Why are we debating this because the facts are we are losing money on illegal immigrants.
Introduction
A continually growing population of illegal aliens, along with the federal government’s ineffective efforts to secure our borders, present significant national security and public safety threats to the United States. They also have a severely negative impact on the nation’s taxpayers at the local, state, and national levels. Illegal immigration costs Americans billions of dollars each year. Illegal aliens are net consumers of taxpayer-funded services and the limited taxes paid by some segments of the illegal alien population are, in no way, significant enough to offset the growing financial burdens imposed on U.S. taxpayers by massive numbers of uninvited guests. This study examines the fiscal impact of illegal aliens as reflected in both federal and state budgets.
The Number of Illegal Immigrants in the US
Estimating the fiscal burden of illegal immigration on the U.S. taxpayer depends on the size and characteristics of the illegal alien population. FAIR defines “illegal alien” as anyone who entered the United States without authorization and anyone who unlawfully remains once his/her authorization has expired. Unfortunately, the U.S. government has no central database containing information on the citizenship status of everyone lawfully present in the United States. The overall problem of estimating the illegal alien population is further complicated by the fact that the majority of available sources on immigration status rely on self-reported data. Given that illegal aliens have a motive to lie about their immigration status, in order to avoid discovery, the accuracy of these statistics is dubious, at best. All of the foregoing issues make it very difficult to assess the current illegal alien population of the United States.
However, FAIR now estimates that there are approximately 12.5 million illegal alien residents. This number uses FAIR’s previous estimates but adjusts for suspected changes in levels of unlawful migration, based on information available from the Department of Homeland Security, data available from other federal and state government agencies, and other research studies completed by reliable think tanks, universities, and other research organizations.
The Cost of Illegal Immigration to the United States
At the federal, state, and local levels, taxpayers shell out approximately $134.9 billion to cover the costs incurred by the presence of more than 12.5 million illegal aliens, and about 4.2 million citizen children of illegal aliens. That amounts to a tax burden of approximately $8,075 per illegal alien family member and a total of $115,894,597,664. The total cost of illegal immigration to U.S. taxpayers is both staggering and crippling. In 2013, FAIR estimated the total cost to be approximately $113 billion. So, in under four years, the cost has risen nearly $3 billion. This is a disturbing and unsustainable trend. The sections below will break down and further explain these numbers at the federal, state, and local levels.
Total Governmental Expenditures on Illegal Aliens
Total Tax Contributions by Illegal Aliens
Total Economic Impact of Illegal Immigration
Federal
The Federal government spends a net amount of $45.8 billion on illegal aliens and their U.S.-born children. This amount includes expenditures for public education, medical care, justice enforcement initiatives, welfare programs and other miscellaneous costs. It also factors in the meager amount illegal aliens pay to the federal government in income, social security, Medicare and excise taxes.
FEDERAL SPENDING
The approximately $46 billion in federal expenditures attributable to illegal aliens is staggering. Assuming an illegal alien population of approximately 12.5 million illegal aliens and 4.2 million U.S.-born children of illegal aliens, that amounts to roughly $2,746 per illegal alien, per year. For the sake of comparison, the average American college student receives only $4,800 in federal student loans each year.
FAIR maintains that every concerned American citizen should be asking our government why, in a time of increasing costs and shrinking resources, is it spending such large amounts of money on individuals who have no right, nor authorization, to be in the United States? This is an especially important question in view of the fact that the illegal alien beneficiaries of American taxpayer largess offset very little of the enormous costs of their presence by the payment of taxes. Meanwhile, average Americans pay approximately 30% of their income in taxes.
Taxes collected from illegal aliens offset fiscal outlays and, therefore must be included in any examination of the cost of illegal immigration. However, illegal alien apologists frequently cite the allegedly large tax payments made by illegal aliens as a justification for their unlawful presence, and as a basis for offering them permanent legal status through a new amnesty, similar to the one enacted in 1986. That argument is nothing more than a red herring.
