As state and local governments grapple with budget deficits brought on by the economic recession, some are blaming immigrants – particularly undocumented immigrants. According to this flawed reasoning, if the tax contributions of immigrants in general, or undocumented immigrants in particular, don't cover the costs of the public services they utilize in a single year, then immigrants must be a financial "burden" on the majority of taxpayers.
However, by this measure, nearly all native-born children, retirees and unemployed workers also qualify as economic "burdens." A realistic accounting of the economic "value" of a person must include the contributions made over a lifetime as a worker, consumer and taxpayer. Yet most of the studies that claim to demonstrate that immigrants are a net "cost" to the economy usually rely on one-year "snapshots" of the immigrant population that fail to account for the incomes and tax contributions of immigrants over time. Most such studies count the education and care of the U.S.-born children of immigrants as "costs" incurred by immigrant households, even though these same children are classified as "natives" when they are taxpaying adults. And few of these studies consider economic contributions such as consumer purchasing power and the formation of businesses, which create new jobs and generate additional tax revenue.
The economic contributions of immigrants, and their children, come in many forms in California.
The California Immigrant Policy Center estimates that the state's immigrants pay $30 billion in federal taxes, $5.2 billion in state income taxes, and $4.6 billion in sales taxes each year.
The Selig Center for Economic Growth calculates that the purchasing power of Latino and Asian consumers in California totaled $412 billion in 2008 – nearly one-third of the state's total purchasing power.
The U.S. Census Bureau found that California businesses owned by Latinos and Asians constituted more than one-quarter of all businesses in the state as of 2002, employing 1.2 million people and generating sales and receipts of $183 billion.
When it comes to undocumented immigration, there is another crucial economic question: What would cost more, deporting 12 million undocumented immigrants, or offering them a pathway to legal status? The "deport them all" option would cost hundreds of billions of dollars and remove workers, taxpayers, and consumers from the economy during a recession. A legalization program would increase the tax contributions and purchasing power of formerly undocumented workers and consumers, while avoiding the economic and human costs of large-scale deportations. Which of these alternatives makes the most economic sense?
Walter Ewing is a senior researcher at the Immigration Policy Center in Washington, D.C.
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