Illegal Immigrants are Paying a Lot More Taxes Than You Think

[ymarkov]

Eight million illegals pay Social Security, Medicare, and income taxes
By Shikha Dalmia

Denying public services to people who pay their taxes is an affront to America's bedrock belief in fairness. But many "pull-up-the-drawbridge" politicians want to do just that when it comes to illegal immigrants.

The fact that illegal immigrants pay taxes at all will come as news to many Americans. A stunning two-thirds of illegal immigrants pay Medicare, Social Security and personal income taxes. Yet, nativists like Congressman Tom Tancredo, R-Colo., have popularized the notion that illegal aliens are a colossal drain on the nation's hospitals, schools and welfare programs — consuming services that they don't pay for.

In reality, the 1996 welfare reform bill disqualified illegal immigrants from nearly all means-tested government programs including food stamps, housing assistance, Medicaid and Medicare-funded hospitalization. The only services that illegals can still get are emergency medical care and K-12 education.

Nevertheless, Tancredo and his ilk pushed a bill through the House criminalizing all aid to illegal aliens — even private acts of charity by priests, nurses and social workers. Potentially, any soup kitchen that offers so much as a free lunch to an illegal could face up to five years in prison and seizure of assets.

The Senate bill that recently collapsed would have tempered these draconian measures against private aid. But no one — Democrat or Republican — seems to oppose the idea of withholding public services. Earlier this year, Congress passed a law that requires everyone who gets Medicaid — the government-funded health care program for the poor — to offer proof of U.S. citizenship so we can avoid "theft of these benefits by illegal aliens," as Rep. Charlie Norwood, R-Ga., puts it.

But, immigrants aren't flocking to the United States to mooch off the government. According to a study by the Urban Institute, the 1996 welfare reform effort dramatically reduced the use of welfare by undocumented immigrant households, exactly as intended. And another vital thing happened in 1996: the Internal Revenue Service began issuing identification numbers to enable illegal immigrants who don't have Social Security numbers to file taxes.

One might have imagined that those fearing deportation or confronting the prospect of paying for their safety net through their own meager wages would take a pass on the IRS' scheme. Not so. Close to 8 million of the 12 million or so illegal aliens in the country today file personal income taxes using these numbers, contributing billions to federal coffers. No doubt they hope that this will one day help them acquire legal status — a plaintive expression of their desire to play by the rules and come out of the shadows.

What's more, aliens who are not self-employed have Social Security and Medicare taxes automatically withheld from their paychecks. Since undocumented workers have only fake numbers, they'll never be able to collect the benefits these taxes are meant to pay for. Last year, the revenues from these fake numbers — that the Social Security administration stashes in the “earnings suspense file” — added up to 10 percent of the Social Security surplus. The file is growing, on average, by more than $50 billion a year.

[Note: this implies that the average earnings of these 8 million illegals are $40,850 - $50,000 mln / 8 mln = $6,250 in FICA taxes at the 15.3% combined rate. Doesn't sound right - YSM]

Beyond federal taxes, all illegals automatically pay state sales taxes that contribute toward the upkeep of public facilities such as roads that they use, and property taxes through their rent that contribute toward the schooling of their children. The non-partisan National Research Council found that when the taxes paid by the children of low-skilled immigrant families — most of whom are illegal — are factored in, they contribute on average $80,000 more to federal coffers than they consume.

Yes, many illegal migrants impose a strain on border communities on whose doorstep they first arrive, broke and unemployed. To solve this problem equitably, these communities ought to receive the surplus taxes that federal government collects from immigrants. But the real reason border communities are strained is the lack of a guest worker program. Such a program would match willing workers with willing employers in advance so that they wouldn't be stuck for long periods where they disembark while searching for jobs.

The cost of undocumented aliens is an issue that immigrant bashers have created to whip up indignation against people they don't want here in the first place. With the Senate having just returned from yet another vacation and promising to revisit the stalled immigration bill, politicians ought to set the record straight: Illegals are not milking the government. If anything, it is the other way around.

Shikha Dalmia is a senior analyst at Reason Foundation, a free-market think tank. This column was originally distributed by the Knight Ridder/Tribune News Service.

Comments

[onionsoupmix.livejournal.com]

That was interesting. I am always annoyed at the immigration debate. Somehow those who were fortunate enough to immigrate legally (or be born here) think that this is because of something they did right. Mostly it is luck-of-the-draw. Any one of us could have been born in some more totalitarian regime and our parents could be dirt poor and immigration would have been a far off dream. There but for the Grace of God go I.

[aphar.livejournal.com]

Living in a country - any country - is a privilege, not a right (unless you were born there, and even then this "right" has been denied to many people over the centuries).
(Even more broadly, living is a privilege - one usually has to fight for it).
It is natural for people having a privilege to want to deny it to others, so I am not surprised at the grass-roots anti-immigration movement.
I doubt that illegal immigrants pay as much in taxes as is claimed by the pro-immigrant groups (especially given their low wages and things like earned income credit), but I agree that people who live in the US illegally but _pay_ taxes (as opposed to collecting EIC) for several years (5? 10?), and have a clean criminal record, should be automatically granted a green card.
Any immigration reform (including guest worker programs) should emphasize education and skills, and unskilled immigration should be discouraged: those people do take the jobs we don't, but by doing so they discourage investment in robotics. Japan does not import unskilled labor and they are way ahead of us in robotics.

