President Barack Obama and his surrogates argue that the president’s executive actions will hold illegal immigrants accountable and force them to pay their “fair share of taxes.” However there is a big question as to whether these illegal immigrants will be a net gain or loss to the Treasury.
Thursday night, President Obama announced a series of executive actions on immigration, including providing legal status to nearly five million illegal immigrants.
While part of Obama’s argument for legalizing millions of immigration law breakers is that they will now have to pay taxes, Fox Business’ Stuart Varney, Avik Roy at Forbes, and others point out that in fact many will actually be receiving money from the government because their income is so low.
“The president says you can stay and work if you pay taxes. Here’s the problem: Many of the people who are now allowed to stay do not earn enough to pay federal or state income taxes,” Varney said Friday on Fox News. “In fact they earn so little that they may be eligible for the Earned Income Tax Credit. That’s a check from the taxpayer to them in January because they earn so little.”
Varney noted that those who are allowed to stay and decide to come forward will be paying Social Security taxes. But he questioned how many would actually be coming forward to pay taxes.
“Not all of the 4.7 million will want to make that switch to start paying taxes. So on a net — net basis, Bill, this is probably not going to bring in any net new tax revenue to the government. In fact it might be a tax loss to the Treasury,” he said.
Roy, writing at Forbes, noted that the “typical beneficiary of Obama’s illegal immigration plan won’t pay net income taxes.” He reached that conclusion by looking at analysis from the Century Foundation, which estimated that in 2005 illegal immigrants, on average, earned less than $24,000 annually.
“That’s about $29,177 in 2014 dollars. According to the Congressional Budget Office, a person making that kind of money would pay negligible federal taxes, and receive around $10,000 in government benefits,” Roy wrote.
He noted that since many of the beneficiaries of Obama’s executive order are parents of U.S. citizens and legal permanent residents, he predicts many will be older and therefore could gain access to Social Security and Medicare.
“Households in the lowest income quintile,” writes the CBO, “paid less than 1 percent of all federal taxes.” But, Roy notes, they “are eligible for substantial tax credits under the Earned Income Tax Credit program.” he added.