Wednesday, August 19, 2015

Tax, Fiscal Policy, and Immigration Reform

Since I've seen some interesting posts lately about various political candidates' proposals regarding immigration reform (Donald Trump, I'm looking at you), it seemed relevant to share my thesis. I double majored in Accounting and Spanish, so it should make sense that I chose to write on the Tax and Fiscal Effects of Immigration Reform.

Should you choose to read it, please understand that this was the very last thing I squeezed in before graduation, so I didn't exactly have the time to make it perfect. Hopefully you will still find it thought-provoking.

The Tax and Fiscal Effects of Immigration Reform

The ultimate conclusion of the paper? Simply granting citizenship to currently present undocumented immigrants would cost the government more in benefit payments than the government would receive in increased taxes. This is because families headed by undocumented immigrants could begin receiving benefits for which they are currently ineligible. Nonetheless, the alternative of mass deportation and/or increased border control has proven to be very expensive and not effective, not to mention a human rights violation. However, making the immigration process easier for all would greatly benefit the US budget. Undocumented immigrants are only a smaller subgroup of immigrants as a whole, and immigrants actually earn more and need less government support than the average domestic-born American. Read the thesis if you want the evidence I used in arriving at this conclusion!

For those who don't want to read a 20 page paper, here are a few fascinating tidbits (see the paper itself for proper citation):

  • There are 4.4 million people waiting for visas to come to the US. Depending on visa category, the wait times are between 19 months and 33 years.
  • In 2010 alone, undocumented immigrants paid $13 Billion (yes, Billion with a B) into Social Security, a benefit which they are not eligible to receive. Each year about $9 Billion of that goes into a suspense fund, essentially an account for payments received which cannot be credited to any person in general. This money, of course, is available for paying out benefits to those currently receiving Social Security payments.
  • Naturalization in and of itself is estimated to increase an immigrant's earnings between 8 percent and 11 percent, with no change in human capital characteristics such as language abilities or industry-related skills. This translates into more income taxes paid and/or fewer government benefits needed.
  • Undocumented workers pay an estimated $12 Billion in state and local taxes each year. Their effective state and local tax rate is 8%. For comparison, the wealthiest 1% of the population has an effective state and local tax rate of 5.1%.
  • The US Border Patrol budget increased tenfold between 1993 and 2010. Meanwhile, the number of undocumented immigrants in the US has tripled. Other statistics which have increased include the number of border-crossing deaths (from 263 in 1993 to 463 in 2012) and non-criminal deportations (from 116,000 in 2001 to 240,000 in 2013). Over 108,000 of the people deported each year have children who are US citizens.
One final note: I welcome opposing viewpoints, so long as they are respectful. I do not tolerate remarks which are mean-spirited or which demonstrate ignorance toward an entire nationality of people.