ImmPolitic

Welcome to ImmPolitic, the National Immigration Forum’s blog. Here we will comment on current developments in immigration policy and politics from the perspective of a Washington-based, national pro-immigrant organization.

Taxes… Someone’s Gotta Pay ‘em

April 16, 2010 - Posted by Maurice Belanger

Yesterday, while the tea party turned out to protest their taxes, there were counter-demonstrations, of a sort, by immigrants who were telling us, “Bring ‘em on!” 

Most of the media focus on tax day is on people who complain about their taxes.  This year, there was an effort by advocates for immigrants to show that, not only are immigrants willing to contribute, but comprehensive immigration reform, according to the Immigration Policy Center and the Center for American Progress, is predicted to result in an increase of as much as $5.4 billion in additional tax revenue for the U.S. within a three-year period.  This is for a variety of reasons, including bringing some immigrants working in the underground economy on to the tax rolls, and the prospect that some immigrants would move into more stable jobs with higher pay.  One of the actions advocates carried out yesterday was a visit to the office of Senator Kay Bailey Hutchison with box loads of blank tax forms representing taxes that could be added to the treasury if only Congress would pass comprehensive immigration reform.

While loving taxes might be a bit of a stretch, it is impressive the extent to which undocumented immigrants, who are ordinarily not made to feel welcome in their encounters with the government, are nevertheless determined to figure out how to interact with the government to pay their taxes.  An article from the Associated Press from 2007 looked in to some empirical measurements:

“One measure of the immigrant market is the growth of Individual Taxpayer Identification Numbers, or ITINs, which the IRS issues to immigrants to use on their tax forms instead of Social Security numbers.

Last year [2006], the IRS issued 1.5 million ITINs, the most since the program was started in 1996 and a 30 percent increase from the 1.2 million issued in 2005. In total, the agency has issued 10.8 million ITINs since the program began [though not all have gone to immigrants in the U.S.].”

ITINS are issued to persons who are not entitled to Social Security numbers.  Most are thought to be issued to undocumented immigrants.

Why do they bother?  Eric Jiminez, an undocumented immigrant from Nashville, told the Associated Press in this article from USA Today that he knows nothing would happen to him if he didn’t pay his taxes, but,

“I have an idea, a mentality, that to be a good citizen you have to pay taxes,” he said. “Also, I’m conscious of the fact that the money we pay in taxes supports the schools and all the public services.”

The Social Security Administration has estimated that about three-quarters of undocumented immigrant workers pay in to the Social Security and Medicare system, even though they are not eligible to receive benefits.  In 2005, most of the $9 billion in taxes paid into the Social Security system that could not be matched to a legitimate Social Security account was thought to have come from taxes paid by undocumented immigrants.

The tax impact of immigrants, however, comes from more than their individual payments.  It comes from the prosperity they bring to the communities in which they reside.  A new study by the Fiscal Policy Institute (summarized in this article in the New York Times) provides some interesting data on immigrants in the 25 largest U.S. metropolitan areas.  The article notes that, contrary to the popular image that recent immigration has flooded the U.S. with low-wage workers,

”…the 25 million immigrants who live in the country’s largest metropolitan areas (about two-thirds of all immigrants in the country) are nearly evenly distributed across the job and income spectrum.”

Even more intriguing, the cities with the greatest economic growth were not the ones that attracted primarily high-skilled immigrants.

”…the fastest economic growth between 1990 and 2008 was in cities like Atlanta, Denver and Phoenix that received large influxes of immigrants with a mix of occupations — including many in lower-paid service and blue-collar jobs.”

For example,

“In metropolitan Denver, where the economy doubled between 1990 and 2008, 63 percent of immigrants worked in jobs on the lower end of the pay scale.”

As the report notes,

“Immigration is part of the story of economic growth. Immigrants are drawn by economic expansion, and once they are in a metro area they earn and spend money, expand consumer demand, start small businesses to meet new needs, and fuel further growth.”

That new prosperity leads to more tax revenue.

We are going to need more taxpayers, because our society is aging and unprecedented numbers are retiring from the workforce. 

Immigrants tend to be younger than the population as a whole, and have their prime earning years ahead of them.

On the other hand, people who identify themselves as supporters of the tea party, according to a New York Times survey tend to be older than 45.  Many of them are drawing Social Security benefits, or soon will be.  We need workers paying in to the system so that these tea party activists can continue to draw the benefits to which they are entitled.  One tea party supporter interviewed for the survey was asked what she thought about her advocacy for smaller government while she was drawing Social Security.  She told the interviewer,

“I guess I want smaller government and my Social Security.”

