Jim McTague of Barron’s devotes his latest “D.C. Current” column to the potential impact of President Obama’s recent immigration order on the federal Treasury.
Several studies from pro-immigrant groups and the administration claim that both federal and state tax receipts will rise when shadow workers step into the light and begin paying federal and state taxes on incomes they have been receiving under the table, as day laborers or independent contractors. None of those studies look at the costs these immigrants impose on the nation.The Heritage Foundation’s Robert Rector, who’s been conducting cost/benefit analyses of immigrants for years, estimates that, in 2010, the average outlaw immigrant family got $24,721 in government benefits and services, including public schooling for their children, while paying an average $10,334 in taxes.
Some undocumented immigrants already fill out tax forms — and get some tax benefits in exchange if they have children. How is this possible? In the U.S., anyone without a proper Social Security number is prohibited by law from taking a job. But anyone who realizes income, from the Godfather down to the illegal-alien gardener, must report it to the Internal Revenue Service. To expedite this, the IRS gives unauthorized workers an individual taxpayer identification number. And because of a loophole in tax law, persons who file an ITIN can claim child tax credits. A July 7, 2011 study by the Treasury’s inspector general for tax administration found that 2.3 million ITIN filers claimed child tax credits totaling $4.2 billion in 2010. That compares with 796,000 ITIN filers claiming $924 million in 2005. The inspector general’s conclusion: “The payment of federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts federal law and policy to remove such incentives.”
Rector predicts that Obama’s executive order will cost U.S. taxpayers an extra $4 billion a year in EITC to provisionally legitimized aliens. This figure will exceed their FICA tax payments. Over their lifetimes, these provisional legal aliens will receive more than $9.4 trillionin government benefits, while paying about $3.1 trillion in taxes, based on an earlier study by Rector. Eventually, that sucking sound will become a roar.
