Hidden taxes on illegal immigrants
The taxes on illegal immigrants are hidden. Their hidden taxes more than pay for their expenses on healthcare and other services. Neither the Right nor the Left will discuss this.
Here is my line of reasoning.
An illegal immigrant does not have full access to the job market. Therefore, he is forced into the grey areas of the economy. The wages and the kinds of job opportunities in the grey areas of the economy have many downsides - low end jobs, lower off-the-books wages, no benefits, difficulty in getting family members together, fear of getting caught, inability to travel across borders, difficulty in getting loans to acquire education, housing or set up business, extra costs of financial transactions.
Some guess estimates:
- There is a significant wage differential between illegal immigrants and legal immigrants for the same job. My guess is that the difference is anywhere from 30-60 percent. Let us take the case of an immigrant at the bottom rung of the capabilities - someone who is only fit for the most low skilled jobs. The prevailing salary in those kinds of jobs is likely to be between $5/10/hour (assume average of $8/hour). The possibility is that the immigrant is getting paid at the bottom most of the scale, and maybe even lower than the legal limits as he is being paid off-the-books (let us assume $4.5/hour). The hidden tax paid by the illegal immigrant is $3.5 an hour. As a percentage of the legal wages it is $3.5/$8*100= 44 percent. This tax is indirectly paid to the US resident by the lower cost of goods and services, or as profits to business owners. A legal resident or citizen in that wage scale probably pays negligible taxes.
- Extra costs of financial transactions - Check cashing services take away 2-3 percent. International wire transfer services take away as much as 3-10 percent depending on the amount transfered. Assuming that the illegal immigrants wire transfer about 10 percent of their incomes, it adds about 0.5 percent additional costs. Total increase in financial transaction costs - 3 percent. This tax is paid to the banking business.
- Legal costs - An illegal immigrant will average $500+/year for immigration lawyer. Even if we take $250 per year, and an average annual income of $15,000, that is about 2 percent. That fee is paid back to the the legal industry (lawyers, govt.)
There are other hidden taxes/penalties I can bring up that are very valid, but let us stop here.
50 percent taxes paid back to the US residents in forms of subsidies. Of course the illegal immigrants pays sales taxes etc. in addition, like everyone else.
Even at low legal wages of $15,000 a year, that is $7500/year of subsidy. That much money can still buy a health plan. As for payment for schools, the immigrant is paying indirectly through the rent paid for housing.
-Arun
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