The Immigration Smoke Screen

Harry Pollard

[Reprinted from The InterStudent Review, September 1993]

On August 9th, Governor Wilson seemed to declare war on Illegal Immigration. Echoing the sentiments of many citizens, he sent an open letter to President Clinton demanding greater federal control over U.S. borders, and outlined a "strategy" which would require changing the U.S. Constitution. He wants to deny citizenship to children born of illegal immigrants. He also proposed to eliminate other incentives to illegal immigration such as education and health care by requiring legal immigrants to carry tamper-proof identity cards to enjoy such services. The Clinton Administration is also exploring the feasibility of national identity cards.

Such measures are reminiscent of Orwell's 1984 and the former Soviet Union - the so-called Worker's State, meaning a totalitarian hell. Still, one wonders how these incentives, if abolished, would dissuade a single migrant given the fact that economic opportunity is the fundamental reason for illegal immigration. As long as natives and legal Immigrants fail to satisfy the demand for labor, employers will continue to hire illegals. If one employer hires illegal immigrants he can be stopped, but what if tens of thousands of employers are hiring? Short of hiring legions of INS workers (at taxpayers expense, of course), or completely militarizing the borders, there's little hope of stopping these Job-seekers. Laughable measures such as Senator Dianne Feinstein's proposal to charge a $1 border toll at the U.S.-Mexican crossing to help pay for border patrol will probably have no significant effect. (The border is 2,000 miles long.)

During the 1980s about 8.9 million immigrants came to the United States. The 1990 immigration law permits 700,000 immigrants to enter the country each year. America still permits more legal immigrants than the rest of the world combined. But no one knows exactly how many immigrants enter the country illegally. The U.S. Immigration and Naturalization Service estimates about 300,000 each year. The Clinton White House estimates that about 3 million people live In the U.S. illegally from China, Mexico, Ireland, Nigeria, and India. Other special interest groups say there are 6 million people living illegally in the country. According to the The Economist, there are 1.3 million undocumented immigrants living in California.

One of the prevailing arguments against illegals, if you can call it an argument, is that illegal immigrants use up more government services than they contribute in taxes. Some estimates put the annual cost to the state at $5 billion, of which $1.2 billion goes to the prisons, where illegal immigrants are about 15% of inmates.

A recent Los Angeles County report calculated that Immigrant-related revenues to the county were $139 million as against costs of $940 million. While local immigrants appear to pay little to the county, which provides hospital care and social services, they reportedly pay out some $4.3 billion in taxes to all levels of government - $2.6 billion (60%) to the federal government, $1.2 billion (29%) to state government; $350 million (8%) to local entities, and $139 million (3%) to the county. What they pay in federal, state and local taxes, is quadruple their local costs. This suggests a problem with our tax system, not immigrants. The Los Angeles study has a major shortcoming, according to Julian L. Simon of the University of Maryland and author of The Economic Consequences of Immigration. In a recent Wall Street Journal article he wrote: It considers only those immigrants who arrived after 1980. It lumps earlier immigrants - those who make the largest tax contributions - into the same category as natives. This group of earlier immigrants is particularly productive and puts a great deal more into the system that it takes out.

Mr. Simon has had to face a steady barrage of criticism. Most recently, he was challenged by Michael D. Antonovich, one of the Los Angeles County Board of Supervisors. Antonovich said Simon is engaging in a "childish smear tactic of substituting name calling for reasoned argument," and that the net impact of illegal immigrants on the county budget has been "catastrophic".

Another argument against immigrants is that they abuse the welfare system. Simon refutes this claim as well:

The most important fact about immigrants is that they typically arrive when they are young and healthy. Hence they use fewer welfare services on average than do native families. New cohorts do not receive expensive Social Security, Medicare and other aid to the aged. And for its first several decades in America, the average immigrant family pays more taxes than does the average native family. Altogether, the immigrant family contributes yearly abut $2,500 more in taxes to public coffers than it obtains in services.

Why does the Los Angeles County study show that immigrants cost the county more than they collect in local taxes? The reason is that most all illegal immigrants probably own little or no land in the county. However they certainly pay rent. (It is not uncommon for low wage families to pay 50% or more of their income for rent alone.) This revenue gets collected by slumlords who in turn pay property taxes. The fact that property tax revenues are low is no fault of illegal Immigrants. We can blame the generation that enacted Proposition 13 for that!

