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Illegal Immigrants are Paying a Lot More Taxes Than You Think
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.
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.
Here's another load, if you have time :-) - p.1
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.