In assessing U.S. immigration policy, four general principles should serve as a guide. These principles concern the rule of law and the impact that immigration has on the nation’s economy, culture, and politics. I will discuss each of these briefly and, in the second section of this chapter, provide an analysis of the economic impact, in particular, of a wave of low-skilled immigrants on the United States today. On the basis of this analysis, the final section will present recommendations for America’s immigration policy.
Rule of Law. The first principle that should guide U.S. immigration policy is the rule of law—in particular, alignment with America’s Constitution, which states that Congress has the responsibility to “establish a uniform Rule of Naturalization.”1 U.S. citizens via their congressional representatives must decide who enters the United States, who resides in this country, who accesses government welfare, and who becomes a citizen and votes in our elections—and who thereby determines the future of the United States. These issues should not be settled unilaterally by foreigners, but rather by the consent of the governed in this nation.
Today, in the United States, this principle is being violated; the determination of who enters and resides in the United States is largely fixed unilaterally by the people who violate our immigration laws. To date, the United States has responded to this situation by periodically granting these individuals citizenship and, thereby, full rights to determine America’s political and economic future. This is a core violation of U.S. sovereignty. To improve immigration policy the government must first return to American citizens the authority to decide who does and who does not reside in the United States and who does and does not-become a U.S. citizen.
National Interest. Immigration should be economically beneficial to Americans, and at the very least, it should not be economically harmful to them. In particular, it should not be harmful to the least skilled and least advantaged Americans. While it seems that this point should be obvious, there is confusion regarding immigration’s economic impact. It is often assumed that immigration is economically beneficial because adding labor into an economy results in a bigger gross domestic product (GDP). But the question that should be asked is, Does immigration make the post-tax income of the average American higher?
For example, in a factory that employs ten people the addition of an eleventh worker would increase the factory’s output by 10%, and thus seem to be beneficial. This is how immigration’s impact on the nation’s GDP is often presented in debates in Congress. But the questions that are relevant to the workers in that factory (or, on a larger scale, to American workers) are: How did the additional worker affect my wages? Did my standard of living go up or down after the additional worker was hired? Too often, the impact of immigrants on Americans’ standard of living is not considered.
Throughout the world, there may be as many as 1 billion people who would like to come to live in America. Because the pool of potential immigrants is so large, the United States can be selective about who it admits into this country. A key principle that should guide our immigration policy is that people who come to this country should not impose an additional net burden on U.S. taxpayers; in fact, immigrants should be net fiscal contributors. They should have the skills necessary to earn an income high enough that the amount that they pay in taxes is greater than the amount that they take out in benefits. Currently, this is not the case, and as will be shown in more detail later in this chapter, the situation is getting worse year after year.
Patriotic Cultural Assimilation. Immigration policy has to respect the core political culture of the United States. While immigrants may alter and adjust their lifestyles and eventually assimilate, they also alter the culture and society of the country they come to. This is particularly true when there is a large wave of immigration. Consider why it is that people want to come to live in the United States: Is it because we have a balmy climate? Is it because we are nice people? People want to come to live in America because the United States generates a higher level of prosperity in comparison with most other nations in the world. Immigrants are drawn to this prosperity. Conversely, there is very little migration from America to Mexico.
It is important to recognize that U.S. prosperity is rooted in the underlying, often implicit, elements of the nation’s culture: respect for the rule of law, belief in limited government, respect for property and a free market, belief in personal responsibility, and the conviction that government is not to be used for personal gain. Now, when you look out across the cultures of the world, you find that these cultural traits are actually relatively rare and that the societies that have them tend to prosper. Countries that do not have these traits do not prosper, and their people will want to migrate to nations whose political cultures promote success and prosperity.
Too much immigration too quickly will threaten these underlying cultural traditions that generate prosperity. This is not to say that immigrants never assimilate; most of us are the descendants of immigrants. Yet, there is an inverse relationship between the rate of inflow and the degree of assimilation. A rate of inflow that is too rapid can threaten the core political culture that generated the prosperity that attracts the immigrants to the United States in the first place.