Good thing for her that there are immigrants who want to be a part of our country and pay their taxes.

Economic Impact Immigrant contributions Immigration Reform Taxes

The Staggering Cost of Mass Deportation

March 26, 2010 - Posted by Maurice Belanger

Image: (c) iStockphoto/Abejon Photography

The Center for American Progress (CAP) has updated its estimate of the cost of the immigration policy alternative advocated by immigration hardliners inside and outside of Congress: mass deportation of the 10.8 million undocumented immigrants residing in the U.S.  The CAP study, The Costs of Mass Deportation, makes the assumption that such a program would be conducted over a period of five years.  Using publicly available information, CAP estimates the mass deportation strategy would cost $285 billion dollars.

To put this amount in perspective, CAP notes that raising that amount would require $922 in additional taxes for every man, woman, and child in the country.  $285 billion, if put into education, would provide an extra $5,100 for the education of every elementary and secondary public and private student in the U.S. 

Putting the number of people subject to a mass deportation effort in perspective, CAP notes that the 10.8 million unauthorized immigrants is 3.5 percent of our population, or nearly the population of our New England states.

CAP breaks down the component and per-person cost of mass deportation:

• $18,310 per person for apprehension costs
• $3,355 per person for detention
• $817 per person for legal processing costs
• $1,000 per person average transportation costs

Why the estimate is probably too low

There are a number of reasons that CAP’s estimate is probably unrealistically conservative.  Many of these reasons CAP acknowledges.

First, just from observing how new government programs are financed in recent years, the idea that there would be a new tax amounting to $922 per person is unrealistic.  The money would be borrowed, so we would have to add to the cost the finance charge for borrowing the money to engage in the mass deportation project.
 
Regarding detention, the CAP study assumes that detaining an extra 1.73 million people—a 71 percent increase over current levels—would not necessitate added construction costs, an assumption CAP admits is probably unrealistic.  If additional detention space were to be constructed, CAP notes that the average per-bed construction cost is $11,900 and approximately 144,000 beds would be needed.

Although CAP gives an estimate for legal processing costs based on current data, the report notes that immigration courts are “ill equipped to serve the current caseload.  It is difficult to fathom how the immigration legal system would handle 8.66 million new adjudications that would come from a deportation campaign.”  (The report assumes that not all deportees would go through the immigration courts; the remainder would “voluntarily depart.”)

The immigration detention and court systems are already strained to the breaking point with their current workload.  CAP notes that “the problems currently plaguing our detention system and immigration courts would be exacerbated in the extreme and would likely precipitate widespread human rights and due process violations” (and, I would add, attendant legal costs defending against resulting legal actions).

There are other costs that would accompany a mass deportation program, some of which CAP alludes to in their report.  CAP reminds us that most undocumented immigrants have lived here for a long time—63 percent for more than 10 years.  They are “intimately integrated into local communities,” and many have U.S.-citizen children.  Seventy-three percent of the children of undocumented immigrants are U.S. citizens.

There are a couple of ways in which these facts may indicate costs that are not calculated and impossible to predict. 

For one, most undocumented immigrants have already resisted leaving for a long time and, as CAP notes, a mass deportation strategy might just mean that “those who intend to remain would burrow in further, taking with them their wages that are now taxed, or forcing them to use more advanced false documents.”

Secondly, what happens to families when one (or more) breadwinners are removed?  U.S. citizen family members who remain will be eligible for safety net benefits, and some are forced to rely on them as the family income slips below the poverty line (discussed in this blog post).

The reaction of the community is hard to predict. CAP asks, “would immigrant communities organize to help their family members and neighbors?” In the face of a massive effort that would result in the disruption of workplaces, congregations, neighborhoods, schools, and communities, it may well be that efforts to protect the targets of mass deportation will go beyond family members and neighbors.  Will people of faith organize to help their fellow congregants?  Will workers organize to help their co-workers?  Any resistance to a mass deportation program is going to increase its costs.

Any way you look at it, the cost to our government and to our society of mass deportation would be enormous.  Even so, the cost would be dwarfed by the cost to our economy—estimated to be $2.6 trillion over the next 10 years.

The CAP study is certainly worth a read, giving us another reason to ask about mass deportation, “Now, why do we want to do this again?”

