I was pointed to this post by Michelle Malkin by TLB of the Lone Wacko Blog. What I found interesting was the basic premise and conclusion of Malkin’s post. It goes like this,
- There is an underground economy.
- Immigrants make up the bulk of this part of our economy.
- There are few if any taxes collected on this economic activity.
- If the IRS could collect taxes on that economic activity we’d have budget surpluses forever.
Neat story. Only one problem. Malkin et. al. are always ready to tell us how poor these immigrants are and how in terms of taxes and consumption of government services they are a net drain, not a net plus. In other words, since these illegal immigrants are so poor there would be little to no tax revenues there. In fact, many of them might qualify for things like the Earned Income Tax Credit and actually get money from the federal government.
I also become quite skeptical of these utopian views of the world. If we just do X, then problem Y will disappear forever. Gee, then why aren’t we doing X?
Finally, lets suppose that all of this is true. That if we could tax those immigrants the amounts they owe we’d raise enough revenue to seriously reduce or eliminate the budget deficit; what does this imply as a policy? How about amnesty for all those people in the underground economy? After all, many of them are probably avoiding taxes in large part out of fear of being found out and deported. Remove that fear and they might just surface into the legitimate economy and start paying more in taxes. In fact, if the plan for amnesty is to pay back taxes as well as future taxes, then the windfall would be gigantic.
On a side note, this is where that 20 million illegal immigrants number comes from as well. Further, this is a study that, as far as I know, isn’t available to check for methodology, data sources, etc. Usually, citing a single study in support of a position is not very reasonable, especially when there are different studies that come to dramatically different conclusions. The actual number is undoubtedly in the middle of the interval 7 million to 20 million. My guess is that the 12 million figure is probably not that bad a number.