FAIR believes that most studies grossly overestimate both the taxes actually collected from illegal aliens and, more importantly, the amount of taxes actually paid by illegal aliens (i.e., the amount of money collected from illegal aliens and actually kept by the federal government). This belief is based on a number of factors: Since the 1990’s, the United States has focused on apprehending and removing criminal aliens. The majority of illegal aliens seeking employment in the United States have lived in an environment where they have little fear of deportation, even if discovered. This has created an environment where most illegal aliens are both able and willing to file tax returns. Because the vast majority of illegal aliens hold low-paying jobs, those who are subject to wage deductions actually wind up receiving a complete refund of all taxes paid, plus net payments made on the basis of tax credits.
As a result, illegal aliens actually profit from filing a tax return and, therefore, have a strong interest in doing so.
Naturally I disagree
with much of the opposition and my well-meaning colleagues on the left in
regards to Keynes and his school of economics. Many in this school of thought
cannot accept the fact that Keynesian economics has never worked; it did not
work in the depression nor has it worked any time since then. The only time
stimulus has “worked” is after the economy has already recovered and
then becomes overheated by the stimulus. Keynesian economics is an excuse for
politicians to buy off special interest and voters with other people’s money.
Let me address some of the opposition’s specific points.
First, stimulus
spending creates jobs. False: stimulus spending financed by taxes substitutes
relatively inefficient government spending for private spending, in other words
government spending “crowds out” private spending. The opposition may
disagree that public spending is less efficient but the recent analysis of the
government spending does not support their point of view.
Second, many will
tell you that it is not taxation but debt that is financing the government
spending; thus it is not crowding out private spending. I maintain that
government debt crowds out private borrowing and investment. Many of my
anti-capitalist colleagues say that government spending is not crowding out private
investment because interest rates are low. Therefore there is plenty of money
to finance private investment. Unfortunately, in an attempt to protect
depositors, and the government guarantee of such deposits, the bank regulators
have increased the credit underwriting requirements on banks. Consequently,
they are not lending to small and medium sized businesses.
Interest rates are
low because the Fed is printing money and as a result significantly increasing
the money supply thereby making money less expensive. The irony of artificially
low interest rates is that it reduces the income of pensioners and savers. This
in effect shifts money and consumption from savers and transfers it to the
government who is borrowing at artificially low rates.
The business
community realizes that the increased money supply is financing government
spending and the private sector must eventually pay the piper. Consequently,
the business community is not investing as much as it might because it is
concerned about inflation and higher future taxes to pay for the borrowing.
Since business investment takes time for a return, the business man making an
investment now expecting a return 2 or 3 years from now knows that his taxes
are going to be increased with the expiration of the Bush tax cuts and the 3.8%
new Obama care tax on unearned earnings. Thus the businessman is not investing
today because he knows his return is being significantly reduced 2 years from
now.
Third, their argument
of skyrocketing business investment is based on historically low investment in
2009 created by the worst recession since the Great Depression. Investors in
2011 are merely “catching up.” Investment is not above the trend
line.
Fourth, the left’s
idea to stimulate the economy through a tax credit for firms that increase
employment shows a fundamental lack of understanding of why companies increase
employment. Jobs are a by-product of increased sales and revenues. Companies do
not like to hire employees. They are expensive, require management and cannot
be easily laid off in the event of incompetence or loss of business. Companies
increase employment because they have additional business that needs to be
processed, and they cannot process it through overtime or increased capital. No
businessman in his right mind would hire someone merely because labor is 10%
cheaper because of tax credits. He would only increase employment if that is
his only alternative to process additional business. If he has additional
business, then he will hire additional employees regardless of the 10% credit.
Therefore the credit is an inefficient way to increase employment and waste of
taxpayer money.
Fifth, their plan for
a serious budget reduction in the future does not work without a big initial
down payment in spending cuts. Today’s Congress cannot bind future congresses,
and Congress has been notoriously unreliable with respect to the fiscal
management of the country’s finances. Only a naive observer of America’s
today’s political environment could believe that congress will constrain
spending to bring the deficit under control when the economy improves. The only
point that the left may have is that fiscal stimulus may have a small temporary
benefit when the money is originally spent, but the extent of the benefit
depends on how the money is spent, e.g. infrastructure, tax rebates, government
program, etc., and technical arguments about the multiplier effect of the
spending. However, it has a negative impact when it is finally paid for.
