Amnesty Will Cost U.S. Taxpayers at Least $2.6 Trillion
Published on June 6, 2007 by Robert Rector WebMemo #1490 Print PDF
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The Senate is currently considering a massive immigration reform bill, the "Secure Borders, Economic Opportunity and immigration Reform Act of 2007" (S. 1348). This bill would grant amnesty to nearly all illegal immigrants currently in the United States.
The fiscal consequences of this amnesty will vary depending on the time period analyzed. It is expected that many illegal immigrants who are currently working "off the books" and paying no direct taxes will begin to work "on the books" after receiving amnesty, and therefore tax payments will rise immediately. By contrast, under S. 1348, benefits to these immigrants from Social Security, Medicare, and most means-tested welfare programs (such as Food Stamps, public housing, and Temporary Assistance to Needy Families) will be delayed for many years. In consequence, then, the increase in taxes and fines paid by amnesty recipients may initially exceed slightly the increase in government benefits received. In the long run, however, the opposite will be true
. In particular, the cost of retirement benefits for amnesty recipients is likely to be very large. Overall, the net cost to taxpayers of retirement benefits for amnesty recipients is likely to be at least $2.6 trillion.Who Are the Illegal Immigrants?
According to the most widely accepted estimates, there were 11.5 million to 12 million illegal immigrants in the United States in the spring of 2006.[1] Because the number of illegal immigrants has, on average, increased by roughly 500,000 each year, the number of illegal immigrants in the U.S. in 2007 is probably around 12 million to 12.5 million; however, these estimates are uncertain, and the actual number of illegal immigrants may be higher.
As Chart 1 shows, some 49 percent of illegal immigrants are adult males, 35 percent are adult females, and 16 percent are foreign-born children. Living in illegal immigrant families are another 3.1 million U.S.-born children of illegal immigrant parents.[2] Because they were born inside the U.S., these children are considered citizens, not illegal immigrants.
Illegal immigrants now make up about 4 percent of the U.S. population, meaning that about one in twenty-five persons currently in the U.S. is here unlawfully. Illegal immigrants make up nearly one-third of the foreign-born population in the U.S.
As Chart 2 shows, more than half (56 percent) of illegal immigrants come from Mexico. Another 22 percent come from other Latin American countries, and 22 percent come from Asia, Europe, and Africa.[3]
Education of Illegal Immigrants.
Illegal immigrants generally have very low education levels. As Chart 3 shows, 61 percent of illegal immigrant adults lack a high school diploma, 25 percent have only a high school diploma, 5 percent have attended some college, and 9 percent are college graduates, according to the Center for immigration Studies' estimates.[4] The Pew Hispanic Center estimates slightly higher education levels: 49 percent without a high school diploma, 25 percent with a high school diploma only, 10 percent with some college, and 15 percent with college degrees.[5] Overall, 49 to 61 percent of adult illegal immigrants lack a high school diploma, compared to 9 percent of native-born adults.
Illegal Immigrants and poverty.
Because of their low education levels, illegal immigrants have a poverty rate that is roughly twice that of native-born Americans. As Chart 4 shows, the poverty rate of children in illegal immigrant families is 37 percent, compared to 17 percent among children in non-immigrant families. The poverty rate among adult illegal immigrants is 27 percent, compared to 13 percent among non-immigrant adults.
S. 1348 and the amnesty Process
The Senate's immigration reform bill would offer amnesty and a path to citizenship to the 12 million to 12.5 million illegal immigrants currently in the U.S. In addition, its lax evidentiary standards would encourage millions more to apply for amnesty fraudulently. Because there is no numeric limit on the number of amnesties that could be granted under the bill, the actual number who would receive amnesty under the bill could be far higher.
In general, under S. 1348, any person who was illegally present inside U.S. borders on January 1, 2007, is eligible for Z visa status, amnesty, and ultimately citizenship. Excluded from this rule are illegal immigrants subject to a formal deportation order issued prior to enactment of the legislation and illegal immigrants convicted of a felony or three misdemeanors prior to enactment. The amnesty process consists of four stages leading to citizenship.
Stage One: Probationary Z Visas. Within 180 days of enactment of the bill, the Secretary of Homeland Security would begin accepting applications for Z visa status from illegal immigrants. The Secretary can accept applications for up to two years. The Secretary must grant "probationary Z visa" status to all amnesty applicants who pass a background check that must be completed within one business day. Except for those failing the one-day background check, applicants will automatically be granted probationary status and issued appropriate documents on the day after their application, even if the background check has not been completed.[6]
Stage Two: Permanent Z Visas. The Secretary must issue a permanent Z visa to every applicant who is determined to have met four conditions: the individual was inside the U.S. unlawfully on January 1, 2007; has not left the U.S. for more than six months since then; is employed or is the spouse or child of an employed applicant; and has passed more thorough criminal background checks that may be required. Each Z visa is good for four years and can be renewed indefinitely for the rest of the Z visa holder's life.[7] The Secretary cannot grant permanent Z visas unless the modest enforcement trigger provisions of S. 1348 have been met.[8]
Stage Three: legal Permanent Residence (LPR).All Z visa holders who pay a $4,000 fine and pass an English test would become eligible for legal permanent residence (also known as green card status). Z visa holders must go abroad to apply for LPR status but may return to the U.S. the same day. No later than 8 years after enactment, the Secretary of Homeland Security must determine the number of Z visa holders who are eligible for legal permanent residence and grant LPR status to all such persons over the following five years at a rate of 20 percent per year.[9]
During this process, Z visa holders would be granted their own special "supplemental allocation" of green cards and would not be required to compete with other visa seekers.[10] In the 13th year after enactment, the Secretary must provide an additional allotment of green cards to Z visa holders who are qualified for Z visa status.