Balance of Politics. Finally, immigration should not be used to tip the political balance in the United States. The reality is that low-skilled immigrants tend to vote more to the left. Some people in Washington support high levels of immigration because they simply want a new electorate; they want to bring in additional voters to alter the political balance. We should not accept immigration policy that is crafted with a motive of altering the U.S. political structure.
The Declining Education Levels of Immigrants. Current immigrants (both legal and illegal) have low education levels relative to the nonimmigrant U.S. population. As figure 11.1 shows, 49%, and perhaps 60%, of illegal immigrant adults are high school dropouts.2 Among legal immigrants the situation is better, but still a quarter are high school dropouts. Overall, a third of all immigrant households are headed by individuals without a high school degree. By contrast, only 9% of nonimmigrant adults are high school dropouts. The current immigrant population, thus, contains a disproportionate share of poorly educated individuals. These individuals will tend to have low wages, pay little in taxes, and receive above-average levels of government benefits and services.
FIG. 11.1. PERCENTAGE OF ADULTS WHO ARE HIGH SCHOOL DROPOUTS
Source: Pew Hispanic Center, “Statistical Portrait of Hispanics in the United States, 2006” (Washington, DC, January 23, 2008), http://pewhispanic.org/factsheets/factsheet.php?FactsheetID=35.
Think about it this way: over the last twenty years or so, the United States has imported nearly 11 million high school dropouts from abroad. Consider what the public reaction would be to an announcement that the number of high school dropouts in Kentucky, for example, had increased by 11 million. This would be decried as a national crisis.
There is a common misconception that the low education levels of recent immigrants is part of a permanent historical pattern and that the United States has always admitted immigrants who were poorly educated relative to the native-born population. Historically, this has not been the case. For example, in 1960 recent immigrants were no more likely than were nonimmigrants to lack a high school degree. By 1998 recent immigrants were almost four times more likely to lack a high school degree than were nonimmigrants.3 As the relative education level of immigrants fell in recent decades so did their relative wage levels. In 1960 the average immigrant male in the United States actually earned more than the average nonimmigrant man. By 1998 the average immigrant earned 23% less than the average nonimmigrant.4
Rise of Government Transfers. The changing trend in immigrants’ levels of skills and education is coupled with the fact that, throughout the twentieth century, the U.S. government generated a massive wealth-transfer system. In this system of financial redistribution, the top third of the population was excessively taxed to provide subsidized benefits and services to the least-skilled portion of the population. This system did not exist earlier in, say, 1900, when we had no income tax and little government expenditure. With today’s bevy of entitlement and benefits, an immigrant flow that is disproportionately low-skilled has an enormous fiscal consequence.
FIGURE 11.2. FY 2004 GOVERNMENT EXPENDITURES ON HOUSEHOLDS HEADED BY IMMIGRANTS WITHOUT A HIGH SCHOOL DIPLOMA
Source: Robert Rector and Christine Kim, The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer, Special Report no. 14 (Washington, DC: Heritage Foundation, May 21, 2007).
As figure 11.2 shows, households headed by immigrants without a high school diploma (or low-skilled immigrant households) received an average of $30,160 in direct benefits, means-tested benefits, education, and population-based services in fiscal year 2004. Means-tested aid came to $10,428 per household, while direct benefits (mainly Social Security and Medicare) amounted to $4,891. Education spending on behalf of these households averaged $8,462 per household, while spending on police, fire, and public safety came to $2,746 per household. Transportation added another $809, and administrative support services cost $1,195. Miscellaneous population-based services added a final $1,629.5
It is important to note that the costs of the immediate benefits and services outlined in figure 11.2 are a composite average of all low-skilled immigrant households. They represent the total costs of benefits and services received by all low-skilled immigrant households divided by the number of such households. It is unlikely that any single household would receive this exact package of benefits; for example, it is rare for a household to receive Social Security benefits and primary and secondary education services at the same time. Nonetheless, the figures are an accurate portrayal of the governmental costs of low-skilled immigrant households as a group. When combined with similar data on taxes paid, they enable an assessment of the fiscal status of such households as a group and their impact on other taxpayers.
