Immigrants Contribute More to the Economy Than They Take

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Take a hike. That’s effectively what President Bush on May 15 told the throngs of immigrants who marched in Los Angeles two weeks earlier to ask for less restrictive and more humane immigration policies.


Bush proposed many steps to stop illegals from crossing the border, such as calling in the National Guard to assist with border patrol, speedy deportations of people trying to sneak in and sanctions against employers who hire illegals. Yet he offered few meaningful channels that would allow unskilled foreigners to legally enter and work in the country.


A far cry from the generous policies that he proposed when he came to office, Bush’s new proposal was a capitulation to pull-up-the-drawbridge politicians such as Rep. Tom Tancredo, R-Colo.). Tancredo and his ilk have fanned the fire of nativism in this country by popularizing the idea 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, a stunning two-third of illegals file Medicare, Social Security and personal income taxes.


Yet the 1996 welfare reform bill disqualified illegal immigrants from nearly all means-tested 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.


Not satisfied, however, 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 as to avoid “theft of these benefits by illegal aliens,” as Rep. Charlie Norwood, R-Ga., puts it.


There would be a case for such requirements if, as in Europe, immigrants flocked to the United States to mooch off the government. That, however, is not the case.



Billions contributed


According to a 2002 study by the Urban Institute, the 1996 welfare reform effort dramatically reduced the use of welfare by undocumented immigrant households, exactly as intended. But the same year Congress passed the welfare bill, 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 confronting the prospect of paying for their safety net through their own meager wages would take a pass on the IRS’s scheme. Not so. Up 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.


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, the New York Times reports.


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.


To be sure, 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 that would match willing workers with willing employers in advance so that they wouldn’t be stuck for long periods where they disembark. But for such a program to be meaningful, it would have to be more than “temporary” as President Bush is proposing. It would have to offer a way for workers to gain permanent residency or else it will simply force them back into the shadows when their work visa expires.


Welfare to 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. But there is no morally defensible reason why citizenship and not tax contributions ought to be the proper test for receiving aid. Fair-minded legislators would have a better shot at rational immigration reforms if they first allayed unsupported fears about the public costs of immigrants.



Shikha Dalmia is a senior analyst at the Reason Foundation, a Los Angeles-based free-market think tank.

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