Currently, it is extremely lucrative to employ illegal immigrants because they essentially work tax-free and are paid under the table. Under current law, an illegal being paid $10/hour in cash is equivalent to a legal worker being paid anywhere from $12-14/hour (15.3% in payroll taxes plus whatever the marginal tax rate is). Under the FairTax, it won’t matter; both workers would make the same because there are no taxes. And since there are penalties for hiring illegal immigrants, employers would naturally choose legal workers if there is no price difference. In addition, the illegal worker would not receive a monthly BCA because he has no Social Security number, making life in America much harder. As a result, there is a much larger incentive to migrate here legally and a large tax burden for migrating to the US illegally.
I see your point over the short term, but I'm looking at it long term. What would be the incentive to keep the current border? Technically they would add lots of money to the coffers (so why not let them in)and it would be "unjust"( In my mind's eye I can already see a kerry or kennedy look alike stating it) to prevent a taxpayer from reaping the benefits of what he pays. And while to the educated person it may seem like a large tax burden to come to the USA under such a scenario, I think some dirt farmer who's starving or making 10 dollars a day in some factory shipping parts to the US isn't going to care.( I can be dirt poor down in mexico or I can be poor and unmeployed in the us and possibly on the dole) Doesn't seem like much of choice. Also your comparison is faulty because you assume they would pay the illegals on the same scale. If you calculate them paying the illegals at a 1/2 the rate the incentives are the same or greater. But again I'm not that knowledgeable on the subject its just that if I was a poor mexican i would take my chances in the US regardless of any alleged tax burden. Better to be poor and eating than poor and starving. (and if they feel otherwise I would be either real scared or real happy because that means we are on the same economic level as mexico)