Here's another load, if you have time :-) - p.1

[ymarkov.livejournal.com]

Mexican Wave
By STEPHEN HABER
WSJ May 3, 2006; Page A14

What policy should America adopt toward illegal immigrants from Mexico? One view is that they drive down the wages of American workers, burden taxpayers and undermine the integrity of American culture. That view is embodied in the recent immigration bill passed by the House of Representatives: It seeks to seal off the border and treat immigrants who are already here as felons.

A second view is that Mexican immigrants increase the competitiveness of the U.S. economy. That view is embodied in draft legislation in the Senate that would make it possible for illegal immigrants who have been in the U.S. for more than five years to obtain a visa and eventually citizenship -- provided they learn English. The Senate bill also contains provisions for workers who have been here for less than five years to either obtain a green card or become a guest worker, after they return to Mexico and make the necessary applications.

Any serious attempt at reform needs to take account of facts regarding illegal immigrants that are often given a back seat to ideology by partisans on either side of the debate. Any serious attempt at immigration reform also needs to take account of facts about Mexico's fragile economy and democracy -- facts that both sides in the debate have tended to miss entirely. Indeed, most discussion about immigration reform implicitly assumes that its effects stop at the border. The truth is that our immigration policy is more consequential for what happens to Mexico's political and social stability than it is for America's economy or cultural integrity.

Those who favor a "soft line" on Mexican immigration often simultaneously argue that Mexican workers make American industry more internationally competitive and that Mexican workers do not reduce the wages of U.S.-born workers. Both statements could simultaneously be true if Mexican immigrants included large numbers of highly educated electrical engineers and molecular biologists who had a tremendously positive effect on American total factor productivity. But Mexican immigrants tend to have very low levels of education by U.S. standards; they also tend to cluster in industries that produce goods that do not enter into international trade, such as restaurant meals, home construction, landscaping and janitorial services.

The overall effect of Mexican immigration on the U.S. economy is trivial -- almost certainly less than one-tenth of 1% of GDP. Moreover, to the degree that Mexican immigration makes some industries more internationally competitive, it does so by reducing the wages of the U.S.-born workers in those industries. The reduction is not trivial. Careful research done by Harvard's George Borjas indicates that Mexican immigration has caused a 7% decline in the wages of U.S.-born high school dropouts, and a 1% decline in the wages of workers with only a high school diploma. Score one for the hard-liners on immigration.

Here's another load, if you have time :-) - p.2

[ymarkov.livejournal.com]

Hard-liners, however, have it wrong about the social and cultural impact of immigration on the U.S. They tend to look at recent immigrants and decry their low levels of education, difficulties with the English language, and propensity to choose marriage partners from their own immigrant group. They tend to ignore that every other large-scale immigrant group in the history of the U.S. -- Poles, Italians, Irish, Eastern European Jews -- had many of the exact same social and cultural characteristics.

The impact of immigration on American culture is not determined by what immigrants do, but by what their children and grandchildren do. Here the evidence is unambiguous: The children and grandchildren of Mexican immigrants assimilate and move up the income ladder. Meticulous research by James Smith at Rand demonstrates that second- and third-generation Mexican-Americans quickly overcome the educational deficit faced by their immigrant parents and grandparents. As a result, they do not constitute a permanent economic underclass; they have been steadily narrowing the income gap with native-born whites. Nor do they constitute a social and cultural group independent of mainstream America. The reason is clear: 80% of third-generation Mexican-Americans cannot speak Spanish. Score one for the soft-liners on immigration.

Both sides in the immigration debate have it wrong, however, when it comes to one core assumption -- that Mexican immigration is only a domestic policy issue. What we choose to do will have serious ramifications for Mexico.

To understand why, we need to take into account that the large-scale immigration of Mexicans to the U.S. is a recent phenomenon. Until the 1980s, Mexicans migrated to the U.S. at very modest rates -- on the order of 50,000 people per year. In the 1980s it surged to roughly 200,000 people per year, and in the 1990s it went through the roof, averaging 500,000 people per year. The reason is that the Mexican economy collapsed in the early 1980s, and since then Mexico's per capita GDP, adjusted for inflation, has grown at a staggeringly slow 0.7% per year, less than one-third the U.S. rate.

There is little reason to think that the Mexican economy will recover any time soon. Indeed, all of the fundamentals, most particularly the preference of foreign multinational companies to site new facilities in China instead of in Mexico, point toward continued slow growth.

What would happen to Mexico if we were to suddenly cut off the escape valve provided by immigration to the U.S.? Unemployment and underemployment, already major problems, would increase dramatically. Remissions from immigrants, which total some $18 billion per year and are the lifeblood of many rural communities, would dry up. The widespread frustration felt by the population caught between rising crime and diminished economic expectations -- which fuels the populist presidential campaign of Andres Manuel Lopez Obrador -- would almost certainly become more acute. There is no scenario in which these developments would be positive for Mexican political and social stability. And there is no scenario in which a politically and socially unstable Mexico is in the interest of the U.S.

Mr. Haber, Peter and Helen Bing Senior Fellow at the Hoover Institution, is A.A. and Jeanne Welch Milligan Professor in the School of Humanities and Science, and director of the Social Science History Institute, at Stanford University.

Полный оффтопик.

[zlata-gl.livejournal.com]

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