Economic Impact Enforcement-Only Policies

Immigrants – Creating the Jobs Americans Want to Do

March 05, 2010 - Posted by Maurice Belanger

 

The Christian Science Monitor the other day published a story, “Who’s creating US jobs? Mexicans.”  The story noted an increase in Mexican entrepreneurs coming to the U.S. in order to escape drug cartel violence and kidnapping.  There are special visas available to immigrant entrepreneurs willing to come to the U.S. to create jobs.  In the last decade, there has been a steady increase in the number of Mexicans who have been transferring their businesses here, buying and renovating businesses here, or starting new ones.

In the immigration debate, we hear a lot (from anti-immigrant groups) about immigrants “taking” American jobs.  Not enough is said about immigrant entrepreneurs and the jobs they create for Americans.

Each year, the Kauffman Foundation puts out an Index of Entrepreneurial Activity. The index “is a leading indicator of new business creation in the United States.” 

Their latest, the Kauffman Index of Entrepreneurial Activity, 1996-2008, reveals some important “shifts in the demographic and geographic composition of new entrepreneurs across the country.”  

For a number of years, researchers have found that immigrants have a greater rate of entrepreneurial activity than the native-born.  According to the latest Index, the difference between immigrant and native-born entrepreneurial activity is growing.

The immigrant rate of entrepreneurial activity increased from 0.46 percent in 2007 to 0.51 percent in 2008, further widening the gap between immigrant and native-born rates. Native-born rates increased only slightly, from 0.27 percent to 0.28 percent.

The increase in entrepreneurial activity among immigrants in 2008 from the year before, the report notes, is driven by startups in “low- and medium-income-potential” types of businesses, such as grocery stores, child care services, and restaurants.  However, the report notes that immigrants are “also more likely to start high-income-potential types of businesses than the native born.”  That list includes various types of manufacturing, wholesalers, and medical and legal services. 

Looking at ethnic groups, in 2008 Latinos (.48 percent) and Asians (.35 percent) had a higher rate of entrepreneurship than non-Latino whites (.31 percent).  The report also notes that it doesn’t take a college degree to start a business.  In fact, 

While business-creation rates increased for less-educated individuals, the college-educated experienced a decline in entrepreneurial activity rates, from 0.33 percent in 2007 to 0.31 percent in 2008.

The Kauffman report and others such as this one from the Immigration Policy Center estimating that comprehensive immigration reform will boost our economy by $1.5 trillion over ten years, make it increasingly clear that, as we grapple with ways to pull out of the current economic slump, immigration reform must be part of the solution.

Photo by Flickr user Sugi. 

Economic Impact Immigrant contributions

Economic Stimulus for New York

January 29, 2010 - Posted by Maurice Belanger

On January 20th, New York City Mayor Michael Bloomberg gave his State of the City address at the Frank Sinatra High School of the Arts in Astoria, Queens.  He spent the bulk of his talk telling New Yorkers what to expect from his Administration in the future in terms of helping New Yorkers climb out of the economic downturn. 

One focus of his Administration will be to help immigrants succeed.

So as we push for comprehensive immigration reform in Washington, we’ll also do more to help struggling immigrants right here in our own backyard because all of us have an interest in seeing immigrants succeed.

A recent report by the Comptroller of New York, Thomas DiNapoli, emphasized just how important successful immigrants are to New York City.

In a short paper, The Role of Immigrants in the New York City Economy, the Comptroller lays out a wealth of statistics explaining the crucial contribution immigrants make to the New York workforce and economic life.

The arrival of immigrants between 1970 and 2008 arrested the city’s population decline and more than turned it around.  The immigrant population more than doubled, to 3 million, while the native population declined by a million during the same period. 

New arrivals, the report notes, helped revitalize neighborhoods across the city.  The ten neighborhoods with the greatest concentration of immigrants had stronger economic growth than the rest of the City between 2000 and 2007—14.8 percent compared to 3.3 percent.  In those neighborhoods, the number of paid workers grew by 8.2 percent, but only by 0.9 percent in the rest of the City.  Even though immigrants tend to have lower-paying jobs than native-born residents, the report notes, the annual payroll in the 10 high-concentration immigrant neighborhoods increased by 36.3 percent, compared to 32.8 percent in the rest of the City.

Not all immigrants were in lower-paying occupations.  According to the report, foreign-born workers made up 100 percent of the City’s chemical engineers, 71 percent of biomedical and agricultural engineers, 40 percent of accountants and auditors, 27 percent of chief executives and legislators, and 21 percent of elementary and middle school teachers.

Overall, immigrants make up 43 percent of New York City’s workforce and they account for $215 billion in economic activity—about 32 percent the total gross city product. 

