Social Security Administration Says Immigration Reform Will Increase Tax Revenue, Boost Economy

shutterstock_112541258Will the immigration reform bill create millions of jobs, boost GDP, and help balance the budget? A new report by the Social Security Administration says that it will, by putting undocumented immigrants on the tax rolls and allowing them to participate fully and legally in the U.S. economy.

The Chief Actuary of the Social Security Administration estimates that the proposed bipartisan immigration reform bill will allow about 8 million undocumented individuals, many of whom already work in the underground economy, to become legal and pay taxes. As a result, as reported by the Wall Street Journal, the legislation will add more than 6.5 million taxpayers over a decade, generating more than $275 billion in revenue for Social Security. Social Security costs would increase by only $33 billion, resulting in a significant net benefit. The bill would also bring in more than $64 billion in revenue for Medicare over 10 years.

Allowing the undocumented population in the U.S. to apply to for legal status would also boost the economy significantly in other ways, by allowing them to participate legally in the U.S. economy and create more jobs.  The report estimates that the reform bill will have the result of adding 3.2 million jobs over a decade and increasing gross domestic product by 1.63% by 2024, according to the Wall Street Journal.

It is not surprising that allowing undocumented immigrants to integrate into U.S. society will result in a net economic benefit for the U.S., as many other studies have noted. Immigrants tend to be entrepreneurial and create more job-creating businesses than the average population. Generally, they also tend to be younger and healthier, which means they will pay more taxes and use public benefits like health care and Social Security less.  As a result, the Social Security Administration noted that the “net effect of this bill on the long range OASDI actuarial balance will be positive,” using the acronym for Old Age, Survivor and Disability Insurance program.

The Social Security Administration report contrasts with a study released earlier this week by the Heritage Foundation, saying that the cost of allowing undocumented immigrants to apply for legal status would be $6.3 trillion. The Heritage Foundation report is contrary to a broad consensus of policy analysts, from both the left and right, stating that reform would have a positive effect on the economy, and has been harshly criticized for flaws in methodology. One of the co-authors, Jason Richwine, has also been accused of racial bias.

The Social Security Administration notes that, in addition to improving the U.S. economy and helping balance the budget, immigration reform will also help address the problem of illegal immigration through border control and employment verification. The letter states that these measures “will reduce the number entering the country without authorization by about half a million per year by the time the measures are fully implemented.”

Immigrants are a positive force in the U.S. economy, and by allowing undocumented immigrants already in the U.S. to participate fully, immigration reform will help balance the budget and create American jobs. Reform will also help address the underlying causes of undocumented immigration flows. It is this balanced approach to legalization and enforcement that will create an effective immigration system that will foster prosperity and diversity.

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