What is the fiscal burden of illegal immigration on U.S. taxpayers?

[GratefulFred]

There is a comprehensive report on the fiscal burden of illegal immigration on US taxpayers at www.fairus.org

They assert that US and State governments are paying $113 billion a year for 13 million illegal immigrants while taking in $13 billion a year in taxes from illegal immigrants.

Other than the recurring “13” in the summary numbers, does any reader here know about FAIR and if their numbers are reasonably accurate or not?

 

[BillP]

Their numbers are extremely suspect. Let me cite two examples from your link:

• Education for the children of illegal aliens constitutes the single largest cost to taxpayers, at an annual price tag of nearly $52 billion. Nearly all of those costs are absorbed by state and local governments.

Under current law each and every child born in the US is a US citizen, same as you and me (assuming you are in fact a citizen). This means that the VAST majority of children of illegals (so called “anchor babies”) are US citizen and therefore entitled to education. Note the careful wording of the bullet: “education for the children of illegals”

• Most illegal aliens do not pay income taxes. Among those who do, much of the revenues collected are refunded to the illegal aliens when they file tax returns. Many are also claiming tax credits resulting in payments from the U.S. Treasury.

Really? This is simply nonsense. EVERY SINGLE tax form I’ve ever seen requires a valid SSN to file. How are these illegals getting refunds or EITC if they don’t have a valid SSN?

The general modality is for illegals to use a either a made up SSN (which the IRS catches as invalid) or someone else’s (which the IRS catches when they suddenly have two different sets of W-2s for the same person at different addresses). They have taxes withheld (employers can’t claim wages as an expense if they don’t withhold taxes!), but never file for the refund for fear of discovery.

see also here:

In our cost estimates we also include the minor children of illegal aliens born in the United States. That adds another 3.4 million children to the 1.3 million children who are illegal aliens themselves. We include these U.S. citizen children of illegal aliens because the fiscal outlays for them are a direct result of the illegal migration that led to their U.S. birth. We do so as well in the assumption that if the parents leave voluntarily or involuntarily they will take these children with them. The birth of these children and their subsequent medical care represent a large share of the estimated Medicaid and Child Health Insurance Program expenditures associated with illegal aliens.

So now we’re back to judging American Citizens by who their Daddy was.

 

[agbasinger]

FAIR is as balanced as Fox News. I suggest you watch the documentary Farmingville.

The problem with trying to quantify illegal immagration stats is that we are looking at a black market. I’ve heard that close to $30 billion is sent from the US to Mexico in support of family memebers ‘back home’.

 

[ExAgnostic]

There is a comprehensive report on the fiscal burden of illegal immigration on US taxpayers at www.fairus.org

They assert that US and State governments are paying $113 billion a year for 13 million illegal immigrants while taking in $13 billion a year in taxes from illegal immigrants.

Other than the recurring “13” in the summary numbers, does any reader here know about FAIR and if their numbers are reasonably accurate or not?

Believe it or not, most economists think it’s negative, meaning they think illegal immigrants contribute more to GDP than they consume in direct and indirect costs. The equation you provided (tax revenues less expenses) is not used by any economist, since tax revenue only represents a portion of national income from immigrants (legal or illegal). In the interests of being fair and balanced, there are some economic studies that show a negative number, but the majority opinion seems to side with the positive – although only just. A lot of those conclude with a net impact of less than 1% of GDP (positive). Also, I want to provide a few qualifiers:

• Most economists also agree there is a negative wage impact, at least in the low end of the labor market (generally classified as employees without a high school diploma) – it looks like the generally accepted number on average is around 3-3.5%, although it could be higher for some groups in some industries in some markets (as high as 7%)
• Because of the former, most economists also agree there is a wealth redistribution effect, from employees to employers. A lot of classical and pro-market economists think this is a good thing, since these funds can be reinvested to further grow GDP. Demand-side economists express some concern, since wages drive consumer demand. It comes down to a question of where we get the most efficient utilization of capital, and there are varying schools of thought on that.

