For years, Washington’s corporate class quietly nurtured a sweetheart deal that made hiring foreign workers cheaper than hiring American graduates. Now, after federal investigators uncovered what officials describe as a sprawling “phantom employee” scheme tied to thousands of foreign students, Republicans are finally moving to slam the brakes on the gravy train.
Rep. Glenn Grothman is rolling out legislation designed to kill a tax loophole critics say has warped the labor market against young Americans trying to land decent-paying jobs after college. His proposal, dubbed the “OPT Fair Tax Act,” would require companies hiring workers through the Optional Practical Training program — better known as OPT — to pay the same Social Security and Medicare payroll taxes they already pay for American employees.
Right now, employers using the OPT pipeline get a break that can shave thousands of dollars off labor costs. Translation: multinational corporations and tech firms have been financially rewarded for bypassing American graduates in favor of temporary foreign labor.
Grothman says enough already. “Americans should not be put at a disadvantage because Washington created a loophole that favors hiring foreign workers over qualified U.S. citizens,” the Wisconsin Republican said. He added that “too many young Americans graduating from our colleges and universities are forced to compete against a system that tilts the playing field against them.”
⏰Today, I introduced the OPT Fair Tax Act to end tax incentives that encourage companies to hire foreign workers over Americans.
American workers should never be put at a disadvantage in their own job market. My bill restores fairness by ensuring employers pay the same payroll…
— Rep. Glenn Grothman (@RepGrothman) May 21, 2026
The renewed scrutiny exploded after acting ICE Director Todd Lyons revealed Homeland Security investigators identified more than 10,000 foreign students connected to what he called “suspect employers” under the OPT system. Officials say the cases uncovered so far are “just the tip of the iceberg.”
According to Lyons, agents conducting site visits across states including Florida, Texas, Georgia, Illinois, New York and New Jersey found addresses linked to supposed employers that were little more than empty buildings, locked offices and residential homes allegedly hosting hundreds of workers on paper. “In many places, multiple OPT employers claim to operate from the same address, but none actually lease the facility,” Lyons said.
Even worse, investigators say they uncovered so-called “phantom employees” — foreign students who secured work authorization but never appeared at the jobs they claimed to hold. “This is not accidental,” Lyons warned. “This is deliberate, coordinated and criminal.”
The OPT program was originally pitched as a temporary training opportunity for foreign students studying in the United States. But critics say it metastasized into a de facto guest-worker pipeline after expansions under both the Bush and Obama administrations. Lyons himself said the government initially expected “only a few thousand foreign students” would use the program before returning home. Instead, it ballooned into a massive labor stream involving hundreds of thousands of workers annually.
NEW: “We’ve dramatically expanded our oversight at OPT and can report that we found fraud nationwide…” Acting @ICEgov Director Todd Lyons says they identified more than 10,000 foreign students who claim to be working “for highly suspect employers…”
Via USCIS: OPT or Optional… pic.twitter.com/7WHojTiojr
— Ali Bradley (@AliBradleyTV) May 12, 2026
And while corporate America enjoyed the discount labor, American graduates got stuck fighting for fewer entry-level jobs in industries already obsessed with outsourcing and visa labor.
Data cited by Grothman’s office shows roughly 330,000 students participated in OPT each year between 2017 and 2022. Analysts estimate ending the payroll tax exemption could generate between $27 billion and $36 billion in federal revenue over the next decade. That’s a staggering price tag for what critics call a government-engineered hiring preference against American citizens.
Sen. Tom Cotton introduced the Senate version of the bill last year, arguing, “Our tax code shouldn’t incentivize businesses to hire foreign workers. By ending the FICA tax exemption, we will put American workers first.” The legislation has yet to pass, but the ICE revelations are giving the issue fresh momentum — and exposing just how badly the system appears to have spiraled.
Grothman says Congress should stop bending over backward for companies gaming the labor market while American graduates drown in student debt and shrinking opportunities. “Congress should be focused on opening doors for young Americans, helping U.S. graduates find good-paying jobs and ensuring employers are encouraged to hire Americans first,” he said. “Not creating incentives for companies to bypass American talent.”
After years of watching Washington lecture Americans about “labor shortages” while handing corporations discount foreign labor, voters may finally be asking the obvious question: Why was this loophole allowed to explode in the first place?