Balance of Taxes and Benefits. To determine the fiscal impact of an influx of low-skilled immigrants who lack a high school degree, the average benefits and services received was compared with the average of taxes paid. In 2004 federal, state, and local taxes paid by low-skilled immigrant households came to $10,573 per household. Federal and state individual income taxes made up only 15% of total taxes paid, while taxes on consumption and employment produced the bulk of the tax burden for low-skilled immigrant households. The single largest tax payment was $2,878 per household in Federal Insurance Contribution Act (FICA) tax. (Workers were assumed to pay both the employee and employer share of FICA taxes.) On average, low-skilled immigrant households paid $1,815 in state and local sales and consumption taxes. The analysis assumed that a significant portion of property taxes on rental and business properties was passed through to renters and consumers; this contributed to a $1,618 property tax burden for the average low-skilled immigrant household. The analysis also assumed that 70% of corporate income taxes fell on workers; this contributed to an average $873 corporate tax burden for low-skilled immigrant households. Low-skilled immigrant households are frequent participants in state lotteries, with an estimated average purchase of $686 in lottery tickets per household in 2004.
On average, low-skilled immigrant households received $30,160 per household in immediate government benefits and services in FY 2004 and paid only $10,573 in taxes. Thus, low-skilled immigrant households received nearly three dollars in benefits and services for each dollar in taxes paid. Strikingly, as figure 11.3 shows, low-skilled immigrant households in FY 2004 had average earnings of $28,890 per household; thus, the average dollar amount of government benefits and services received by these households not only exceeded the taxes paid by these households but also exceeded the average earned income of these households. The net fiscal deficit of a household equals the cost of immediate benefits and services received minus taxes paid.
FIGURE 11.3. TAXES PAID AND BENEFITS RECEIVED IN HOUSEHOLDS HEADED BY IMMIGRANTS WITHOUT A HIGH SCHOOL DIPLOMA
Source: Robert Rector and Christine Kim, The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer, Special Report no. 14 (Washington, DC: Heritage Foundation, May 21, 2007).
As figure 11.4 shows, when the costs of direct and means-tested benefits, education, and population-based services were counted, the average low-skilled household had a fiscal deficit of $19,587 (expenditures of $30,160 minus $10,573 in taxes). At $19,587, the average annual fiscal deficit for low-skilled immigrant households was nearly twice the amount of taxes paid. For the average low-skilled immigrant household to be fiscally solvent (that is, paying taxes equal to immediate benefits received), it would be necessary to eliminate all Social Security and Medicare and all means-tested welfare and to cut expenditures on public education roughly in half. As it stands, each household of this kind requires $19,000 more in services than they pay in taxes, and someone else has to pay for that. That “someone else” is the upper-middle class in the United States.
Receiving, on average, $19,587 more in immediate benefits than they pay in taxes each year, low-skilled immigrant households impose substantial long-term costs on the U.S. taxpayer. Assuming an average sixty-year adult lifespan for heads of household,6 the average lifetime costs to the taxpayer will be nearly $1.2 million for each low-skilled immigrant household.7 This calculation assumes that a low-skilled immigrant comes to the United States in his mid-twenties with a spouse and that both remain in the country for an average of sixty years. Even if low-skilled immigrants return home rather than remain in the United States permanently, thereby reducing costs, this situation underscores how costly low-skilled immigrants are to the U.S. taxpayer. The less time these immigrants spend in the United States, the lower the cost to the taxpayer. Moreover, most current immigration reform proposals would grant legal status to illegal immigrants, increasing their access to welfare and Social Security. These proposals would substantially increase the time that these immigrants remain in the United States.
