Illegal Aliens’ Taxes Don’t Cover their Liabilities

John Vinson's picture

By John Vinson

John is a Senior Writing Fellow with CAPS. A long-time advocate of conservation and responsible use of natural resources, John is president of the American Immigration Control Foundation.

The writer's views are his own. 

May 12, 2015

Illegal aliens pay lots and lots of taxes, reported the Institute on Taxation and Economic Policy (ITEP). Upon hearing these glad tidings, illegal alien advocacy groups rejoiced that they had a new argument to use for their cause. In truth, however, they were being too hasty. What the recent ITEP study concluded was that illegal immigrants pay a total of about $12 billion in state and local taxes per year, and that if they were granted amnesty, they would play a total of $14 billion.

This really isn’t remarkable. No one can live in the United States without paying at least some taxes for food, shelter and basic living expenses. Sales taxes are one example, and even renters indirectly pay property taxes. Currently, an estimated 11 million illegal aliens live in the U.S., so what they pay adds up. A large number also pay state and federal income taxes, though as many as half evade these taxes by receiving payment under the table for their jobs.

Stacks of Money
While illegal aliens may pay taxes, they receive much more from the system than they pay in.

In any case, the fact that illegal aliens pay taxes is not the key issue; specifically it’s whether they are paying their way in America by contributing more in taxes than they consume in public services. Significant research shows that they don’t.

A study by the Heritage Foundation concluded that they pay a good bit more in state and local taxes, a total of $17.6 billion, than ITEP’s estimate. But it also found that at all levels of government, they consume $54.5 billion more per year in tax-paid services than they pay in taxes.

The basic reason, the Heritage study notes, is that illegal aliens generally work at low-wage jobs due to their limited skills and an average 10th grade educational level. Typically people in these categories and income brackets, foreign and native-born alike, receive more in public benefits than they contribute.

One of the big cost items for illegal aliens at the local and state level is public education. Currently there are between 3 and 5.5 million children from illegal immigrant households enrolled in public schools. Given that the average annual cost for educating a student in the U.S. is $12,000, this means at minimum a total annual expenditure of $36 billion – a sum three times greater than what ITEP estimates that illegal aliens pay in state and local taxes.

Illegal alien advocates acknowledge the high cost of educating these students, but they maintain that most of it should not be tallied as a liability for their cause. They argue that the majority of these students were born in the U.S., so therefore they are U.S. citizens, not illegal aliens like their parents. Thus the expenditures for these citizen children, as the argument goes, are not a cost of illegal immigration.

This argument is highly disingenuous. As the Heritage Foundation’s study observed, “The presence of these … native-born children … is a direct result of unlawful immigration [by their parents]…. Obviously, any analysis of the fiscal cost of unlawful immigration must therefore include the costs associated with these children, because those costs … would not exist in the absence of unlawful immigration.”

The Heritage study also points out that amnesty would impose new fiscal burdens. Even if amnestied illegal aliens paid more in taxes after getting legal status, they would impose significant new costs over time.

As legal residents they would have access to many public assistance programs which they cannot legally use now. Also, when they retire they will be entitled to Medicare and Social Security. As generally low-income earners, they are likely to take more out of those programs than they will contribute. The claim often made that illegal aliens will “help save Social Security” literally doesn’t add up.

If we want taxpayers who really pay lots and lots of taxes, we need a high-wage economy – not one where massive legal and illegal immigration keep pushing wages down.

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