Immigrants Are a Boon to Economy, Study Says

Immigrants are a net boon to the national economy, having paid $162 billion in taxes last year and providing crucial support for the troubled Social Security system, according to a study scheduled for release today.

Sponsored by an immigration advocacy group and a libertarian think tank that supports loose borders, the report synthesizes about 30 recent studies on the fiscal impact of immigration and offers some original research. It says that high levels of immigration result in a massive transfer of wealth to the United States, and that the influx of young workers will help pay retirement benefits to aging baby boomers.

But although the federal government profits from immigration, cities and states with large foreign-born populations--led by Los Angeles and California--suffer, the report says. That is because immigrants get half of their public services at the local level, while 70 cents of every tax dollar goes to Washington.

The report by the Cato Institute think tank and the National Immigration Forum found that the foreign-born pay a disproportionately low amount of taxes: Immigrants make up more than 9% of the population, but accounted for 8.3% of the taxes paid.

But overall, “all of these findings lead to one inescapable conclusion about the fiscal impact of the new immigrants: They do not cost--they pay,” economist Stephen Moore wrote in the report, a copy of which was provided to The Times. “The net fiscal impact is positive.”

The report is the latest in a series of high-profile attempts at a cost-benefit analysis of immigration, and comes in a highly charged political atmosphere. There is little consensus--one recent study asserted that immigrants pump an extra $10 billion into the economy each year, but another said they are a $12-billion drag on the nation.

“This is junk science,” Dan Stein of the Federation for American Immigration Reform said after reading the latest 28-page study. “Its purpose is to mislead policymakers by perpetuating confusion to produce inertia. . . . It’s a piece of propaganda.”

Frank Sharry of the National Immigration Forum, the study’s co-sponsor, contends that the new analysis is “the immigrant opponent’s worst nightmare.”

“Five years ago, these folks were saying that immigrants hurt the economy, cause unemployment and drain budgets. We now have the strongest economy in the world, the lowest unemployment in a generation--at the same time we have generous levels of immigration,” Sharry said. “They’ve been proven wrong by the facts. If I were them, I’d be upset, too.”

In large part, the new report regurgitates findings of other researchers, often juxtaposing them against one another to make a new point. It estimates that the nation’s 25 million legal and illegal immigrants each contribute $20,000 to $80,000 more in taxes than they use in services over their lifetimes, and says that families with naturalized citizens pay about $1,500 more annually in federal taxes than native-born families.

Like others, the authors emphasize that higher-skilled immigrants who can speak English fare better once in the United States and are less likely to rely on government programs, but add that all immigrants tend to become net contributors to the economy after 10 to 15 years.

Among the key new arguments is a focus on the age profile of immigrants, which the report says “makes them a fiscal bargain for native-born U.S. taxpayers.”

Because 70% of immigrants are 18 or older, the report argues, the nation has saved $1.43 trillion by inheriting workers whose schooling was paid for by other countries. Further, because only 3% of immigrants are over 65--compared with 12% of Americans overall--the net benefit to the Social Security system will be nearly $500 billion by 2022.

“We’re getting these immigrants right when they’re starting their productive working years--I get mystified by how some economists could say this is not a good deal for the United States,” Moore said. Stein and other critics said that because immigrants have higher birth rates than natives, any benefit to the retirement system is offset by the high cost of educating their children.

“It is very likely that immigrants do pay more in Social Security than they use in Social Security payments, but when you add up all the other things that they use, you get a negative effect,” said Steve Camarota, resident scholar at the Center for Immigration Studies, a conservative Washington think tank. “It doesn’t look like such a good deal overall.”

Although the new report points out immigrants’ entrepreneurial spirit, highlighting high-tech firms such as Intel and Sun Microsystems that were founded by foreigners, Camarota and Stein said that it is the large numbers of lower-skilled and uneducated immigrants--including those who come illegally--that drain public services.

Rep. Elton Gallegly (R-Simi Valley), who has been among the most outspoken critics of the cost of illegal immigrants to California and other states, refused to read the new report because it does not differentiate between immigrants who come to America legally and those who are undocumented.

Moore, the author, said he wanted to analyze only legal immigrants, but because the census simply asks people whether they were born here, their legal status was impossible to determine.

Gallegly cited a 1990-91 Los Angeles County study that showed that two-thirds of the women giving birth in public hospitals were undocumented, and said that one in four federal prisoners--whose incarceration costs $30,000 a year--also are illegal immigrants.

“The illegal immigrant takes a great deal more out than they put in,” the congressman said. “When we mix legal and illegal, I think that’s the most unconscionable thing we do because it’s not honest, it’s not accurate.”