Stage Four: Expanded Eligibility for Government Benefits. During the initial years an immigrant is in LPR status, access to government welfare programs may be limited; however, after five years in LPR status, individuals become eligible for nearly all welfare programs. legal permanent residents may also apply for U.S. citizenship at this point.
Eligibility for Government Benefits
The following outlines eligibility for government benefits at each stage of the amnesty process. In each case in the following text, eligibility for a benefit means that the former illegal immigrant or his family member obtains the same eligibility for that program as a U.S. citizen would have; that is, he will receive the benefits if income limits and other normal eligibility standards applying to U.S. citizens are met.
Probationary and Permanent Z Visa Status. All children born within U.S. borders to illegal immigrants, Z visa holders, or legal permanent residents are automatically U.S. citizens. As such, these children are potentially eligible for all U.S. welfare benefits from the moment of birth through the rest of their lives. All children of Z visa holders (both foreign- and native-born) have the right to attend U.S. public schools and to receive Head Start and daycare assistance.[11] In addition, adult Z visa holders and their foreign-born children will be eligible for medical care under the Medicaid Disproportionate Share Program.
All individuals placed in probationary Z visa status will be given lawful Social Security numbers,[12] which makes the Z visa holder Immediately eligible for two refundable tax credits: the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). These credits provide cash welfare assistance to low-income parents. Upon receipt of a lawful Social Security number, Z visa holders will also be granted the right to earn entitlement to future Social Security and Medicare benefits. After 10 years of employment, they will become fully eligible for Social Security and Medicare benefits, although in most cases the benefits will not commence until the individual reaches age 67.
Legal Permanent Residence. Upon obtaining LPR status, the non-citizen children of former Z visa holders will become eligible for Food Stamp benefits.[13] All legal permanent residents who have a 10-year work history in the U.S. are automatically eligible for Food Stamps, Medicaid, Supplemental Security Income, Temporary Assistance for Needy Families (TANF), and other welfare programs.[14] Many legal residents without a work history are eligible for Medicaid in 22 states, including California and New York.[15] Irrespective of employment history, amnesty recipients will become eligible for 60 different federal welfare programs five years after receiving legal permanent residence.
Citizenship. After obtaining citizenship, individuals become eligible for Supplemental Security Income, a means-tested cash aid program for disabled and elderly persons.
To summarize this process, all Z visa holders will be eligible for medical care benefits under the Medicaid Disproportionate Share Program. Foreign-born children of Z visa holders will be eligible to attend public schools and receive Head Start and daycare assistance. Children born inside the U.S. to illegal immigrant parents and Z visa holders will be eligible for public schooling and all means-tested welfare programs. Many state and local governments may also provide benefits and services to Z visa holders.
Upon obtaining a probationary Z visa, amnesty applicants will receive a lawful Social Security number, which makes Z visa holders potentially eligible for the EITC and the ACTC. In addition, they will begin to earn entitlement to Social Security and Medicare benefits. Roughly eight years after enactment, amnesty recipients will begin to enter LPR status and non-citizen children will become eligible for Food Stamps. legal permanent residents with a 10-year work history in the U.S. will be eligible for most federal welfare programs subject to income limits and other admission criteria. No later than five years after receiving LPR status, amnesty recipients will be eligible for nearly all means-tested welfare programs.
The initial limitation on receipt of means-tested welfare will have only a small effect on governmental costs. welfare is only part of the benefits received by immigrant families. Moreover, the average adult amnesty recipient can be expected to live more than 50 years after receiving his Z visa. While recipients' eligibility for means-tested welfare will be constrained for the first 10 to 15 years, they will be fully eligible for welfare during the last 30 to 40 years of their lives. Use of welfare during these years is likely to be heavy.[16]
In addition, if S. 1348 is enacted, many state and local governments are likely to begin giving benefits and services to Z visa holders that are greater than those currently provided to illegal immigrants. State governors of both parties will pressure Congress to relax the eligibility restrictions barring Z visa holders from receiving most federal means-tested benefits as a way of relieving fiscal pressure on state and local governments. In the present political climate, these efforts are likely to prove successful.
The Net Retirement Costs of amnesty
Giving amnesty to illegal immigrants will greatly increase long-term costs to the taxpayer. Granting amnesty to illegal immigrants would, over time, increase their use of means-tested welfare, Social Security, and Medicare. Fiscal costs would rise in the intermediate term and increase dramatically when amnesty recipients reach retirement. Although it is difficult to provide a precise estimate, it seems likely that if 10 million adult illegal immigrants currently in the U.S. were granted amnesty, the net retirement cost to government (benefits minus taxes) could be over $2.6 trillion.
The calculation of this figure is as follows. As noted above, in 2007 there were, by the most commonly used estimates, roughly 10 million adult illegal immigrants in the U.S. Most illegal immigrants are low-skilled. On average, each elderly low-skill immigrant imposes a net cost (benefits minus taxes) on the taxpayers of about $17,000 per year. The major elements of this cost are Social Security, Medicare, and Medicaid benefits. (The figure includes federal state and local government costs.) If the government gave amnesty to 10 million adult illegal immigrants, most of them would eventually become eligible for Social Security and Medicare benefits or Supplemental Security Income and Medicaid benefits.
However, not all of the 10 million adults given amnesty would survive until retirement at age 67. Normal mortality rates would reduce the population by roughly 15 percent before age 67. That would mean 8.5 million individuals would reach age 67 and enter retirement.