Immigrants & Taxes II

I do not normally respond to comments. It is my belief that once I have said what I have to say, it is best to let the combox take on a life of its own. I am delighted when readers debate each other there. I am even delighted when readers just rant at each other. The exchange of opinions is a good thing per se, even when it is accompanied by the throwing of rhetorical elbows.

But, last week, I wrote a post about immigrants that both examined the results of a new Pew study and suggested that it would be helpful if the Congressional Budget Office could calculate what effects comprehensive immigration reform would have on extending the solvency of both the Social Security and Medicare trust funds. The comments of Professor Carmen Nanko-Fernandez on that post are such that they deserve a response.

First, let me stipulate what is obvious: Professor Nanko-Fernandez is deeply concerned about achieving justice for immigrants. I commend her for that stance without reservation. Indeed, if Professor Nanko-Fernandez was an immigrant-hater of the kind that apparently dominates today’s GOP base, I would not bother to respond.

Second, Professor Nanko-Fernandez correctly takes me to task for one sentence in that post in which I wrote, “I do not know what percentage of undocumented immigrants are undocumented workers, but you can imagine the rate is fairly high and you can bet your bottom dollar that very few of them pay payroll or other taxes.” I should have included a key modifying adjective – “federal” – in that sentence. Undocumented workers pay many state and local taxes because many states and localities primarily raise revenue through sales and property taxes, not through income taxes. Some states – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming - do not even have an income tax and two others – New Hampshire and Tennessee – one tax income earned from capital gains or dividends. And, it should be noted, that undocumented workers also pay federal excise taxes, such as that on gasoline.

Third, as Professor Nanko-Fernandez points out, many undocumented workers also pay federal income and payroll taxes and, because they do not have working papers, they will never recoup the money they pay into Social Security or Medicare. This is a matter of unjustice of the highest order and I suspect that Professor Nanko-Fernandez would wholeheartedly join me in support of any legislation that would rectify that injustice.

But, then we run into a difficulty. In my post, I was not addressing this issue, but a different albeit related one. There are plenty of undocumented workers who are paid under the table. In my neighborhood, you can find day laborers at the Home Depot and the 7-11 every morning. I can drive to some of the fancier neighborhoods in DC and bring you to homes that are cleaned by domestic workers who are paid in cash. Many small businesses also pay workers in cash. These people do not pay into Social Security or Medicare and my question is: If they did, would it extend the solvency of those systems? The money already paid into the system by undocumented workers is, obviously, already counted: The money is in the Trust Funds. So any calculation of the kind I am seeking would extend the current calculations of the long-term solvency of Social Security and Medicare. I admit that scoring it would be difficult for the CBO for a variety of reasons. Undocumented workers are, by definition, often beneath the radar or in the shadows. Additionally, CBO would probably have to offset the additional solvency with a calculation of the additional benefits of that would be drawn from the entitlement programs by those currently paying in but not receiving benefits. Nonetheless, the immigrant workforce is disproportionately young and would I suspect add to the long-term fiscal health of these programs. (I say “suspect” because I am not an actuary and do not work at CBO.) This is an argument for comprehensive immigration reform I have never heard but one which I think is worth making.

Professor Nanko-Fernandez, however, also accuses me of not doing my homework and of spreading misinformation, and she points me to data found at the website of the United States Confernece of Catholic Bishops. (And, let me note, I am delighted to see any theology professor citing the bishops’ conference as authoritative on any issue.) Alas, if you go to that website, you will find that someone did not do their homework, but it wasn’t me. The section of the “fact sheet” that is most relevant to these issues reads:

Studies show that unauthorized immigrants provide a net gain of $7 billion to the Social Security system each year. The Social Security Administration also credits these workers for paying an additional $520 billion under mismatching Social Security numbers.

Now, even in Washington, $520 billion, with a “b,” is an eye-catching number and I thought to myself when reading it that surely I would have known if that much money had been contributed to the Social Security trust fund by undocumented workers.

The USCCB “fact sheet” includes a footnote to the testimony of the Social Security Administration’s Inspector General before the Senate Finance Committee in 2006. Unfortunately, the testimony cited does not support the claim made at the USCCB website. The SSA’s Inspector General noted that between 1937 and 2003, the SSA had accumulated 225 million wage reports that had some kind of “mismatch,” that is, the Social Security number did not match a known recipient or there was some other problem. Those wage reports amount to $520 billion in wages, according to the testimony. Wages, not taxes. Therefore the USCCB website is simply incorrect.

The other website to which Professor Nanko-Fernandez refers me is that of the organization Justice for Immigrants. And she provides a quote that, she says, “labels responses like yous [sic] as false myths” but which I think indulges the same kind of imprecision I wrongly committed in my first post and which, in the event, is not germane to my post. The passage reads:

Undocumented immigrants pay taxes. Between one half and three quarters of undocumented immigrants pay state and federal taxes. They also contribute to Medicare and provide as much as 7 billion dollars a year to the Social Security Fund. Further still, undocumented workers pay sales taxes where applicable and property taxes—directly if they own and indirectly if they rent.

The problem here is with the adverbs. As noted above, we have to differentiate between federal income and payroll taxes and other kinds of taxes. The “also” and the “Further still” are not clarifying just as my neglect to add the adjective “federal” in my initiasl post is largely responsible for this entire back-and-forth. But, insofar as the Justice for Immigrants claims are directed to a different question from the one I was raising, I deny Professor Nanko-Fernandez’s charge that I was peddling in false myths.

Finally, as for the usefulness of the phrase “alternately documented,” I am unmoved. This is precisely the kind of politically correct language that gives the academy a bad name and leads the general public to believe that our intellectual elites, and their political allies, are out-of-touch. This weekend, I arranged to have brunch with a friend who is a member of the Congressional Hispanic Caucus. I asked her if she was familiar with the phrase “alternately documented,” and she rolled her eyes. She also made the point that such efforts often minimize the injustice they seek to highlight. The scandal here is that we do not provide legal documents to every human being within our borders. Why should we engage in linguistic gymnastics that distracts from the enormity of that scandal?

As I say, I am sure that at the end of the day, on the central issue at hand, Professor Nanko-Fernandez and I are in a great deal of agreement: The plight of undocumented workers is an insult to our Catholic beliefs about human dignity and social justice. But, I invite the professor to be a little more careful before offering condescending advice about doing one’s homework or leveling the charge of spreading misinformation.

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