FIGURE 11.4. DROPOUT HOUSEHOLDS RECEIVE MORE THAN $3 IN BENEFITS FOR EVERY $1 PAID IN TAXES
Source: Robert Rector and Christine Kim, The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer, Special Report no. 14 (Washington, DC: Heritage Foundation, May 21, 2007).
The total annual fiscal deficit (total benefits received minus total taxes paid) for all 4.5 million low-skilled immigrant households equaled $89 billion in 2004. This sum includes direct and means-tested benefits, education, and population-based services. Over the next ten years, the net cost (benefits minus taxes) to the taxpayer of all low-skilled immigrant households will approach $1 trillion.8
Given the scenario described above, what should be done to reform America’s immigration policy? Each year roughly 1.5 million legal and illegal immigrants enter and take up residence in the United States. This immigrant flow is disproportionately poorly educated because illegal immigration primarily attracts low-skilled workers and the legal immigration system favors kinship ties over skill levels. As a result, there are currently 4.54 million low-skilled immigrant households in the United States, containing 15.9 million persons—that is, roughly 5% of the U.S. population. At each age level, low-skilled immigrant households receive substantially more in government benefits than they pay in taxes. Overall, low-skilled immigrant households impose a net cost of $89.1 billion per year on U.S. taxpayers.
The fiscal cost of low-skilled immigrants will be increased in the future by government policies that increase the number of low-skilled immigrants, the immigrants’ length of stay in the United States, and the access of low-skilled immigrants to government benefits. Conversely, fiscal costs will be reduced by policies that decrease these variables. Clearly, immigration policy has enormous fiscal implications. Consistent with principles for immigration reform discussed above and in other publications,9 immigration policy should be changed to reduce the costs of low-skilled immigration to the taxpayer through the following measures.
1. Enforce the current law against employing illegal immigrants. Illegal immigrants are predominantly low-skilled. Over time, they impose large costs on the taxpayer. In 1986 the United States gave amnesty to 3 million illegal aliens in exchange for a prohibition on hiring illegals in the future. While amnesty was granted, the law against hiring illegals was never enforced in more than a token manner. As a result, there are now 11 to 12 million illegal immigrants in the United States.10 Because the majority of illegal immigrants come to the United States for jobs, serious enforcement of the ban on hiring illegal labor would substantially reduce employment of illegal aliens and encourage many to leave the country. Reducing the number of low-skilled illegal immigrants in the nation and limiting the future flow of illegal immigrants will reduce future costs to the taxpayer.
2. Do not grant amnesty to illegal immigrants. Granting amnesty to illegal immigrants would, over time, confer entitlement to welfare, Social Security, and Medicare for the amnesty recipients. This would be ruinously expensive to U.S. taxpayers. Similarly, a modified amnesty such as the Z visa program proposed by President Bush would, almost certainly, over time result in entitlement of the Z visa holders to welfare, Social Security, and Medicare; such a plan would be nearly as expensive as forthright amnesty. Amnesty in any form would impose serious fiscal costs.
3. Ensure that any guest-worker program is truly temporary and not a gateway to welfare entitlements.11 In 2006 the Senate passed the Comprehensive Immigration Reform Act (S 2611). If enacted, S 2611 would have created a massive temporary guest-worker program for low-skilled workers. In this program, the workers would have been neither “temporary” nor “guests.” Instead, they would have been entitled to legal permanent residence with access to welfare and ultimately to U.S. citizenship.12 Such a program would have greatly increased the number of low-skilled immigrants in the United States at enormous cost to U.S. taxpayers.
A program that involves long-term residence and permits access to welfare, Social Security, Medicare, and public education would be enormously expensive to the U.S. taxpayer. For example, if a guest worker brings school-age children with him or her, each child will generate, on average, $9,600 in public education costs that must be funded by U.S. taxpayers. Similarly, even if the guest worker’s low-income family were formally barred from receiving welfare assistance, in reality, such families would be likely to receive aid simply because welfare agencies would be reluctant to deny services to families that appear to be in need of aid.
