New Heritage Report Ignores Broad Consensus on Economic Benefits of Reform

shutterstock_119137036Today, the Heritage Foundation released a report that attempts to assess the fiscal costs associated with legalizing the 11 million unauthorized individuals living in the United States. The new report is similar to a 2007 study, which was widely criticized at the time of publication and continues to be refuted today by conservatives like Republican budget hawk Paul Ryan, former head of the Congressional Budget Office under President Bush, Douglas Holtz-Eaken, anti-tax activist Grover Norquist and the libertarian Cato Institute. In addition, the Bi-Partisan Policy Institute’s Immigration Task Force (which includes Condoleeza Rice and Haley Barbour) remarked on the report after its release noting, “we strongly believe that this study’s modeling and assumptions are fundamentally flawed because they do not account for the many contributions that an appropriately reformed immigration system can afford our economy and our country.”

The 2013 Heritage report is a close redux of their 2007 fiscal analysis, which offers no examination of the economic benefits of immigration reform. Instead, the authors take a very narrow look at what the newly legalized would pay in taxes over their lifetime. What this report does do is serve as a reminder of why fiscal cost analyses cannot replace broader economic analyses. Ironically, Heritage claims to be using the methodology of a 1997 National Research Council study, which estimated that “the economic benefits of immigration run as much as $10 billion a year.”

In reality, broad agreement has emerged as to not only the net economic and fiscal benefits of immigration, but the acceleration of those benefits over time. These analyses examine not only fiscal costs, but balance them with the fiscal and economic gains that would come from reform, including increasing tax contributions (full tax participation by legalized immigrants, with increasing tax revenue as their wages rise over time), consumer purchasing power (increasing wages means more money to spend), and an environment that yields gains from greater immigrant entrepreneurship and innovation.

In addition, Heritage is pushing for a piecemeal approach to reform, advocating for laws that keep and invite high-skilled immigrants in and even suggests that if we make it too hard for people to find a job, they will leave on their own or perhaps “self-deport.”

While the majority of the literature has attempted to move the issue forward, as has Congress by introducing bi-partisan reform legislation, the Heritage Foundation is stuck with an old analysis, old framing, and old thinking on the issue.

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  1. Sr. Karen Lynn Trespacz says:

    I apologize if you’ve covered this already, but I suspect that a deeper analysis of CIR would show a significantly positive impact on the economies of poor countries and on good will toward the United States. I have met a number of immigrants who are supporting several people back home. This is foreign aid that goes directly to people who need it and who are going to spend it, bypassing the government skim-offs and bureacratice layers that can happen with large aid programs – a much more efficient way to get money into ailing economies. The immigrant population is a resource for getting aid efficiently into the poorest countries, and who knows, could perhaps allow us to scale back on some of the more traditional foreign aid programs. It might be more efficient, too, to spot world bank offices in some countries to do micro-loans to allow people to develop their own businesses back home; it would help if the host country would agree to collect only official taxes and not bribes (we can dream, can’t we!). Dunno what to do about local gang violence, but that is a serious factor in allowing recipients to keep the money that goes to them, and to grow their local businesses efficiently. Thank you for your “Adding It Up” factsheet. SKL

  2. I am glad for the publishing of this article. The Heritage Foundation has and underlying agenda based on Eugenics, and their so called analysis are usually flawed to the benefit of their agenda. There is no doubt that a humane and balanced Immigration Reform would benefit the economy of the USA and that of the recipients of the immigrants’ families who could qualify for such reform. We still have a long way to go but hopefully the House of Representatives will finally get the message from the American public who in its majority support an immigration reform with a path to citizenship. I consider such path too long as proposed, because giving a shorter path to citizenship would give the stability and security to unauthorized workers to buy homes, and open businesses with more confidence for both the new citizen and the economic institutions interacting with them.

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