Thursday, May 13, 2010

I Was Wrong About Immigration

John Maynard Keynes once was getting berated for having changed his mind on a topic. To which he famously responded, "When the facts change, I change my mind. What do you do, sir?"

Well it turns out that I got a pretty important fact wrong in my previous post on Immigration. I wrote this:
“…that illegal immigrants consume taxpayer services without themselves paying taxes is true. But this is an indictment of fiscal policy more than of immigration policy.”
My assumption here was that illegal immigrants were a drain on the welfare system, but that this fact did not justify removing them. My argument was that it justified reducing the benefits of the welfare system in order to not make it so attractive to immigrants.

But it turns out that I was wrong. Illegal immigrants are, in fact, *NOT* a drain on the welfare system, as Reason’s Shikha Dalmia pointed out over 4 years ago:
“…immigrants aren't flocking to the United States to mooch off the government. According to a study by the Urban Institute, the 1996 welfare reform effort dramatically reduced the use of welfare by undocumented immigrant households, exactly as intended. And another vital thing happened in 1996: the Internal Revenue Service began issuing identification numbers to enable illegal immigrants who don't have Social Security numbers to file taxes.… Close to 8 million of the 12 million or so illegal aliens in the country today file personal income taxes using these numbers, contributing billions to federal coffers.

…What's more, aliens who are not self-employed have Social Security and Medicare taxes automatically withheld from their paychecks. Since undocumented workers have only fake numbers, they'll never be able to collect the benefits these taxes are meant to pay for. Last year, the revenues from these fake numbers — that the Social Security administration stashes in the "earnings suspense file" — added up to 10 percent of the Social Security surplus. The file is growing, on average, by more than $50 billion a year.”
Raising taxes, either through income tax or a VAT or any way is a solution to a non-problem, becuase illegal immigrants are not, in fact, a net drain on US taxes.I was mistaken that I thought this was actually a problem that needed to be solved. What I should have said was “*if* illegal immigrants consumed taxpayer services without themselves paying taxes, it *would* be an indictment of fiscal policy more than of immigration policy.”
I regret the error. Hence the correction.