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Friday, December 09, 2005

Illegal immigration

A new report by the Department of Administration says that illegal immigrants are costing the state up to $188 million a year in services like education and incarceration. Hold on now, though. According to the Star Tribune story, the report did not make any guesses as to how much money is brought into the state every year by these illegal immigrants. When I read further, though, especially the Pioneer Press article, I found some more troubling news, especially in how the state calculates the true cost of immigrants. I'm just shocked that the governor would use a completely biased report as a policy guide, aren't you? Seriously, the fact that the Department of Administration didn't even bother to make some estimates as to how much money immigrants bring in, and that news media didn't make a similar attempt, is just plain pathetic. So I guess I am going to have to do so. We'll take it in two steps: revenue first, then how the report is completely full of crap on the expenditure side.

Money comes into the state through two big conduits: sales taxes and income taxes. Sure, there are a lot of other taxes out there, but these are the biggies. If the 80,000 illegal immigrants a year pay more in taxes than they cost the state in services, this wouldn't be a drain on the state. Let's see if that is possible. The report says that "17,000 of their children" cost public schools to educate, but it doesn't say if those 17,000 are included in the 80,000 or not. To be fair, let's include them in the 80,000. That means that there are perhaps 65,000 working adults in the mix (this may be high if there are lots of unemployed immigrants out there, or it may be low if the children aren't included in the original number). I'm going to be getting information from the Minnesota Tax Incidence Study, which breaks information down into households, so let's pretend there are 32,000 households of illegal immigrants (again, that number may be high or low, but it's not completely out there).

Let's say that two adults are working, and they are making $20,000 a year each, which isn't a huge amount of money. That's $40,000 a year for the household. According to the tax incidence study, the effective sales tax rate for households of this size is about 3.3%. That means the household pays $1,320 a year in sales taxes, or $42 million for all households. Then there is the income tax. This is a bit trickier, since some immigrants don't pay any income taxes at all because they are paid under the table, while other immigrants pay too much in income taxes because they are withheld from their checks but they don't file income tax returns at the end of the year. Let's say that's another three percent or so, for another $38 million. So between sales and income taxes, the state takes in $80 million a year using my guesses. That's not an insignificant number. That also doesn't take into account property taxes, which would offset some of that education spending.

Now, how does the report cook the books on the expenditure side? To see that, you have to look at the PiPress story. According to that, the report breaks down the 17,000 children into two sets: 7,000 children who are illegal immigrants themselves, and 10,000 children who were born here to illegal immigrants, making them U.S. citizens. The second group does not belong in this report: they are citizens. It doesn't matter how your parents got here, once you are born on U.S. soil you are a citizen. So prorating the share for those 7,000 non-citizens, that means they cost the state between $60 million and $65 million a year.

Illegal immigrants also cost the state $35 million a year in health care assistance programs. But wait! The federal government pays for half of that cost. So in reality, the state pays for $17 million of it. If we were to count the federal government's share in the total, we would also have to take into account the federal income taxes that immigrants are paying.

When you add up all the real costs to the state, you get $91 million to $96 million a year, countered by maybe $80 million a year in revenues. Does that suddenly seem like a big problem? Not to me.

What does this all mean? Well, it's not too big a stretch to assume that Pawlenty, like many Republicans nationwide, is going to try to turn this into a campaign issue. One problem is that he has very little control over immigration. He said in a new release, "We need to remember that we are a nation of immigrants and we should support immigration that is legal and orderly. Unfortunately, the current system is neither and needs to be reformed." But how exactly can the governor of Minnesota reform the immigration system? He can't. The things he can do, like cut state aid to illegal immigrants, has been done already. So in reality, he can do little more than demagogue on this issue, like he has done before. I don't know if the majority of Minnesotans are really all that concerned about waves of dark-skinned people crossing our borders, though. Of course, there are some nutballs out there who are ranting and raving about it, but the recent survey showed that education, not immigration, is foremost in voters' minds.

If we are going to have a debate on immigration, let's make it realistic and based on facts.

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