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Why was Trump’s H-1B fee struck down?

Why was Trump’s H-1B fee struck down?

Posted on June 16, 2026 By admin


The story so far:

On June 8, in a 42-page ruling with nationwide effect, U.S. District Judge Leo T. Sorokin struck down President Donald Trump’s policy imposing a $100,000 fee on H-1B visas for highly skilled foreign workers. Upholding a challenge brought by California and 19 other States (plaintiffs), the court held that the fee amounted to an unlawful tax that the President could not impose without Congressional delegation.

What is an H-1B Visa?

The H-1B visa, created by the Immigration Act of 1990, is the backbone of the United States’ high-skilled immigration architecture. Building on the broader framework of the Immigration and Nationality Act of 1952 (INA), which established the “H” category of temporary worker visas, the 1990 law carved out a distinct H-1B classification for highly educated professionals. It permits U.S. employers to hire foreign nationals in “specialty occupations”, which require (i) theoretical and practical application of a body of specialised knowledge and (ii) at least a bachelor’s degree in a relevant field, typically in sectors such as technology, engineering, healthcare, research, finance, and higher education. Notably, H-1B workers can generally remain in the U.S. for up to six years and often use the visa as a pathway to permanent residency.

To balance employers’ demand for skilled talent with protection of the domestic workforce, Congress capped H-1B approvals for most private employers at 65,000 visas annually, with an additional 20,000 visas reserved for holders of advanced degrees. However, universities, affiliated non-profit entities, and governmental or non-profit research organisations are exempt from these numerical limits.

Why did Trump impose a $100,000 fee?

On September 19, 2025, Mr. Trump signed Proclamation 10973, requiring a $100,000 supplemental payment for all H-1B visa petitions — a substantial increase over the pre-existing filing costs of roughly $960 to $7,595. The proclamation reasoned that the H-1B programme had been “deliberately exploited to replace, rather than supplement, American workers” with lower-paid foreign labour, harming U.S. economic and national security interests, particularly in critical STEM sectors. Mr. Trump’s proclamation relied on Sections 212(f) and 215(a) of the INA. Section 212(f) empowers the President to restrict or suspend the entry of any class of aliens (non-citizens) when he finds their entry “would be detrimental to the interests of the United States.” Additionally, Section 215(a), which also concerns the President’s authority to regulate entry into the U.S., allows him to subject alien entry to “such reasonable rules, regulations, and orders, and such limitations and exceptions as the President may prescribe.”

While alleging that the proclamation violated the ‘separation-of-powers’ principle as it “usurps Congress’s exclusive constitutional authority to set immigration policy and to levy taxes”, the plaintiff States argued before the U.S. District Court that the $100,000 H-1B fee would undermine their ability to recruit and retain essential skilled workers. They argued it would worsen teacher shortages, hamper hiring in higher education, disrupt research, and deepen healthcare staffing gaps — raising costs and straining public systems.

Simultaneously, the measure also carried significant implications for India. Indians account for roughly 70% of H-1B visa approvals, followed by Chinese nationals at about 12%, and are heavily represented in the STEM professions targeted by the proclamation. By raising the cost of an H-1B petition, the policy effectively created a prohibitive barrier for thousands of Indian software engineers, doctors, researchers, and other skilled professionals, many of whom already face years-long green card backlogs.

Did the President have the power to impose the fee?

The threshold issue before the court was whether the $100,000 charge was a ‘tax’ or a ‘penalty’, because only Congress possesses the constitutional power to “lay and collect Taxes, Duties, Imposts, and Excises” under Article I, Section 8 of the U.S. Constitution, unless it clearly delegates that authority to the executive.

To answer this question, the judge, an appointee of President Barack Obama, relied on two landmark Supreme Court precedents. In Bailey v. Drexel Furniture Co. (1922), the court invalidated the Child Labour Tax Law, holding that its “heavy exaction” was a ‘penalty’ rather than a ‘tax’ because it was designed to prohibit the employment of child labour. By contrast, in National Federation of Independent Business v. Sebelius (2012), the court found that the Affordable Care Act’s requirement that individuals pay an additional fee to the Internal Revenue Service for not obtaining health insurance amounted to a ‘tax’, not a ‘penalty’, explaining that a penalty ordinarily constitutes “punishment for an unlawful act or omission.” Applying this framework, Judge Sorokin concluded that the $100,000 H-1B charge was a ‘tax’, as hiring workers under the H-1B programme is plainly lawful, and the payment did not operate as punishment for any unlawful conduct.

Further, the court examined whether Congress had delegated taxing authority to the President through Sections 212(f) and 215(a) of the INA. It found no such delegation.

While those provisions empower the President to impose “restrictions”, “rules”, “regulations”, “orders”, “limitations”, and “exceptions” governing the entry of non-citizens, Judge Sorokin held that their ordinary meaning does not encompass the power over the public purse. The court also found multiple violations of the Administrative Procedure Act. Accordingly, Judge Sorokin ruled that “the Policy implementing the Proclamation is declared unlawful and is vacated in its entirety”.

Kartikey Singh, lawyer, and currently working as a Law Clerk-cum-Research Associate at the Supreme Court of India. Views expressed are personal.

Published – June 17, 2026 08:30 am IST



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