Land rents, which result from public improvements and the increase in population should be considered natural government revenue, rather than having to tax Labor and Capital. Because of the relatively low assessment on land under Proposition 13, land rents are currently either imputed to the owners (in the form of increased "equity") and/or paid out by tenants in the form of commercial, apartment and housing rent. (Part is Economic Rent, meaning for Land, the other is really Interest for the use of Capital, such as an apartment or house.) Most of the income enriches slumlords, and is not passed on to pay for basic government services as it should be. Therefore, the accusation that illegal immigrants aren't paying their fair share of taxes is really a question of the current property tax and serves to illustrate the concentration of land-ownership in California. This is an issue for our state legislators and the greater voting populace, who know full well that immigrants are indeed paying a considerable share - to slumlords. If county revenues paid by illegal immigrants are "down" its because the revenue collected from the property tax (which assesses land and improvements together) is low, but the amount of rent retained by landowners is high.

Furthermore, if the bulk of income tax revenues are being sent to Washington, this is another issue that should irk all people, but no reason to pinpoint illegal immigrants, who are hardworking and struggling to survive at subsistence level wages.

Common sense aside, many people in the country have turned cold on the immigrant question. A recent Gallup poll found 65% of Americans in favor of tighter controls.

Another traditional accusation is that immigrants hurt the job prospects for poor inner-city minorities such as blacks. But Thomas Muller of the Urban Institute, in his recent work, Immigrants and the American City, has pointed out that the influence of immigrants on blacks has been for the good since they've mostly displaced them from General Level type jobs into better-paid occupations. Mr. Mueller found that in West Coast metropolitan areas "black unemployment rates are not increased - if anything they are lowered - by a rise in the proportion of Mexican Immigrants." According to a recent Wall Street Journal article, Gregory De-Freitas of Hofstra University used the 1980 Census data to show that Hispanic immigrants, many of them illegal, had no "discernible negative effect on unemployment." Yet certainly the unskilled poor, regardless of origin, have historically always competed for low-wage Jobs. Nonetheless, Joseph G. Altonji of Northwestern University and David Card of Princeton, who studied the effects of immigrants on less-skilled natives in various cities in 1970 and 1980 concluded: "We find little evidence that inflows of immigrants are associated with large or systemic effects on the employment or unemployment rates of less-skilled natives."

But the fact remains: most native born Americans, be they high school graduates or whatever, won't pick vegetables, work in sweatshops, or as domestic housekeepers. Language alone may insure them slightly better Job opportunities. Perhaps we should be asking why, in such a comparatively rich country as ours, there should be any low wage jobs at all. Poverty in America cuts much deeper than any arguments over illegal immigration. Conditions in the inner-cities and rural America rival that of some Third World countries. And while it is true that "the dog under the rich man's table eats better than the one under the poor man's," some 27 million Americans are living on food stamps. Millions are looking for Jobs. Why aren't millions of Jobs looking for people? The whole issue of illegal immigration is a smoke screen hiding more systemic problems. A scapegoat is no substitute for real analysis, but it does fan the flames of ignorant nativism.

If we're concerned about the costs paid out to service Immigrants, perhaps we should direct our attention to where much of the local revenue goes that immigrants pay to live here. A closer look will reveal that landholders are pocketing the lion's share in rent which the immigrants are generating through their work.

It Is foolish to accuse immigrants of "taking" Jobs away, since they only add to the general productivity of society by spending their earnings on the output of other workers, thus generating more employment. If we would make society healthy, and adequately supply local governments with the revenues required for essential services in an expanding economy, then we must recover the natural source of income which results from that very growth. This source is called Economic Rent.

"This country has greatly benefited from its immigrants for 200 years," said President Clinton, but "we should not allow aversion to illegal immigration to create an aversion to legal immigration."

However, it seems that if we're truly concerned about the sheer illegality of nightly border crossings, then we should consider the economic barriers to a more prosperous Mexico and world economy. The answer is free trade.

Sources

"At America's Door," The Economist, 7/24/93.

"They're Coming," The Economist, 7/24/93.

James Flanlgan, "Blaming Immigrants Won't Solve Economic Woes," L.A. Times, 8/15/93.

David Lauter and John Broder, "Clinton Differs With Wilson Ideas on Immigration," L.A. Times, 8/13/93.

Patrick Lee, "Studies Challenge View That Immigrants Harm Economy," L.A. Times, 8/13/93.

Julian L. Simon, "The Nativlsts Are Wrong." The Wall Street Journal, 8/4/93.

Michael D. Antonovich, Letters to the Editor, The Wall Street Journal, 9/10/93.

Bill Stall and Patrick J. McDonnell, "Wil- son Urges Stiff Penalties to Deter Illegal Immigrants," L.A.Tlmes, 8/10/93.

Richard G. Polanco, "Cut the Rhetoric and Work on Solutions," L.A. Times, 8/13/93.