The Costs of Enforcement-Only and the Benefits of Comprehensive Reform
Tax Day is an appropriate time to take stock of a few fiscal bottom lines about immigration enforcement and immigration reform. The federal government spends billions of taxpayer dollars every year on border and interior enforcement measures intended to deter unauthorized immigration. While these efforts have failed to solve the problem of unauthorized immigration, they have had a negative impact on American families, communities, and the economy. Were the United States to adopt a different approach by implementing comprehensive immigration reform, the legalization of currently unauthorized immigrants alone would generate billions of dollars in additional tax revenue as their wages and tax contributions increase over time.
Millions of immigrants in the U.S. send billions of dollars in remittances to friends and family members in their home countries each year. While it is easy to assume that this represents a huge loss for the U.S. economy, the relationship between remittances and the U.S. economy is much more complex than meets the eye. It’s true that remittances are an important source of income for immigrant-sending countries, but remittances are also a huge boost to U.S. exports and the U.S. economy. The following IPC Special Report reveals the economic benefits of remittances to both developing nations and the U.S. economy.
In the weeks since a devastating earthquake hit Haiti, there has been much discussion of the impact the Haitian diaspora in the United States and the remittances they send to family members will have on the nation’s recovery. According to Kristin Johnson, Ph.D., author of the IPC report, Many Happy Returns—Remittances and their Impact: How Money Sent Home by Migrant Workers Helps the American Economy, the remittances Haitians receive will be extremely important to their recovery process. Furthermore, the money that leaves the U.S. in the form of remittances will be used by Haitians to purchase U.S. exports. Over half of Haiti’s imports originate in the U.S., and the states with the most Haitian immigrants also have large export markets in Haiti. In this way, the remittances that immigrants in the U.S send abroad have a positive impact on the U.S. economy and trade. Read more...
A new report, “Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform,” by Dr. Raul Hinojosa-Ojeda, finds that comprehensive immigration reform that includes a legalization program for unauthorized immigrants and enables a future flow of legal workers would result in a large economic benefit—a cumulative $1.5 trillion in added U.S. gross domestic product over 10 years. In stark contrast, a deportation-only policy would result in a loss of $2.6 trillion in GDP over 10 years.
According to a new study by UCLA’s Dr. Raúl Hinojosa-Ojeda, Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform, legalizing undocumented workers through comprehensive immigration reform would yield $1.5 trillion to the U.S. GDP over a ten year period, generate billions in additional tax revenue and consumer spending and support hundreds of thousands of jobs. The report, which runs several different economic scenarios, finds that enacting a comprehensive immigration reform plan which creates a legalization process for undocumented workers and sets a flexible visa program dependent on U.S. labor demands not only raises the floor for all American workers, but is an economic necessity.
The Fiscal Policy Institute (FPI) recently released a report highlighting the contributions of immigrant workers in the 25 largest metropolitan areas in the U.S. FPI’s report broadens a growing understanding that immigrant workers make important economic contributions to the U.S. and to their local economies. Immigrants are likely to be of prime working age, work in occupations across the economic spectrum, and contribute robustly to economic growth in each of the 25 metropolitan areas studied and in the United States as a whole.
The data analyzed in IPC's latest Special Report, Economic Progress via Legalization, indicates that unauthorized immigrants who gained legal status in the 1980s through the legalization provisions of the Immigration Reform and Control Act (IRCA) experienced clear improvement in their socioeconomic situation. Between 1990 and 2006, the educational attainment of IRCA immigrants increased substantially, their poverty rates fell dramatically, and their home ownership rates improved tremendously. Moreover, their real wages rose, many of them moved into managerial positions, and the vast majority did not depend upon public assistance. The findings presented in this report support the notion that legalization of unauthorized immigrants can play a role in promoting economic growth and lessening socioeconomic disparities. Reforming our immigration system is not an obstacle to getting our economy back on track—it is part of the solution.
We can expect every major piece of comprehensive reform legislation to tackle the issue of creating a legal status for the 11- 12 million undocumented immigrants residing in the United States. Ultimately, most politicians and policy makers agree that practically, the U.S. cannot deport this population, and some kind of process for legalizing status is necessary. However, there remains a temptation to create high penalties in exchange for a green card because many politicians want to ensure that people have paid the price for coming to the country illegally. An overly punitive process, however, ultimately defeats the purpose of a legalization program because it will deter people from participating and potentially drive people further underground. A successful legalization program combines measured penalties with clear and achievable goals that will get the maximum number of people into the system, identify the relatively few who do not belong here based on criminal activity, and integrate those who can contribute their talents as quickly as possible.
The public debate over immigration reform, which all too often devolves into emotional rhetoric, could use a healthy dose of economic realism. As Congress and the White House fulfill their recent pledges to craft immigration-reform legislation in the months ahead, they must ask themselves a fundamental question: can we afford any longer to pursue a deportation-only policy that ignores economic reality?
At a time of economic recession, high unemployment, and budget deficits, policymakers and the public are concerned about the impact of immigration—especially unauthorized immigration—on state and local economies. In particular, there is debate over whether or not unauthorized immigrants are a drain on the budgets of state and local governments because of the public services they utilize. Accurately assessing the costs and contributions of immigrants, particularly unauthorized immigrants, is a challenge, but research shows that roughly one-half of unauthorized immigrants pay federal and state income taxes, Social Security taxes, and Medicare taxes. Moreover, all immigrants (legal and unauthorized) pay sales taxes (when they buy anything at a store, for instance) and property taxes (even if they rent housing). Below is a survey of a number of state studies which have found that immigrants in general—and the unauthorized specifically—contribute to the public treasuries and economies of many states and localities.