Tuesday, November 27, 2018

Passel and Cohn on unauthorized immigrants

Tuesday, November 6, 2018

Van Hook on Census questions about citizenship

In case you missed it, Jennifer Van Hook looked at CPS data from 2014-2018 (through March 2018) and testified in Manhattan yesterday about the changing patterns of response that appear to be associated with its citizenship questions and the political environment.

Here is my tweet about her killer chart:

Fiscal costs of unauthorized immigrants

Several media outlets have recently expressed interest in the fiscal costs to governments of unauthorized immigrants. Although easy to conceptualize — the costs of government services and benefits provided minus the taxes and user fees paid — it isn't easy to figure out what the bottom line is for a population that is hard to measure.

A 2013 Heritage study by Jason Richwine and Robert Rector currently provides the most precise look at this. It's based on the 1997 report by the National Academies and some very reasonable extrapolation. Using the 1997 NRC methodology, they estimate that 3,444,955 unauthorized immigrant households in 2010 (Table 2) were responsible for an annual deficit of $14,387 per household (page vi, first column).  In total, that amounts to about $50 billion.

Another estimate can be derived from the 2017 report by the National Academies (bottom of page 406, Table 8-1 on page 389). For all first-generation immigrants, the statistic is something like a $279 billion annual deficit for the 55.5 million first generation immigrants and dependents. That includes all kinds of old-age benefits that unauthorized folks wouldn’t be able to absorb, so it’s too large a cost number but still illustrative. (Another bias works toward attenuation because unauthorized immigrants are somewhat less educated than all immigrants.) But if we were to prorate it, then the cost associated with 11 million unauthorized immigrants  would be 11/55 or about 20% of that, or roughly $55 billion.

So my vote is for about $50 billion. That's a rough estimate of the annual fiscal cost associated with unauthorized immigrants' absorption of benefits in excess of their tax payments at all levels of government. Most of the impact is at the state and local level in the form of K-12 education spending.

In comparison, there is a statistic of $100 billion floating around the Internet that probably comes from this report by the Federation for American Immigration Reform (FAIR).

Here are some takeaways:

  • It is likely that $100 is too high
  • Even if it were accurate per se, an annual "cost of unauthorized immigration" is a deceptive statistic because it is not the net cost of a policy action
    There is no way to recoup the $50 billion absorbed by unauthorized immigrants annually with a costless policy. A more useful statistic to guide policy would be the net cost of removing 11 million unauthorized immigrants. One estimate places the cost of removal alone at about $100 billion, leaving aside the added enforcement costs of maintaining removal once it has occurred. Combining these produces a net additional cost to taxpayers of $50 of removing all unauthorized immigrants in a year (if that were possible): the $50 billion gained by not paying benefits in excess of taxes, minus the $100 billion for removal.
  • Unauthorized immigrants are not the only domestic group absorbing more in benefits than they pay in taxes, not by a long shot. Leaving aside the elderly (most of whom have paid taxes in the past), Americans with less than a high school degree receive much more in benefits than they pay in taxes because of the progressive nature of our income taxes.
  • A big reason this is particularly true today is because the federal government budget is in deficit. The Trump tax cuts have increased deficits, which were already large. Because tax rates are low relative to rates of spending, most living Americans' net fiscal contributions are negative. As a nation we are shifting this burden onto our children, their children, and the children and grandchildren of immigrants.
  • The main reason why immigrants are costly to government is because their children go to public school. The data also show that immigrants are actually better than natives in terms of generational mobility in education. These two aspects combine to imply that it is a good deal to educate immigrant children, who pay back those benefits with tax contributions when they are older. Measuring fiscal burden during a single year misses this important benefit.