Study Says Illegal Immigrants Cost U.S. $10 Billion a Year; Analysis Is Disputed

Illegal immigrants cost the federal government more than $10 billion a year, and a program to legalize them would nearly triple the figure, a study released Wednesday said.

The analysis by the Center for Immigration Studies, which opposes efforts to legalize the estimated 8 million to 12 million undocumented immigrants in the United States, comes as Republicans are bracing for a fight over immigration at their convention next week in New York.

Some conservatives are pushing for language in the GOP platform that strongly opposes amnesty for illegal immigrants. But business-oriented Republicans want to significantly loosen immigration restrictions.

In the middle is President Bush, who has proposed a guest-worker program that would grant temporary legal status to undocumented immigrants, the majority of whom are from Mexico.

“The fundamental problem is that the modern American economy is based on skills, and that makes it very difficult to bring unskilled workers in and not sock taxpayers with a huge cost,” said political scientist Steven A. Camarota, research director at the Washington center and author of the report.

“The fiscal impact of a legalization program needs to be an important consideration,” he said.

Other researchers challenged some of the study’s assumptions about what illegal immigrants cost the government.

Based on census data for 2002, the report compared households headed by undocumented immigrants with those headed by citizens and legal residents. Federal benefits for U.S.-born children of undocumented immigrants were counted as a cost of illegal migration.

The study included findings that ran counter to commonly held stereotypes. For example, it concluded that illegal immigrants did not constitute a significant drain on welfare programs, receiving much less in social services than citizens and legal residents.

However, it found that undocumented immigrants paid nearly 75% less per household in federal taxes, on average. Some work off the books, but the majority who pay taxes are unskilled, low-wage workers with little income tax liability.

“The primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their ... heavy use of most social services,” the study said. “The vast majority of illegals hold jobs. Thus, the fiscal deficit they create for the federal government is not the result of an unwillingness to work.”

The study estimated the costs of illegal immigration by calculating the migrants’ share of specific federal programs, among them Medicaid, food assistance and subsidies for hospitals that treat uninsured patients. It also assigned to illegal immigrants a proportional share of general government costs.

The report found that federal programs for the elderly benefited from illegal immigration. Social Security and Medicare reap a $7-billion annual windfall from payroll taxes paid by undocumented workers. That accounts for about 4% of the total annual surplus of the two programs.

But the balance sheet may shift in the other direction. Under a recent agreement, retirees in Mexico will be able to claim credit for taxes paid into Social Security while they worked in the United States.

Legalizing undocumented immigrants would bring them out of the underground economy and increase the amount they pay into Treasury coffers. But it could also make them eligible for more government benefits.

The study estimated that paying for added benefits would swamp any increase in tax collections, increasing the net cost to the federal government to $29 billion a year.

A leading immigration researcher challenged the study.

Jeffrey S. Passel, a demographer at the Urban Institute, a Washington nonprofit economic and social policy research organization, said a significant share of the costs attributed to illegal immigrants represented general expenses on domestic programs. The government would incur the costs -- for such things as building roads and paying bureaucrats’ salaries -- with or without the presence of undocumented workers.

“Most of that money is not money that would be saved if you could magically make these people disappear,” Passel said.