By Marshall Fitz, Philip Wolgin, and Patrick Oakford
Even though the 2012 presidential election put an end to Mitt Romney’s idea that 47 percent of Americans were moochers “who are dependent upon government,” the Heritage Foundation on Monday doubled down on that thinking, releasing a report that claimed that immigration reform could cost the country $6.3 trillion.
But to believe the Heritage Foundation is to believe—as they say on page 10—that just under 70 percent of all Americans are moochers, taking more from the American economy than they pay in. Only from a starting point that claims 70 percent of Americans “take” from the economy rather than pay into it, can Heritage claim that legalized immigrants would also cost the government trillions of dollars:
Unsurprisingly, a bevy of conservative voices, including Paul Ryan, Doug Holtz-Eakin, Grover Norquist, the Cato Institute, and the Bi-Partisan Policy Institute’s Immigration Task Force (co-chaired by former governor Haley Barbour) have all come out against the study.
The fact of the matter is that Heritage’s study is fatally flawed, failing to account for any changes that might occur after legalization. Here are three examples of how Heritage misses the mark:
1. They do not account for increases in wages after legalization: Previous empirical studies of legalized immigrants (particularly the seminal 1996 Department of Labor study of the nearly 3 million unauthorized immigrants who gained legal status under the Immigration Reform and Control Act of 1986,) have found that legalized workers see a 15.1 percent increase in their wages within 5 years. Recent research has also found that citizenship leads to an addition 10 percent increase in earnings. And yet the Heritage study only includes a 5 percent increase. Higher wages and citizenship means more tax revenue, and a lower fiscal cost because immigrants will pay more taxes on their increased earnings and their increased earnings will lower the need and likelihood of using social programs.
2. They count children only in the “benefits-received” column: Heritage includes even native-born U.S. citizen children of unauthorized immigrants in their calculations, leading to large expenditures on things like public K-12 education. And yet they fail to consider any taxes that these children will pay, simply noting that “the odds that the children of unlawful immigrant, on average, will become strong net taxpayers are minimal.” But all children are “costly” when it comes to getting a public education—the implicit bargain is they pay back into the system once they graduate and become taxpayers. By discounting any of these future payments Heritage artificially inflates their overall costs.
3. They undercount current and future education levels: The Heritage Foundation report is premised on the idea that people with lower levels of education use more in benefits than they pay in taxes. So the percentage of people that Heritage counts as less educated matters. But they do not account for the fact that once legal, people have a strong incentive to get more education and training, now that they can legally work in better jobs. So even if the current undocumented population is skewed more toward people without a high school degree, the incentives to get more education in the future (especially for people who might need this education to qualify for things like the DREAM Act provision) will mean a more-educated future immigrant population. Past experience indicates that these aspiring Americans would likely take the steps needed to invest in their education. For example, a Department of Labor study that followed the cohort of immigrants that gained legal status in 1986 found that just five years later, immigrants at all levels had made investments in their education.
Taking each of these changes into account would significantly raise the amount of tax revenue paid by legalized immigrants, and minimize their costs. By failing to account for them, Heritage gives a skewed picture of the ‘cost’ to Americans from immigration reform, one that defies logic and believability.
And beyond just the direct costs and benefits from immigration, the report casually discards any possibility of indirect benefits from immigrants, as the newly legalized take their higher wages and spend them in the economy, growing demand for goods and services, helping grow businesses, and creating more economic value — all of which helps the economy. In fact providing legalization will boost the U.S. GDP by a cumulative $832 billion over ten years, creating on average 121,000 new jobs in each of those years. These are benefits Heritage does not even begin to consider, instead attempting to resurrect the divisive “moochers and makers” arguments of Romney.
Our guest bloggers are Marshall Fitz, Philip E. Wolgin, and Patrick Oakford, who study immigration at the Center for American Progress Action Fund.
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