A Potential Windfall Waits Outside the Golden Door : Immigration: Raise the quota for legal immigrants, and watch the Treasury swell with billions in new payroll taxes.

With Congress desperately seeking politically painless ways to raise federal revenues, it was probably inevitable that legislators would eventually stumble on the latest scheme: tax immigrants.

An immigrant tax is the brainchild of Rep. Bruce A. Morrison (D-Conn.), chairman of the House immigration subcommittee. His bill to reform legal immigration, which is headed for House debate next week, would raise immigration quotas from 550,000 to about 800,000 per year and impose a fee of up to $1,000 on employers for every immigrant they sponsor or transfer to work in the United States.

With this bill, dubbed the “Pole tax,” Congress has indeed stumbled inadvertently on a fail-safe way to pump billions of dollars into the federal Treasury. But it achieves this objective by letting more immigrants in, not by taxing them.

According to Census Bureau data, almost two-thirds of all immigrants come to America between the ages of 16 and 45. Partly as a result of this working-age profile, and partly because of their higher productivity and economic success compared to the U.S.-born population, immigrants, on average, pay more in income, sales, property and excise taxes than they use in public services.

One prominent study, conducted for the 1980 Select Commission on Immigration, calculated that, on average, the net windfall to the government for each additional immigrant family is $10,000 to $20,000 over the members’ lifetime. The cumulative impact of raising immigration quotas by 250,000 per year would be tens of billions of dollars in reduced federal deficits bythe end of the century--a fiscal policy bonanza.

Consider the impact from increased immigration on the most politically sensitive of programs: Social Security. The Social Security Administration calculates that every additional 100,000 legal immigrants raise receipts and the net balance in the trust fund by about 0.1% of taxable payroll over their lifetime. Using this rule-of-thumb estimate, a recent report from the Alexis de Tocqueville Institution finds that the net value (in 1991 dollars) of an increase in immigration to 1 million per year for 50 years is $292 billion. No other conceivable investment that the government could make during the budget summit or in legislation would render this kind of dividend.

Raising immigration levels has a cumulative positive effect on the Social Security trust fund over time.

For instance, if immigration were permanently raised this year by, say, 300,000 new workers per year, after 10 years there would be roughly 3 million additional workers and after 30 years roughly 9 million contributing billions in extra payroll taxes. This means that a permanent hike in the immigration level today would result in sharply climbing Social Security receipts at least through the year 2020--precisely when the baby-boomers begin retiring and new revenues will be most urgently sought.

Of course, the immigrants themselves will eventually retire, but their own Social Security benefits will be roughly offset by the tax payments of their children--leaving a one-generation windfall to the retirement system.

The message for Congress is clear: America needs to raise its gates to allow the entry of more taxpaying immigrants. What we don’t need is a tollbooth at the base of the Statue of Liberty. Scrap the $1,000 levy and let time bring the Treasury the rewards of a larger immigrant-worker pool.