State’s tax system makes it a big loser on immigrant labor

This story speaks of the financial of illegal immigrants which is not necessarily due to their not paying taxes. Because both illegal and newly arrived legal immigrants are generally working the low-wage jobs nobody else wants they do not contribute as much to the tax system. Naturally, a person making less money pays less taxes. If a community, such as Hazleton, is mostly populated by low income workers there will be less taxes for the local government to use toward public services.

Of course, it’s no secret that the rich in this country often escape paying their fair share of taxes. Stories like this one illustrate this fact.


State’s tax system makes it a big loser on immigrant labor

By: Kathy Ruff
11/08/2007
The impact on taxes and the economy due to growth of immigration – legal and illegal – represents another area of controversy throughout the country.
“I think that (immigrants) are filling a needed void in the labor force, and from the business signs that I see in Spanish and the stores that I see that are serving the Latino community, I have to think that they are positive things for the economy,” says Austin Burke, president of the Greater Scranton Chamber of Commerce. “Economic growth raises all boats and the increasing population that the immigrants bring are providing an economic stimulus. They are increasing, I will call it, our gross regional product.”
That viewpoint changes for different people depending on their beliefs, experiences, needs and fears, but it mirrors the history of the area and the nation.

The story states:

“One of the things that the city has seen is a very large increase in its own population and no increase in its wage earner tax,” says Steven A. Camarota, director of research at the Center for Immigration Studies, Washington, D.C. “What that means, it makes Pennsylvania’s government and its localities uniquely vulnerable to the impact of illegal immigration because we think that only 50 to 60 percent of the illegals are paid on the books.

According to this statement 50 to 60 percent of illegal immigrants are paying taxes because they are paid on the books. So why then does this story then state that there has been no increase in the wage earner tax? Aren’t these people paying taxes? I’m sure they’re not paying much, but they’re paying.

The story states that people in Hazleton are paying one and a half percent of their income in local taxes. So it does seem fair to state that an influx of poor people would put a greater burden on local services. But is the problem that there are too many poor people in general or just too many people living in poverty in Hazleton?

Further into the story it comments on the fact that many US citizens are paid under the table:

Rose believes the system also contributes to other economic and financial stresses.
“While it’s true that those undocumented immigrants who work ‘under the table’ aren’t paying income taxes on the money they earn, neither are the millions of citizens who are paid in cash,” says Rose. “Bear in mind that both of these groups do spend their unreported income, thus boosting the local economies in which they live. Remember, too, that many undocumented immigrants do pay income taxes and Social Security/Medicare taxes, albeit using false Social Security numbers. Moreover, these workers tend not to receive a Social Security check in retirement, either, because they don’t live long enough to collect, or because they’ve returned to their home country where they find a comfortable and supportive social network.”

I agree with this statement that illegal and new immigrants are serving this country in poverty to provide the rest of us with low prices so we can continue buy more.

“(Illegal immigrants) work in jobs that many in this country don’t like to work,” says Patttabiraman Neelakantan, professor of economics at East Stroudsburg University. “Without illegal immigrants, these jobs may go unserved. They work at relatively low wages, and thus benefiting our economy with lower prices. Without these illegal immigrants, prices are likely to go up, first in some select industries, and then spreading out to other industries.”

The story concludes that the benefits outweigh the costs when looking at the services provided by illegal immigrants.

“On the whole, the benefits seem to outweigh the costs,” says Neelakantan . “We have to remember that the cost of locating, prosecuting and deporting illegal immigrants are prohibitive. In that sense, many of the above cost-benefit analyses may be mute.”

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