The Immigration Debate Studies on the Economic, Demographic, and Fiscal Effects of Immigration (1998) / Chapter Skim
Currently Skimming:
5 The Current Fiscal Impact of Immigrants and Their Descendants: Beyond the Immigrant Household
5 The Current Fiscal Impact of Immigrants and Their Descendants: Beyond the Immigrant Household
Pages 183-205
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 183... ...
What would be the fiscal implications for the balance of the population? Because the fiscal impacts unfold over time, the question is intrinsically longitudinal.
|
From page 184... ...
Thus, we propose a conceptual experiment in which all the immigrants vanish in some year, along with all the descendants of those immigrants, iTaking into account the current effect of past fiscal impacts would be a complicated task because we do not know what the past fiscal impacts have been.
|
From page 185... ...
For example, when the baby boom generation retires between 2010 and 2035, payroll taxes will have to be raised or Social Security benefits reduced. The cross-sectional calculation cannot take this into account.
|
From page 186... ...
One can construct a quasi-longitudinal estimate by interpreting the fiscal impacts of householders at differing durations within the country as if they referred to the same immigrant householder over his or her life cycle (see Akbari, 1991)
|
From page 187... ...
Of these, 5.6 million are the adult children of immigrants, who presumably are not members of immigrant households. We estimate the grandchildren of still-living immigrants by estimating the number of children of the 5.6 million adult children of still-living immigrants.
|
From page 188... ...
In 1994 the cost of servicing the debt represented 14 percent of the federal budget. In a longitudinal historical formulation it would matter whether immigrants themselves were partially responsible for causing this debt to be larger or smaller through their fiscal impacts in the past.
|
From page 189... ...
Many cash and in-kind transfers such as Social Security, Medicare, Medicaid, AFDC, earned income tax credits, energy assistance, food stamps, public housing, school lunches, and unemployment benefits are included. Also included are public education at all levels and the costs of incarceration.
|
From page 190... ...
Sales taxes were estimated based on household income and immigrant status (immigrant households are assumed to remit $1,000 in income and hence pay lower sales taxes than nonimmigrant households) using an algorithm estimated 6In the case of Social Security benefits, we observed a higher frequency of "zero" responses among immigrants and lower reported benefits among those who did respond.
|
From page 191... ...
Owners of rental units are assumed to shift the majority of the property tax burden to their renters. Property taxes paid by renters were estimated by assuming that 70 percent of the tax on rental properties was borne by renters and this aggregate amount was equally divided among all renters.
|
From page 192... ...
Public goods and public debt make fiscal impacts more positive or less negative, whereas current deficit spending tends to make fiscal impacts less positive or more negative. Calculations for FY 1994 show that federal tax revenues exceeded costs for nonpublic goods by $345 billion, whereas state and local taxes exceeded total costs by $17 billion.
|
From page 193... ...
Immigrants & Immigrants & Concurrent All Concurrent All Descendants Others Descendants Others Ratio Diff Taxes Income Tax 15.7 113.1387513 0.75-126 Property Tax, Homeowners 10.4 76.1257345 0.74-88 Property Tax, Renters 5.2 23.6130107 1.2123 Sales Tax 17.6 127.8435579 0.75-144 Unemployment & Workers Comp. Contributions 4.3 27.1106123 0.86-17 Other Taxes 8.3 60.1206273 0.76-67 Total Taxes 61.5 427.91,5201,941 0.78-421 Costs of Benefits Medicaid, Institutional Medicaid, Non-institutional + Other Medical 1.1 27 65 0.42 -38 Welfare 12.349.8305226 1.3579 SSI 0.73.11714 1.223 AFDC + Other Welfare 7.728.1190127 1.4963 Food Stamps 0.31.587 1.191 Unemployment Compensation 3.318.38183 0.97-2 Worker's Compensation 1.29.33042 0.71-12 Bilingual Education 6.2 0.0 154 0 n.a.
|
From page 194... ...
. Table 5-4 reports the incremental tax burden on the residual population that is due to the presence of immigrants and their concurrent descendants.8 Results are reported separately for residual residents in the high-immigration states (Cali 8That is, the aggregate fiscal impacts of immigrants and concurrent descendants, reported in Tables 5-2 and 5-3, are divided by the size of the population that is neither immigrant nor descended from a living immigrant.
|
From page 195... ...
