Ferg's Fiscal Insight
May. 21st, 2012: - johnlocke.org Manage Subscriptions

Scapegoating Foreigners for Fiscal Shortfalls
By Fergus Hodgson

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Scapegoating Foreigners for Fiscal Shortfalls

This past month, media outlets have given plenty of attention to the collection of child tax credits by illegal immigrants -- about $4 billion worth. Research on this activity has been publicly available for a couple of years now, but it appears to finally have struck a chord as fiscal pressure, particularly at the federal level, continues to accumulate.

To be clear, I am no fan of manipulative tax codes. Why parents, who use more government services relative to single people, should pay lower taxes is perplexing to say the least. However, the presentation of the issue has been grossly slanted against illegal immigrants and has compelled me to weigh in.

Click here to listen to my radio discussion of this issue with Jeff Crouere of WGSO in Louisiana (8 minutes).

First, let's assume that the $4 billion figure is correct. How does that compare to tax evasion across the country? One detailed estimate from the University of Wisconsin places the total on account of unreported income at $500 billion in annual lost tax revenue. That's right, more than 100 times the tax credits collected by illegal immigrants. Where are the news stories about that?

Keep in mind that the credits are technically legal, even if someone's residency is not, so legislators ought to take responsibility for the loophole. Taxes paid by illegal immigrants, upon which credits are claimed, are comparable to taxes on illegal substances. You're not supposed to have them, but if you do, you're supposed to pay taxes on them. That may be confusing, but in North Carolina such taxes brought in $9 million in 2010.

Contrary to the stereotypes, clear evidence indicates that foreign-born people have lower rates of crime and incarceration than native-born Americans. However, those stereotypes still appear to have fueled the story on what is a drop in the ocean of lost tax revenue. Further, illegal immigrants and non-citizen immigrants are as low on the political totem pole as one can get, without any voting power. So rather than direct condemnation towards them, we'd do better to just drop child tax credits for all residents.

Those Struggling Older Workers... Oh Wait

As the United States Government Accountability Office calls for an expanded array of "jobs" programs for those over the age of 55, a new report from the Manhattan Institute rips such proposals to shreds. Their concern is misplaced, Diana Furchtgott-Roth rightly points out -- not that such programs for other demographics would be a wise idea.

[I]t is younger workers, not older workers, that have borne the brunt of the employment losses during the recession.

The report includes plenty of concise data on the matter (PDF), but here are just a few highlights.

Over the past ten years employment has increased among Americans 55 and over by 8.9 million. At the same time, it has declined by 3.1 million in the 25 to 54 age group, and by 313,000 among those aged 20 to 24...

Perhaps most telling, between 2005 and 2011 the proportion of 20 to 24 year olds with at least a bachelors degree but living with parents or grandparents rose from 36 to 43 percent. That's not surprising, since households with adults over 65 have reached 47 times the net wealth of households headed by those below 35. The ratio was 10 times back in the 1980s.

Still want to transfer more money from the young to the elderly?

Notes

  • Please consider coming to my next speaking engagement, "The Unreported Growth of Government in North Carolina." Americans for Prosperity is hosting the event, and it is at the Warehouse Restaurant, 204 Main Street, Winterville on Saturday, 10am-12pm, May 26, 2012.

  • The event will be an examination of my latest research article, which I encourage people to read. My analysis lays to rest the notion that the latest budget cut state spending. In fact, state spending this fiscal year 2012 will be a record and on a per capita basis more than three times what it was in 1970.

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