Finally, bringing a family into the United States would make it far less likely that the guest worker would actually return home, and the family’s continued residence in the United States would increase fiscal costs. Granting U.S. citizenship to guest workers’ children born in the United States would also raise fiscal costs. If a child born to a guest worker is granted U.S. citizenship, that child immediately becomes entitled to Medicaid coverage and a full range of other welfare benefits. Further, granting the child citizenship makes it less likely that the guest-worker parents will actually leave the United States and thereby increases taxpayer costs.
Any law establishing a guest-worker program must clearly stipulate that children born to guest workers should be treated in the same manner as children of diplomats—that is, they would be citizens of their parents’ country of origin rather than the United States.
4. Eliminate birthright citizenship for children of illegal immigrants.13 When an illegal immigrant gives birth within U.S. borders, the government automatically confers U.S. citizenship on the child. This practice generates considerable costs for U.S. taxpayers and creates practical difficulties against attempts to remove the illegal immigrant parents. There are currently 3 million U.S.-born children of illegal immigrants in the United States.14 Under current immigration law, when these children reach age twenty-one, they can petition to have their parents granted legal permanent residence, and the government must, with few exceptions, grant the request. The green-card category of parental “immediate relatives” is uncapped. When an illegal immigrant parent is granted legal permanent residence, he or she soon becomes eligible for welfare and can begin to earn eligibility to receive extensive Social Security and Medicare benefits.15 In effect, under current law, having a child within U.S. borders is, for an illegal immigrant, a nearly automatic pathway to welfare, Social Security, Medicare, and, eventually, citizenship. The fiscal implications of this policy are enormous.
5. Reduce the number of legal permanent residence visas based on kinship and increase the number of visas allocated to high-skilled workers.16 Under current law, the visa lottery and visa preferences for adult brothers, sisters, and parents tend to bring a high proportion of low-skilled immigrants into the United States. While low-skilled immigrants create a fiscal burden for U.S. taxpayers, high-skill immigrants tend to pay more in taxes than they receive in benefits. The legal immigration system should be altered to reduce the number of low-skilled immigrants entering the country and increase the number of new entrants with high levels of education and skills in demand by U.S. firms. The visa lottery and all preferences for brothers, sisters, parents, and relatives other than spouses and minor children should be eliminated and replaced by new skill-based visas. Parents would be able to visit children in the United States as guests but not as legal permanent residents with access to welfare.
The United States offers enormous economic opportunities and societal benefits. Hundreds of millions more people would immigrate to the United States if they had the opportunity. Given this context, the United States must be selective in its immigration policy. Policymakers must ensure that immigrants do not expand the fiscally dependent population, that is, the population reliant on welfare or other financial transfer programs, thereby imposing large costs on American society. Current immigration policies with respect to both legal and illegal immigration encourage the entry of a disproportionate number of poorly educated immigrants into the United States. As these low-skilled immigrants (both legal and illegal) take up residence, they impose a substantial tax burden on U.S. taxpayers. The government benefits received by low-skilled immigrant households exceed taxes paid at each age level; at no point do these households pay more than they take out.
Current immigration practices, both legal and illegal, operate like a system of transnational welfare outreach, bringing millions of fiscally dependent individuals into the United States. This policy needs to be changed. U.S. immigration policy should encourage high-skill immigration and strictly limit low-skilled immigration. In general, government policy should limit immigration to those who will be net fiscal contributors, avoiding those who will increase poverty and impose new costs on overburdened U.S. taxpayers.
Current legislative proposals that would grant amnesty to illegal immigrants and increase future low-skilled immigration represent the largest expansion of the welfare state in thirty years. Such proposals would increase poverty in the United States, both in the short-term and long-term, and dramatically increase the burden on U.S. taxpayers.
To reiterate the core principles of policy reform outlined above, we need to have an immigration policy that is beneficial to Americans and that helps U.S. citizens achieve the American dream. Americans should determine U.S. immigration policy for their benefit; our policy should not be determined unilaterally by those from abroad who choose to violate our laws.