Immigrants Others Immigrants Others Ratio Diff Taxes Income Tax15.7113.1387513 0.75-126 Income Tax65.5477.616192166 0.75-547 Corporate Tax13.3126.7329575 0.57-246 Excise Tax5.249.8129226 0.57-97 FICA62.7398.815511809 0.86-258 SMI contribution1.010.02445 0.53-21 Other Taxes5.741.4140188 0.75-48 Total Taxes153.31,104.337935008 0.76-1215 Costs of Benefits OASDI24.7296.46121344 0.46-732 HI9.8102.6243465 0.52-222 SMI5.455.9132254 0.52-122 Medicaid, Institutional1.519.03686 0.42-50 Medicaid, Non-institutional12.249.1301223 1.3578 SSI5.022.5123102 1.2021 AFDC + Other Welfare6.624.1163109 1.4954 EITC Refund2.48.56039 1.5621 School Lunch1.75.84127 1.5514 Food Stamps5.425.9134117 1.1417 Energy Assistance0.21.647 0.56-3 Rent Subsidy2.212.25555 0.990 Public Housing0.85.41925 0.77-6 Unemployment Compensation1.16.12728 0.98-1 Refugee Aid0.40.090 n.a.9 Bilingual Education 0.2 0.0 5 0 n.a. 5 Elementary and High School 2.4 10.7 58 49 1.19 9 Public College 0.3 1.2 8 5 1.49 3 Federal Student Aid 1.6 8.0 39 36 1.07 3 Incarceration costs 0.3 2.0 7 9 0.77 -2 Federal Retirement 1.3 35.6 32 162 0.20 -130 Military Retirement 1.2 25.6 29 116 0.25 -87 Railroad Retirement O.2 4.4 5 20 0.25 -15 Congestible Goods 15.8 86.1 391 391 1.00 0 Total Costs 102.5 808.7 2535 3668 0.69 -1133 OASDHI: Taxes - Costs 28.2 -0.2 696 All Other: Taxes - Costs 22.7 295.7 562 Total: Taxes - Costs 50.9 295.5 1258 n.a.
|
From page 196... ...
But these calculations would be correct only under the strong assumption that immigrants resided in the same state as their concurrent descendants. The high rate of geographic mobility in the United States undermines any state-specific methods that include descendants of immigrants who have left their parental home.
|
From page 197... ...
Comparison of Results for Immigrants Only, Immigrant Households, and Concurrent Descendants Table 5-5 shows comparable measures of fiscal impact for the different demographic formulations of the cross-sectional conceptual experiment. In the most restrictive definition, only immigrants themselves are counted.
|
From page 198... ...
Evidently it makes a decisive difference which of the two most common demographic formulations of the problem is used. Measured impacts are strongly positive for immigrants only and strongly negative overall for immigrant households.
|
From page 199... ...
The average present value (over a 300-year horizon and expressed in 1996 dollars) of the stream of net fiscal impacts of an immigrant arriving in 1994 to state and local governments combined is -$25,000, to the federal government $105,000, and overall is $80,000 per immigrant admitted.
|
From page 200... ...
Therefore, we believe that the calculation inclusive of all concurrent descendants is most appropriate within the category of cross-sectional calculations. However, all cross-sectional calculations give the wrong answer.
|
From page 201... ...
We hope to have shown, however, that whatever the general weaknesses of the cross-sectional approach, the failure to include the effects of all concurrent descendants biases the outcome. In practice, the resulting distortions are very large and cannot be ignored.
|
From page 202... ...
Federal budget expenditure program totals for FY 1994 are taken from Budget of the United States Government, FY 1996, Analytical Perspectives (Executive Office of the President, 19961. The following lists the programs and budget item codes taken from this source: OASDI [650i, HI [570i, SMI [570i, SSI [609i, AFDC + other welfare [609 and 506i, earned income tax credit [item code 609i, school lunch [605i, food stamps [605i, energy assistance [609i, rent subsidy and public housing [604i, unemployment compensation [603i, refugee aid [609i, K-12 expenditures [501i, public college [501i, direct student aid [502i, federal retirement [602i, military retirement [602i, and railroad retirement [6011.
|
From page 203... ...
; K-12 education [EFG9-131; public college [EFG16-211; incarceration costs [EFG4-51; unemployment compensation [Y05-061; worker's compensation [Y14151; income taxes [T401; property taxes [T011; general and selective sales taxes [T09-191; unemployment compensation contributions [Y011; worker's compensation contributions [Y14-151; and other taxes that include fines and forfeits [U30i, rents [U40i, royalties [U41i, donations [U50i, lottery [U95i, miscellaneous general revenues [U99i, death and gift taxes [T50i, documentary and stock transfer taxes [T51i, severance [T53i, and miscellaneous taxes [T991.
|
From page 204... ...
8. The CPS had estimated taxes for income tax, property taxes, and payroll taxes.
|
From page 205... ...
LEE AND TIMOTHY W MILLER 205 Lee, Ronald, and Timothy Miller 1997 "The Future Fiscal Impacts of Current Immigrants." Working paper of the project on Intergenerational Transfers, Department of Demography, University of California, Berkeley.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.