The Cost Illegal Immigration

A 2007 review of the academic literature by the nonpartisan CongressiEonalBudget Office (CBO) found that “over the past two decades, most efforts to estimate the fiscal impact of immigration in the United States have concluded that, in aggregate and over the long term, tax revenues of all types generated by immigrants—both legal and unauthorized—exceed the cost of the services they use.” While the overall fiscal impact on the US is beneficial, unauthorized immigrants have an adverse impact on the budgets of state and local governments. While cautioning that the reports are not asuitable basis for developing an aggregate national effect across all states, they concluded that:[20]

“State and local governments incur costs for providing services to unauthorized immigrants and have limited options for avoiding or minimizing those costs”;

“The amount that state and local governments spend on services for unauthorized immigrants represents a small percentage of the total amount spent by those governments to provide such services to residents in their jurisdictions”;

“The tax revenues that unauthorized immigrants generate for state and local governments do not offset the total cost of services provided to those immigrants”;

and “Federal aid programs offer resources to state and local governments that provide services to unauthorized immigrants, but those funds do not fully cover the costs incurred by those governments.”

IRS estimates that about 6 million unauthorized immigrants file individual income tax returns each year.[20] Research reviewed by the nonpartisan Congressional Budget Office indicates that between 50 percent and 75 percent of unauthorized immigrants pay federal, state, and local taxes.[20] Illegal immigrants are estimated to pay in about $7 billion per year into Social Security.[21] In addition, they spend billions of dollars per year, which supports the US economy and helps to create new jobs. The Texas State Comptroller reported in 2006 that the 1.4 million unauthorized immigrants in Texas added almost $18 billion to the gross state product, and contributed $1.58 billion in state revenue, while costing the state about $1.16 billion in services used.[22]

The Social Security and Medicare contributions of illegal immigrants directly support older Americans, as illegal immigrants are not eligible to receive these services, although their children born in the United States are eligible for such benefits.[23] Illegal immigrants pay social security payroll taxes but are not eligible for benefits. During 2006, Standard & Poor’s analysts wrote: “Each year, for example, the U.S. Social Security Administration maintains roughly $6 billion to $7 billion of Social Security contributions in an “earnings suspense file”—an account for W-2 tax forms that cannot be matched to the correct Social Security number. The vast majority of these numbers are attributable to undocumented workers who will never claim their benefits. For 2010, the Social Security Administration estimated that unauthorized immigrants and their employers paid $13 billion in required social security payroll taxes.[24]

The Social Security Administration has stated that it believes unauthorized work by non-citizens is a major cause of wage items being posted as erroneous wage reports instead of on an individual’s earnings record.[25] When Social Security numbers are already inuse; names do not match the numbers or the numbers are fake, or the person of record is too old, young, dead etc., the earnings reported to the Social Security Agency are put in an Earnings Suspense file. The Social Security spends about $100 million a year and corrects all but about 2% of these. From tax years 1937 through 2003 the ESF had accumulated about 255 million mismatched wage reports, representing $520 billion in wages and about $75 billion in employment taxes paid into the over $1.5 trillion in the Social Security Trust funds. As of October 2005, approximately 8.8 million wage reports, representing $57.8 billion in wages remained unresolved in the suspense file for tax year 2003.[25]

Estimates indicate that about 4% of the school-age population is made up of children who are illegal immigrants.[26] Many require remedial assistance in language skills, which increases costs to the public schools. During April 2006, Standard & Poor’s analysts wrote: “Local school districts are estimated to educate 1.8 million undocumented children. At an average annual cost of $7,500 (averages vary by jurisdiction) per student, the cost of providing education to these children is about $11.2 billion.” Other estimates of the costs to educate unauthorized children and US-born children of unauthorized immigrants reached $30 billion in 2009.[27]