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Taxes… Someone’s Gotta Pay ‘em

April 16, 2010 - Posted by Maurice Belanger

Tax form

Yesterday, while the tea party turned out to protest their taxes, there were counter-demonstrations, of a sort, by immigrants who were telling us, "Bring 'em on!" 

Most of the media focus on tax day is on people who complain about their taxes.  This year, there was an effort by advocates for immigrants to show that, not only are immigrants willing to contribute, but comprehensive immigration reform, according to the Immigration Policy Center and the Center for American Progress, is predicted to result in an increase of as much as $5.4 billion in additional tax revenue for the U.S. within a three-year period.  This is for a variety of reasons, including bringing some immigrants working in the underground economy on to the tax rolls, and the prospect that some immigrants would move into more stable jobs with higher pay.  One of the actions advocates carried out yesterday was a visit to the office of Senator Kay Bailey Hutchison with box loads of blank tax forms representing taxes that could be added to the treasury if only Congress would pass comprehensive immigration reform.

While loving taxes might be a bit of a stretch, it is impressive the extent to which undocumented immigrants, who are ordinarily not made to feel welcome in their encounters with the government, are nevertheless determined to figure out how to interact with the government to pay their taxes.  An article from the Associated Press from 2007 looked in to some empirical measurements:

"One measure of the immigrant market is the growth of Individual Taxpayer Identification Numbers, or ITINs, which the IRS issues to immigrants to use on their tax forms instead of Social Security numbers.

Last year [2006], the IRS issued 1.5 million ITINs, the most since the program was started in 1996 and a 30 percent increase from the 1.2 million issued in 2005. In total, the agency has issued 10.8 million ITINs since the program began [though not all have gone to immigrants in the U.S.]."

ITINS are issued to persons who are not entitled to Social Security numbers.  Most are thought to be issued to undocumented immigrants.

Why do they bother?  Eric Jiminez, an undocumented immigrant from Nashville, told the Associated Press in this article from USA Today that he knows nothing would happen to him if he didn't pay his taxes, but,

"I have an idea, a mentality, that to be a good citizen you have to pay taxes," he said. "Also, I'm conscious of the fact that the money we pay in taxes supports the schools and all the public services."

The Social Security Administration has estimated that about three-quarters of undocumented immigrant workers pay in to the Social Security and Medicare system, even though they are not eligible to receive benefits.  In 2005, most of the $9 billion in taxes paid into the Social Security system that could not be matched to a legitimate Social Security account was thought to have come from taxes paid by undocumented immigrants.

The tax impact of immigrants, however, comes from more than their individual payments.  It comes from the prosperity they bring to the communities in which they reside.  A new study by the Fiscal Policy Institute (summarized in this article in the New York Times) provides some interesting data on immigrants in the 25 largest U.S. metropolitan areas.  The article notes that, contrary to the popular image that recent immigration has flooded the U.S. with low-wage workers,

"…the 25 million immigrants who live in the country’s largest metropolitan areas (about two-thirds of all immigrants in the country) are nearly evenly distributed across the job and income spectrum."

Even more intriguing, the cities with the greatest economic growth were not the ones that attracted primarily high-skilled immigrants.

"…the fastest economic growth between 1990 and 2008 was in cities like Atlanta, Denver and Phoenix that received large influxes of immigrants with a mix of occupations — including many in lower-paid service and blue-collar jobs."

For example,

"In metropolitan Denver, where the economy doubled between 1990 and 2008, 63 percent of immigrants worked in jobs on the lower end of the pay scale."

As the report notes,

"Immigration is part of the story of economic growth. Immigrants are drawn by economic expansion, and once they are in a metro area they earn and spend money, expand consumer demand, start small businesses to meet new needs, and fuel further growth."

That new prosperity leads to more tax revenue.

We are going to need more taxpayers, because our society is aging and unprecedented numbers are retiring from the workforce. 

Immigrants tend to be younger than the population as a whole, and have their prime earning years ahead of them.

On the other hand, people who identify themselves as supporters of the tea party, according to a New York Times survey tend to be older than 45.  Many of them are drawing Social Security benefits, or soon will be.  We need workers paying in to the system so that these tea party activists can continue to draw the benefits to which they are entitled.  One tea party supporter interviewed for the survey was asked what she thought about her advocacy for smaller government while she was drawing Social Security.  She told the interviewer,

"I guess I want smaller government and my Social Security."

Good thing for her that there are immigrants who want to be a part of our country and pay their taxes.

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