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Do 90% of Illegals Pay Federal Taxes? Examining an Academic Illusion

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It is estimated that between 8 to 10 thousand illegal aliens cross the border  into  our country every 

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By David North, April 15, 2010

A significant think tank has just issued a study on the effects of the proposed legalization of currently illegal alien residents.

It states (on p. 18) that "Our estimates suggest that 87 percent of former crossers and 91 percent of overstayers filed federal tax returns in 2002."

The report, "Immigrant Legalization: Assessing the Labor Market Effects," was published by the foundation-supported Public Policy Institute of California (PPIC), and was written by Laura E. Hill, Magnus Lofstrom, and Joseph M. Hayes. You will be reading about the 90 percent or so tax payment rate throughout the upcoming legalization debate.

The trouble is that this finding, though narrowly accurate about the people studied, totally misrepresents the characteristics of America's illegal population generally.

It is as if you decided to study the characteristics of everyone enrolled at the mythical Big State University, and you did so by carefully talking to all the graduating Phi Beta Kappa members, and only them, and then extrapolated your findings to the whole BSU student body.

You would find, in this imaginary exercise, that the BSU students generally had great grades, that they all finished college, and virtually all of them were on a track to either graduate school or a good job. You would probably also find that they never had trouble with the campus police and were always nice to their mothers.

No published researcher would have the gall to use the methodology described above, but the PPIC trio has decided to use a sample, something like that of the Phi Beta Kappa types, in their analysis of the projected impact of alien legalization.

If you read the technical appendices to their study carefully, you will find that they draw data from the 2003 New Immigrant Survey. And who was studied in that survey? It was people who, and I am quoting, "have recently gained legal permanent residence in the United States."

In other words the phi bates of the illegal alien population: people with the social skills, relatives, and/or labor-certified jobs who managed to make it to legal status in the U.S. without a mass legalization program. Presumably many married into legal status, while a few won the visa lottery. In short, a relatively tiny and lucky group of people drawn from, but very much unlike, the total population of, say, nine or ten million illegal aliens in the country in 2003.

I attended a presentation of the report at the Migration Policy Institute on Monday, as I reported in a previous blog.

One of the people in attendance, a skilled and vehemently pro-immigrant attorney, said to me afterwards: "Of course they had a high rate of tax payments; they had to prove to the government that they had paid taxes to get their green card."

She was not fooled, but perhaps less well-informed people in the Congress will be.

The authors do have the grace, in their Appendix C, to compare some of the characteristics of their newly legalized population to a study of illegal aliens run by the Census Bureau in 2004. (I suspect even the Bureau missed some of the least skilled, newest-arriving illegals in their study; nevertheless, the comparison is helpful.)

The comparison shows that the study group used by PPIC was considerably less likely to be from Mexico than the Census group (and non-Mexican illegals have more education and better jobs than those from Mexico). Further the PPIC respondents were older, had been in the country longer, had more education and held better jobs than the Census group - all qualities that probably relate to higher rates of tax-paying. The comparison says nothing about tax payments and you will find these data only if you persist to the last two pages of the third and last technical appendix.

Sadly, I predict there will be many a speech in which we will hear that about 90 percent of the illegal aliens in the country pay their federal income taxes.

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