Immigration is Good

On a comment thread on Appletree, Stram is inadvertently giving a good reason why illegal immigration is not a serious economic problem in the US. He links to a factsheet produced by the Center for Immigration Studies, which claims to be based on data from the US Census Bureau.

[Link] Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household.

With nearly two-thirds of illegal aliens lacking a high school degree, the primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their legal status or heavy use of most social services.

Many of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth. Thus, greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them.

If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion.

Costs increase dramatically because unskilled immigrants with legal status — what most illegal aliens would become — can access government programs, but still tend to make very modest tax payments.

The fact that legal immigrants with few years of schooling are a large fiscal drain does not mean that legal immigrants overall are a net drain — many legal immigrants are highly skilled.

The vast majority of illegals hold jobs. Thus the fiscal deficit they create for the federal government is not the result of an unwillingness to work.

One of the advantages of not listing your methodology anywhere in sight is that I won’t be able to rip it to shreds if it’s shoddy (which it usually is). But let’s grant that the methodology is sound and focus on the consequences.

$29 billion is 0.25% of the United States’ GDP. This compares with about $100 billion wasted every year on Iraq and $1 trillion wasted every year on private health care (incidentally, Ezra has a really good series about Ron Wyden’s universal health care proposal, which is slated to shave $150 billion per year in costs).

In fact, illegal immigrants who are offered citizenship will likely vote mostly for the Democrats, who are better than the Republicans at controlling government spending; as such, the political effects of amnesty may well be more than enough to compensate for additional welfare payments.

And finally, the amnesty scenarios only compare illegal immigrants to legal immigrants of similar levels of education, controlling for whether the head of household is from Mexico or another country. Legalization will make it easier for immigrants to acquire more education, for example by attending local colleges, and increase intergenerational income mobility, which will make the immigrants’ children more likely to be educated and have high enough incomes to be a net financial gain to the government.

7 Responses to Immigration is Good

  1. Tyler DiPietro says:

    Costs increase dramatically because unskilled immigrants with legal status — what most illegal aliens would become — can access government programs, but still tend to make very modest tax payments.

    Right now about 8 million out of the estimated 12 million undocumented immigrants pay personal income taxes on IRS issued numbers. Not only that, but those taxes go to services they are, according to the law, ineligible for. The 1996 “Welfare Reform Act” barred undocumented immigrants from almost all means tested programs, save K-12 education and emergency medical treatment (see here). Even though the author doesn’t detail his methodology, I think that this fact should at least make us highly suspicious.

    And even so, the costs of means tested welfare programs averages out to 1% of the state budget and 2% of the individual states. The biggest costs in the budget are programs that benefit middle-class Americas (social-security, medicare, medicaid, public schools, etc.), followed by the military, followed distantly by subsidies to corporations. Even if welfare programs do get bloated, they’ll still be a blip on the monetary radar screen.

    In addition, there is another major flaw with these sorts of “permanent economic underclass” arguments: they defy two entire centuries of immigration history in the U.S. Almost every immigrant group, be they Italians, Jews, Chinese, etc., has started on lower economic tiers than native-born citizens. All have advanced and assimilated within a generation or two.

  2. Alon Levy says:

    Almost every immigrant group, be they Italians, Jews, Chinese, etc., has started on lower economic tiers than native-born citizens. All have advanced and assimilated within a generation or two.

    Don’t worry – American anti-immigration politicians are doing their best to imitate the cultural policies of France or Germany, which have contributed to the formation of permanent immigrant-descended underclasses.

    And even so, the costs of means tested welfare programs averages out to 1% of the state budget and 2% of the individual states.

    I suppose that’s where the $29 billion figure comes from. The combined federal, state, and local budgets in the US are about $3.7 trillion, of which less than $100 billion goes to means-tested welfare.

  3. gordo says:

    Alon and Tyler–

    The “permanent underclass” scenario is one of the biggest problems with current proposals to deal with immigration. It seems obvious that having a permanent underclass would hurt working people– the working people in the South have still not fully recovered from the effects of Jim Crow– and yet many progressives (Thom Hartmann, for example) favor these policies.

    The problem is that they’re taking a Luddite view of economics. Whenever labor is done by a machine or an immigrant, they think that takes money out of the pockets of native-born Americans. But in fact, native-born Americans have always profited from immigration and technological advance, and creating underclasses has always hurt the middle and working classes.

    It would be a real shame if the last election ousted the demagogues of the right, only to make room for the demagogues of the left.

  4. Alon Levy says:

    It’s funny that you call them “the demagogues of the left” – in Europe similar parties are called neutrally right-wing populist, or pejoratively neo-fascist. The BNP is anti-EU, anti-free trade, and pro-welfare, as long as it goes only to white people; the Dixiecrats were for long the faction of a lush social safety net so long as black people don’t enjoy it.

  5. العاب says:

    Thanks so much for giving everyone an extremely memorable opportunity to read from here. It is often very cool and as well , packed with amusement for me and my office co-workers to search your site not less than 3 times per week to see the newest issues you have got. Of course, I’m so certainly pleased with the surprising tricks served by you. Some 2 tips on this page are really the simplest I have ever had.

  6. immigration court…

    […]Immigration is Good « Abstract Nonsense[…]…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: