July 11, 2013

Philadelphia Inquirer:Study shows financial gains if immigrants can work legally

media mention

 

With the cost to revamp immigration law looming large in the national debate, the Institute on Taxation and Economic Policy (ITEP), a left-of-center nonprofit in Washington, released a study Wednesday that estimates big gains in state and local taxes if undocumented immigrants were allowed to work legally.
The study estimated that New Jersey would gain $81 million, Pennsylvania $64 million, and Delaware $5 million annually.
The report came out just hours before the White House released its study detailing “the range of benefits to the U.S. economy” if Congress passes an immigration overhaul.
The ITEP analysis estimates annual revenues would rise by $2.1 billion across the 50 states if the nation’s 11 million undocumented immigrants were absorbed into the legal workforce. It assumes newly legalized immigrants would earn higher wages than they do working in the shadows, and uses computer models to project the income, sales, excise, and property taxes they would pay.
“We know undocumented immigrants already pay 6 or 7 percent of their income in state and local taxes, simply because they buy things and rent or own homes, and sales and property taxes are paid automatically,” said ITEP executive director Matthew Gardner. Legalization is projected to boost wages and income tax compliance, he said, producing “substantial new revenues” for the states.
According to the study, based on payments in 2010, an estimated 550,000 undocumented immigrants live in New Jersey, 160,000 in Pennsylvania, and 25,000 in Delaware.
Collectively, they pay $476 million annually in state and local taxes in New Jersey, $149 million in Pennsylvania, and $12 million in Delaware.
In most cases, according to the study, payroll taxes paid by workers here illegally would more than double if Congress passes immigration changes.
Legislation to toughen border security and grant legal status to most undocumented immigrants, with a pathway to citizenship, recently passed the Senate and awaits action in the House.
The ITEP and White House studies are the latest of several reports released this year on the projected impact of immigration changes.
Pushing back against the Senate bill are opponents of granting undocumented immigrants citizenship, who cite a study by the right-leaning Heritage Foundation that estimated legalization would cost $6.3 trillion over 50 years due to increased use of public services and benefits.
According to that study, a household headed by an undocumented immigrant lacking a high school diploma receives $25,000 a year in public education, public-safety services and other benefits, while it pays just $10,000 a year in taxes.
Meanwhile, the independent Congressional Budget Office estimates that enacting the Senate’s bill would reduce the federal deficit by about $200 billion over the next decade.
What can the public conclude from the avalanche of numbers?
“Immigrants in general aren’t all that different from the population as a whole,” said University of Pennsylvania professor of management Peter Cappelli, an expert on the economic aspects of immigration. But undocumented immigrants, he said, are likely to have less education and lower skills.
“If we added more of these folks to the legal economy,” he said, “would it help? Compared to what? To having them here anyway, and illegally? I don’t think there is any doubt that making them legal is better. You collect the taxes.”

Michael Matza, Inquirer Staff Writer POSTED: Thursday, July 11, 2013, 1:08 AM

With the cost to revamp immigration law looming large in the national debate, the Institute on Taxation and Economic Policy (ITEP), a left-of-center nonprofit in Washington, released a study Wednesday that estimates big gains in state and local taxes if undocumented immigrants were allowed to work legally.

The study estimated that New Jersey would gain $81 million, Pennsylvania $64 million, and Delaware $5 million annually.

The report came out just hours before the White House released its study detailing “the range of benefits to the U.S. economy” if Congress passes an immigration overhaul.

The ITEP analysis estimates annual revenues would rise by $2.1 billion across the 50 states if the nation’s 11 million undocumented immigrants were absorbed into the legal workforce. It assumes newly legalized immigrants would earn higher wages than they do working in the shadows, and uses computer models to project the income, sales, excise, and property taxes they would pay.

“We know undocumented immigrants already pay 6 or 7 percent of their income in state and local taxes, simply because they buy things and rent or own homes, and sales and property taxes are paid automatically,” said ITEP executive director Matthew Gardner. Legalization is projected to boost wages and income tax compliance, he said, producing “substantial new revenues” for the states.

According to the study, based on payments in 2010, an estimated 550,000 undocumented immigrants live in New Jersey, 160,000 in Pennsylvania, and 25,000 in Delaware.

Collectively, they pay $476 million annually in state and local taxes in New Jersey, $149 million in Pennsylvania, and $12 million in Delaware.

In most cases, according to the study, payroll taxes paid by workers here illegally would more than double if Congress passes immigration changes.

Legislation to toughen border security and grant legal status to most undocumented immigrants, with a pathway to citizenship, recently passed the Senate and awaits action in the House.

The ITEP and White House studies are the latest of several reports released this year on the projected impact of immigration changes.

Pushing back against the Senate bill are opponents of granting undocumented immigrants citizenship, who cite a study by the right-leaning Heritage Foundation that estimated legalization would cost $6.3 trillion over 50 years due to increased use of public services and benefits.

According to that study, a household headed by an undocumented immigrant lacking a high school diploma receives $25,000 a year in public education, public-safety services and other benefits, while it pays just $10,000 a year in taxes.

Meanwhile, the independent Congressional Budget Office estimates that enacting the Senate’s bill would reduce the federal deficit by about $200 billion over the next decade.

What can the public conclude from the avalanche of numbers?

“Immigrants in general aren’t all that different from the population as a whole,” said University of Pennsylvania professor of management Peter Cappelli, an expert on the economic aspects of immigration. But undocumented immigrants, he said, are likely to have less education and lower skills.

“If we added more of these folks to the legal economy,” he said, “would it help? Compared to what? To having them here anyway, and illegally? I don’t think there is any doubt that making them legal is better. You collect the taxes.”

 

 

 


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