If you’re interested in reading more on the subject, I’ve tried to provide links to a few interesting articles and research papers. Unfortunately, it really is a hard question, but at least it’s important to note that the people who want to know agree that it’s hard, they respect one another, and they certainly don’t approach the issue with anything like the sort of certainty that is expressed by pundits, who are really in the business of sound-bites.

• online.wsj.com/public/article/SB115100948305787940-tA5PP0Ya_9U0AlXBQQhnaDyMIYc_20060725.html?mod=tff_main_tff_top
• migrationpolicy.org/pubs/Hanson-Dec09.pdf
• jvi.org/fileadmin/jvi_files/Warsaw_Conference/Papers_and_Presentations/Borjas_paper.pdf
• cis.org/articles/2005/back205.html
• ideas.repec.org/p/sur/surrec/0203.html

 

[ExAgnostic]

Sorry - I just wanted to add one distinction. You might get a different answer if you say “economic burden” rather than “fiscal burden.” The one could be positive (looking at aggregate income) while the other could be negative. I’m concerned that the study you cite creates the impression that we’re taking a huge loss from illegal immigration - again, this is only true in a very restrictive sense. In the bigger sense, most economists would actually lean the other way, and say we (nationally) benefit. It could also be true that certain municipalities, counties, and states take a loss, while there is a national gain.

 

[TMC]

Sorry - I just wanted to add one distinction. You might get a different answer if you say “economic burden” rather than “fiscal burden.” The one could be positive (looking at aggregate income) while the other could be negative. I’m concerned that the study you cite creates the impression that we’re taking a huge loss from illegal immigration - again, this is only true in a very restrictive sense. In the bigger sense, most economists would actually lean the other way, and say we (nationally) benefit. It could also be true that certain municipalities, counties, and states take a loss, while there is a national gain.

I agree with the gist of your posts on this topic. A simple (and I think mostly accurate) way to look at the fiscal burden is to realize that whatever the burden is, it has to be less than the fiscal burden created by poor citizens. Most illegal immigrants do not make enough money to pay income taxes, so the fact that they do not file is at worst neutral (as compared to other poor people). If they pay some taxes and do not file for their refund/EITC, that becomes a net positive. Of course the principle tax burden on the poor comes from sales and use taxes, and they pay all of those like anybody else. On the other side of the ledger, they consume fewer state services than most poor citizens for two reasons (1) they do not have the necessary documentation, and (2) they tend to avoid contact with the government out of fear of discovery and deportation. So whatever the net fiscal cost is, it must be less than that of other poor people.

I would just add that while the fiscal impact may be negative (i.e. they cost more than they pay), I don’t see how the net economic impact could be negative.

 

[ExAgnostic]

I agree with the gist of your posts on this topic. A simple (and I think mostly accurate) way to look at the fiscal burden is to realize that whatever the burden is, it has to be less than the fiscal burden created by poor citizens. Most illegal immigrants do not make enough money to pay income taxes, so the fact that they do not file is at worst neutral (as compared to other poor people). If they pay some taxes and do not file for their refund/EITC, that becomes a net positive. Of course the principle tax burden on the poor comes from sales and use taxes, and they pay all of those like anybody else. On the other side of the ledger, they consume fewer state services than most poor citizens for two reasons (1) they do not have the necessary documentation, and (2) they tend to avoid contact with the government out of fear of discovery and deportation. So whatever the net fiscal cost is, it must be less than that of other poor people.

I would just add that while the fiscal impact may be negative (i.e. they cost more than they pay), I don’t see how the net economic impact could be negative.

That’s an interesting way of analyzing the problem. I’m not 100% convinced of your argument about social costs for poor citizens vs. illegal immigrants. Although I agree that they are less inclined to use optional services, to understand if your assertion is correct, we would need to know all costs incurred by both communities. What about incarceration and court costs? What about education costs? I really don’t know the answer to this - I haven’t seen any comprehensive analysis or consensus position.

I was kind of going in a different direction - even granting the premise that tax revenues fell short of expenditure . . . this doesn’t tell us anything about whether they are a burden or benefit to the economy. But I get your point, and you may be correct. I just don’t know.

