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Immigration Reform Would Be A Boon To Federal And State Economies

By Marina Fang, Guest Contributor on July 10, 2013 at 2:30 pm

"Immigration Reform Would Be A Boon To Federal And State Economies"

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Two new reports released today illustrate that granting a path to citizenship for 11 million undocumented immigrants would lead to numerous economic benefits on the federal, state, and local levels, ranging from higher productivity to better fiscal stability.

The reports come as the House of Representatives debates the immigration reform bill passed by the Senate on June 27. Many Republicans have denounced the bill and pledged to vote against it because they oppose granting citizenship for undocumented immigrants.

But both reports enumerate how undocumented immigrants, if they gained legal status, would positively contribute to the economy. The first, from the Executive Office of the President (EOP), finds that the Senate bill would strengthen the national economy and increase real GDP by $700 billion in 2023, or 3.3 percent. The second, from the Institute on Taxation and Economic Policy, asserts that state and local governments would gain $2 billion per year in tax revenues from undocumented immigrants if they were allowed to become citizens.

The EOP’s report, prepared by the National Economic Council, the Domestic Policy Council, the President’s Council of Economic Advisers, and the Office of Management and Budget, finds that giving undocumented immigrants citizenship would increase their productivity and spur more job growth, particularly given that immigrants tend to be highly self-motivated.

The report also emphasizes that granting undocumented immigrants legal status would equally benefit American workers, because an increase in productivity will result in higher wages overall:

CBO determined that the bipartisan Senate bill would boost overall productivity by 0.7 percent in 2023 and by 1 percent in 2033, which would in turn boost GDP per capita, increase wages at all skill levels, and raise the return on investment—improvements that benefit all U.S. workers.

The bill’s benefits to the country’s fiscal health may appeal to skeptical Republicans. According to the Congressional Budget Office, the Senate bill would cut the federal budget deficit by nearly $850 billion over the next 20 years, largely due to tax revenue from the 11 million undocumented immigrants who would become citizens as a result of the bill. It would also reduce federal debt by about seven percent by 2033, compared to today’s levels.


And with more workers paying into the Social Security system, the bill would also strengthen Social Security for all Americans:

Enacting the Senate immigration reform bill will add nearly $300 billion to the Social Security Trust Fund over the next decade—reducing the Social Security shortfall by nearly half a trillion dollars over the next 75 years (0.21 percent of taxable payroll), and extending the life of the Trust Fund by two years.

The Institute on Taxation and Economic Policy’s report drew from a state-by-state examination of income, sales, excise, and property taxes. Undocumented immigrants already pay $10.6 billion annually in taxes to state and local governments. This number would only increase if they were given legal status, because they would likely receive higher wages and therefore would pay more in income taxes. Overall, the report calculated that undocumented immigrants currently pay on average about 6.4 percent of their income in state and local taxes, which would rise to 7 percent if they become citizens.

On Wednesday, House Republicans met over the question of whether to support a path to citizenship for undocumented immigrants because they fear an influx of immigrants flooding the border. Yet a different CBO report found last week that the Senate’s bill would decrease illegal border crossings by as much as 50 percent. Nevertheless, many House Republicans have vowed to obstruct the bill’s passage, and House Speaker John Boehner (R-OH) has said he will not bring it to a vote if a majority of Republicans do not support it.

Marina Fang is an intern for ThinkProgress.

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