The Fiscal and Economic Impact of Administrative Amnesty Examining the implications for public coffers and American workers When thinking about the fiscal impact of immigrants taxes they pay minus the costs they create for government there is agreement that individuals (immigrant or native) with modest levels of education and resulting lower incomes are a net fiscal drain, paying less in taxes than they use in services. In contrast, more educated individuals (immigrant or native) earn higher incomes and are a net fiscal benefit. Prior research indicates that illegal immigrants have about a tenth-grade education on average. Given the education level of those likely to receive the Deferred Action for Parents of Americans (DAPA), it seems certain that allowing them to remain in the country will be costly to taxpayers. The DAPA amnesty will likely increase the cost to taxpayers as DAPA recipients will become eligible for more means-tested programs, such as the Earned Income Tax Credit and the Additional Child tax Credit. Any hoped-for increase in tax revenues from DAPA recipients would be offset by the added costs of such programs. It must be remembered that the costs stem not from the fact that illegal immigrants do not work, but rather their education levels, which result in low average incomes and low average tax payments. Their low incomes also mean that they or, more often, their U.S.-born children are eligible for means-tested programs. As for the impact on American workers, we can expect that, once given work authorization, illegal immigrants will become more likely to find relatively better-paying jobs that are currently off-limits to illegal immigrants because they require background checks and valid Social Security numbers. These include security guards, screeners, janitors, groundskeepers, and clerks employed in the public sector. This may benefit the illegal immigrants, but it also means native-born Americans and legal immigrants will face more job competition for the shrinking pool of better-paying jobs available to the less educated. Further, the Affordable Care Act (ACA) requires employers to pay a tax (penalty) if they do not provide health insurance. As amnesty beneficiaries are not covered by the ACA, this could create an incentive to hire illegal immigrants and avoid the penalty. Introduction In November 2014, the Obama administration announced its program to give legal status, including work authorization, identity documents, and other benefits to perhaps four million illegal immigrants.1 The Deferred Action for Parents of Americans (DAPA) program is for parents who have children who are legal immigrants or were born in the United States. This grant of administrative amnesty expands one the Administration granted to roughly two million other illegal immigrants in June 2012, referred to as Deferred Action for Childhood Arrivals (DACA). When considering the fiscal and economic considerations of DAPA, the most important fact to remember is that a very large share of illegal immigrants have modest levels of education. Prior research, as well as common sense, indicates that persons with this level of education (immigrant or native-born) create a large fiscal drain using more in services than they pay in taxes. Their education level also means that they will generally compete with less-educated, poorer Americans for jobs. Fiscal Costs Understanding the Fiscal Impact of the Less Educated. In our own research, we estimated that 54 percent of adult illegal immigrants have not completed high school, 25 percent have only a high school degree, and 21 percent have education beyond high school.2 The Heritage Foundation in its 2013 study of illegal immigration estimated that, on average, illegal immigrants have a tenth-grade education.3 The Pew Hispanic Center has estimated that 47 percent of illegal immigrants have not completed high school and 27 percent have only a high school education.4 The education level of this population is key to understanding why illegal immigrants as a group do not pay enough in taxes to cover their consumption of public services. Table 1 reports important characteristics of adult immigrants and natives by education level based on Census Bureau Data from 2014. The table makes no assumptions about legal status and instead simply reports what the immigrants and natives told the Census Bureau about their income, welfare use, and other measures of socio-economic status. TABLE 1 Continue -> http://cis.org/Testimony/Camarota-Economics-Cost-DAPA Yippie, there'as also a video.