I agree with you about net economic benefit. I think there’s very little support for the notion that they are a drain on the economy. Not only do most studies support that position, but the fact that we have a tacit policy of tolerating illegal immigration indicates that, on the whole, it serves our economic interests. Some would argue that it is actually detrimental, on the whole, but that special interests in limited industries wield disproportionate influence in public policy, and only they benefit while GDP, overall, is impaired. It’s possible, but would require brainwashing a heck of a lot of people. Always hard to disprove a conspiracy theory.

 

[TMC]

That’s an interesting way of analyzing the problem. I’m not 100% convinced of your argument about social costs for poor citizens vs. illegal immigrants. Although I agree that they are less inclined to use optional services, to understand if your assertion is correct, we would need to know all costs incurred by both communities. What about incarceration and court costs? What about education costs? I really don’t know the answer to this - I haven’t seen any comprehensive analysis or consensus position.

I was kind of going in a different direction - even granting the premise that tax revenues fell short of expenditure . . . this doesn’t tell us anything about whether they are a burden or benefit to the economy. But I get your point, and you may be correct. I just don’t know.

I agree with you about net economic benefit. I think there’s very little support for the notion that they are a drain on the economy. Not only do most studies support that position, but the fact that we have a tacit policy of tolerating illegal immigration indicates that, on the whole, it serves our economic interests. Some would argue that it is actually detrimental, on the whole, but that special interests in limited industries wield disproportionate influence in public policy, and only they benefit while GDP, overall, is impaired. It’s possible, but would require brainwashing a heck of a lot of people. Always hard to disprove a conspiracy theory.

The serious studies I have seen (sorry I don’t have any at hand) suggest that illegal immigrants are less involved in crime than citizens (setting aside their immigration status, of course). They have a strong disincentive to avoid crime as the penalty for even a small crime is very high–deportation. It seems somewhat circular to include the cost of deporting otherwise law-abiding illegal immigrants in the calculus, but I grant that I don’t know what the cost is, so can’t say it doesn’t shift the balance. As for education and other costs, I can think of no reason they would he higher for illegal immigrants than for others in their income group.

At the end of the day, I agree with your bottom line. They are an overall positive economically, principally because of labor costs. I also agree that economic and political forces would have kicked in to limit the use of immigrant labor if that were not true.

 

[ExAgnostic]

The serious studies I have seen (sorry I don’t have any at hand) suggest that illegal immigrants are less involved in crime than citizens (setting aside their immigration status, of course). They have a strong disincentive to avoid crime as the penalty for even a small crime is very high–deportation. It seems somewhat circular to include the cost of deporting otherwise law-abiding illegal immigrants in the calculus, but I grant that I don’t know what the cost is, so can’t say it doesn’t shift the balance. As for education and other costs, I can think of no reason they would he higher for illegal immigrants than for others in their income group.

At the end of the day, I agree with your bottom line. They are an overall positive economically, principally because of labor costs. I also agree that economic and political forces would have kicked in to limit the use of immigrant labor if that were not true.

I agree - deportation would be a dumb inclusion. I didn’t intend to imply that illegal immigrants were more likely to commit a crime. I was just saying that I don’t know what total social costs they generate, as opposed to the citizen population at or below the poverty line. I just have no idea - but I do know that comparing these costs, whatever they are, only to tax revenues is a really bad way to assess economic burden (or contribution, as is more likely the case).

 

[rodomonte]

I don’t even read posts economically justifying 20 million illegal invaders because it is irrelevant. How much is our country worth? The political cost is incalculable. How much are the lives of the 12 Americans killed by illegals every day worth?

The support of the Arizona boycott by an Hispanic Tucson congressman shows you where the loyalty of most Hispanics lies, and it ain’t with the Divided States of America.

 

[ExAgnostic]

I don’t even read posts economically justifying 20 million illegal invaders because it is irrelevant. How much is our country worth? The political cost is incalculable. How much are the lives of the 12 Americans killed by illegals every day worth?

The support of the Arizona boycott by an Hispanic Tucson congressman shows you where the loyalty of most Hispanics lies, and it ain’t with the Divided States of America.

Obviously, you have some strong feelings about this. I don’t think anyone was trying to justify illegal immigration on the basis of economics. We were simply answering the initial question.