administration is relying on a different statute and following a different procedure. Still, it hangs over the rule like a storm cloud. The same basic concern remains: Congress created the H-1B program and set several related fees in statute. A court may reasonably ask whether Congress clearly authorized DHS to impose an additional six-figure charge that finances agencies and activities only loosely connected to a particular petition.

The economic design creates another problem. A flat $103,265 fee doesn’t necessarily identify the most talented worker; it identifies the employer with the fattest wallet. Amazon, Apple, Microsoft, and Google may be able to absorb the cost for select hires. A medical practice, engineering firm, rural employer, or technology startup may not. If the practical result is that only corporate giants can participate, Washington will have transformed worker protection into a rather generous moat for Big Tech. Apparently, antitrust concerns get the afternoon off when immigration policy clocks in.

DHS’s own analysis makes the small-business problem hard to wave away. Of the 28,649 entities that filed cap-subject petitions in fiscal 2025, the agency classified 14,541 as small entities. It estimates that the fee would impose a significant economic impact—more than 1 percent of annual revenue—on 11,051 of them, or 76 percent of the small entities studied. The proposal applies the same fee regardless of employer size and says discounted fees or small-business exemptions could encourage avoidance and undermine revenue collection.

That may explain the agency’s decision, but it doesn’t make the burden disappear. A policy that protects American workers by pricing smaller American employers out of skilled hiring has a certain Washington circularity to it.

There’s also a serious dispute over whether the fee would raise the revenue DHS expects. The agency assumes 85,000 employers will continue filing and cites the Borjas working paper, which estimates that strong demand could support a one-time fee in roughly this range. But David Bier of the Cato Institute argues that the earlier $100,000 payment caused an approximately 87 percent decline in the petitions to which it applied and produced a net revenue loss after reduced filings were considered. The first policy was narrower, so that experience doesn’t conclusively predict the new rule’s effect. It does, however, expose the awkwardness of calling a charge both a powerful deterrent and a dependable revenue stream. If it deters employers, it raises less money. If it raises $8.78 billion, it may not be much of a deterrent. The fee is being asked to ride two horses, and Washington hasn’t supplied a saddle.

The government’s own regulatory analysis adds to the uncertainty. DHS quantifies roughly $8.8 billion in annual costs to petitioners, but it doesn’t estimate monetized benefits or quantify the proposal’s effects on wages or economic growth. The administration may ultimately prove correct that the charge will protect domestic pay and employment, but the proposed rule largely treats those benefits as indirect and qualitative while presenting the bill in exquisitely precise dollars and cents.

Opponents also warn that a job blocked in the United States doesn’t automatically go to an American. Sometimes the employer moves the work overseas. Research on restrictions to high-skilled immigration has found that H-1B-dependent multinational companies respond by increasing employment at foreign affiliates. Other research using H-1B lottery outcomes found that startups with greater access to skilled foreign workers were more likely to attract financing, produce patents, and achieve successful exits. In other words, the choice isn’t always “foreign worker or American worker.” It may be “worker in America or the same work in Toronto, Bengaluru, or Warsaw.”

The exemption for cap-exempt institutions softens some of the damage. Universities, affiliated nonprofit hospitals, and qualifying research organizations would generally remain outside the new fee. Yet that doesn’t protect every private clinic, startup, small manufacturer, engineering firm, or employer seeking to hire an international graduate already educated in the United States. America could spend years training a talented student at one of our universities, then effectively hang a six-figure “please innovate elsewhere” sign around the graduate’s neck.

There’s a human concern as well. H-1B workers are using a lawful channel established by Congress. Some may be paid less than comparable Americans; others are highly compensated innovators; still others are vulnerable to employers because their immigration status is tied to their job. A serious reform should punish companies that exploit the program, not treat every foreign professional as a corporate scheme with a passport.

Fix the Program Without Building a Six-Figure Tollbooth

From my perspective, the administration has identified a real problem and proposed the wrong-sized remedy.

The H-1B program shouldn’t be a back door for replacing qualified Americans with cheaper, more dependent labor. Government has a legitimate responsibility to protect the nation’s workers, enforce wage laws, punish fraud, and ensure that employment-based immigration serves the country rather than merely padding corporate margins. “America First” becomes little more than bumper-sticker theology if American families are told to train their replacements and smile about the quarterly earnings report.

But the $103,265 proposal is too blunt, too broad, and too legally adventurous. It doesn’t simply recover the cost of processing H-1B petitions. It selects one class of lawful-immigration users and assigns them a multibillion-dollar tab for much of the federal immigration system. Calling that a fee doesn’t stop it from looking, walking, and quacking like a tax, and taxes of this magnitude should come from Congress, not creative executive-branch bookkeeping.

The flat charge would also favor giant corporations over startups and smaller employers. That’s not a merit-based system; it’s a balance-sheet-based system. If a company’s ability to pay becomes the main test, the policy may strengthen the very corporate powers that have been accused of abusing H-1Bs in the first place. Congratulations, we protected the little guy by giving his largest competitor the only affordable key to the talent pool.

There’s a better path. Congress should require employers to make a serious, documented effort to recruit qualified Americans before seeking an H-1B worker. Wage floors should be strengthened and tied to occupation and location, with higher standards for H-1B-dependent and outsourcing firms. Visas should be prioritized for genuinely scarce skills, high wages, critical industries, and exceptional qualifications, not distributed as a cheap-labor lottery. Employers that lay off Americans and immediately seek foreign replacements should face aggressive audits and serious penalties. Foreign workers should also have greater freedom to change employers so that a visa doesn’t become a pair of golden handcuffs.

A substantial but proportionate fee could help fund H-1B adjudication, fraud prevention, wage enforcement, and American training programs. It should be transparently connected to those purposes, scaled where appropriate, and authorized clearly by Congress. Domestic STEM education, apprenticeships, career pathways, and midcareer retraining deserve real investment too. Importing talent can address an immediate shortage; building American talent addresses the next generation.

We don’t have to choose between a corporate free-for-all and a legal-immigration drawbridge. Justice requires fair treatment of American workers, honest treatment of foreign workers, responsible stewardship of the nation’s resources, and respect for the constitutional lawmaking process.

So, yes, reform H-1B. Close the loopholes. Raise the standards. Make companies prove the need and pay the real cost. But don’t turn lawful skilled immigration into a $103,265 tollbooth designed to finance half the federal immigration bureaucracy. A scalpel is still the better instrument, even when Washington has already ordered the sledgehammer and put it on the taxpayer’s credit card.