It is no wonder Mayor Bloomberg is stepping up his support for Comprehensive Immigration Reform.  As he noted in a press release commending Representative Luis Gutierrez and members of the New York Congressional delegation for introducing CIR ASAP in December,

New York City’s greatest strength has always been its diversity, and the contributions made by New York’s immigrant communities have driven America’s economic engine for generations.  Today, however, our immigration laws are broken, hurting our economy and many immigrant families.  A comprehensive solution is urgently needed.

The immigration reform component of our economic recovery will also be important to New York State as a whole.  As the Immigration Policy Center notes in a recent fact sheet, New York’s immigrants are responsible for nearly one quarter of the state’s gross domestic product.  Should comprehensive immigration reform fail, and if undocumented immigrants were to be removed from New York, the state would suffer the loss of approximately 137,000 jobs and $12.7 billion in economic output.  That is no way to go about economic recovery.

Photo: Flickr user sayan51

Economic Impact Immigrant contributions

What’s in it for us?

January 08, 2010 - Posted by Maurice Belanger

The Center for American Progress and the Immigration Policy Center released a papers on the economic benefits of comprehensive immigration reform.  The report was authored by Dr. Raul Hinojosa-Ojeda, of the North American Integration and Development Center at the University of California, Los Angeles.

The report, Raising the Floor for American Workers, gives us a very practical reason for implementing comprehensive immigration reform that includes a program to provide legal status to undocumented immigrants.  The program would have economic ripple effects that would, when compared to the alternative policy of mass deportation promoted by immigrant restrictions, have a net economic benefit of as much as $4.1 trillion for the U.S. economy over 10 years.

A scenario in which comprehensive immigration reform with a legalization program is passed would result in a positive gain of $1.5 trillion for the economy over 10 years.  The mass deportation scenario result in a $2.6 trillion loss over the same period.

The amount for the legalization scenario was derived from experience with the legalization program of the 1986 Immigration Reform and Control Act.  A number of studies have followed individuals who went through the legalization program to determine how they did once they gained legal status.

Legalization would set in motion a chain of positive circumstances that would ripple out from the immediate immigrant beneficiaries and effect the economy as a whole.

Legalization raises pay: A variety of studies have shown that legalization, even isolated from other factors, had significant positive effects on the pay of formerly undocumented workers. 

Freedom to choose: There are other factors that further hike the pay of legalized workers.  Workers with legal status have the freedom to leave jobs where they are being exploited.  They have more opportunity to find jobs that pay more.

A willingness to invest: With the threat of deportation lifted, a worker is much more likely to make investments that will improve his skills—learning English, for example.  These investments yield dividends in a timeframe that is longer than a worker might expect if he might be deported.  The dividends include opportunities for better jobs, further boosting income.

Raising the wage floor: As the fortunes of undocumented workers rise, so too do the fortunes of other workers.  In industries where there are large concentrations of undocumented workers, the availability of many workers who can be exploited by shady employers depresses wages for all workers.  When undocumented workers gain legal status, they also gain rights and the ability to walk away from a bad boss.  If the bad employers lose their exploitable workers, they have to pay more, and wages for all workers go up.

More income, more spending, more taxes: All of these workers have more money to spend, and that effects the economy as a whole.  According to the report,

The real wages of newly legalized workers increase by roughly $4,405 per year among those in less-skilled jobs during the first three years of implementation, and $6,185 per year for those in higher-skilled jobs.  … [This] translates into an increase in net personal income of $30 billion to $36 billion, which would generate $4.5 to $5.4 billion in additional net tax revenue …[and] consumer spending sufficient to support 750,000 to 900,000 jobs.

By contrast, the mass deportation scenario, which the report defines as the government deporting over four million immigrant workers and their dependents, would depress U.S. Gross Domestic Product by 1.46 percent annually.  Over 10 years, the economy would take a $2.6 trillion hit—not including the actual cost of deporting all those people, which would add more than $200 billion to the deficit.  According to the report, the wages of low-skilled workers in the U.S. would rise a bit, but the economy would lose a large number of jobs.

So what’s in it for us?  What do we get for comprehensive immigration reform?  More jobs, more taxes, and higher wages for all workers.

When Congress returns for its 2010 session, new stimulus legislation will be on the agenda.  It will be a struggle to have the government spend additional money in the context of a deficit that is already a trillion-and-a-half dollars. If Congress passed comprehensive immigration reform, they would simultaneously be enacting a new stimulus program on the cheap.

Photo by Flickr user yomanimus.

Economic Impact Immigrant contributions Immigration Reform

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