SUMMARY: It’s pretty clear that, despite their under-the-radar status, illegal immigrants pay taxes in Alabama –- but like all numbers used in the immigration debate, Sefsaf’s $130 million figure contains a certain amount of guesswork. There’s some evidence that Georgia has seen adverse economic effects from its immigration law, but those effects are mostly in a single sector of the economy -– agriculture.
ANALYSIS: Sefsaf’s column ran in the Sunday edition of The Star, alongside an opposing view by state Sen. Del Marsh, R-Anniston. A reader requested a fact check of Marsh’s column –- which ran in the Thursday edition of the paper. Then Marsh’s office requested a fact check of Sefsaf’s piece. The Star looked into two of Sefsaf’s biggest assertions.
Do Alabama’s illegal immigrants pay $130 million per year in state and local taxes?
TRUTH RATING: 3 of 5
“While there is certainly a cost for illegal immigration, it’s important to remember that they are taxpayers and consumers, too,” Sefsaf wrote. “In fact, they contribute $130 million in income, sales and property taxes in Alabama.”
For years, the immigration debate has been dogged by the fact that no one knows how many illegal immigrants there really are in the United States. Heads that can be counted are heads that can be found and deported, so undocumented immigrants tend to avoid census workers. Without a hard number of immigrants to begin with, there’s an element of guesswork in any set of figures about the undocumented population.
“This is fundamentally a population that we don’t observe directly,” said Matt Gardner, an analyst for the Institution for Tax and Economic Policy, a progressive Washington think-tank. “There is a lot that we don’t know, and anybody who tells you any other way is not being honest.”
Gardner is the author of the numbers Sefsaf quoted in her article. In April, ITEP published estimates of the amount of taxes paid by unauthorized immigrants in every state.
Gardner’s numbers are based on the proposition that there are now 120,000 illegal immigrants in Alabama. That falls well within the wide-ranging estimate by the Pew Hispanic Center, probably the most respected source on undocumented immigrant numbers.
With that number as a basis, Gardner estimated how much money the average illegal immigrant spent on food, clothing, gas and rent –- estimates that were based on documented immigrants with similar levels of education and income. He used the Pew Center’s estimates on the income of illegal immigrants, projecting a household income of about $32,000 per year. That’s about $9,000 per year less than the median household income for Alabama and $5,000 less than the median for Calhoun County.
Gardner considered $2,000 of that money untaxable -– a nod to the funds immigrant workers send to their home country.
Gardner concluded that illegal immigrants paid $5.8 million in property taxes. That number may seem odd, given the trouble undocumented immigrants would encounter in trying to purchase property. Gardner said the number is an estimate of the taxes landlords pay on property rented by illegal immigrants.
“It’s well known that landlords pass on their property taxes to their renters,” Gardner said.
Gardner also estimated that half of Alabama’s undocumented immigrants pay income tax. That’s based on an estimate found in a 2005 report from the Bush White House. The theory, Gardner said, is that many illegal immigrants do find a way to file income tax, even if they have to use fake paperwork to do it. In total, he estimates their income tax contribution as $25 million per year.
But by far the biggest contribution is from sales tax. Alabama is one of the few states that charges taxes on groceries, making at least some taxation unavoidable for anyone who lives here. Gardner estimates the sales-tax contribution of Alabama’s undocumented workers at $98 million.
But there’s a catch. Gardner said the $98 million includes more than just the money immigrants pay directly in sales taxes. It also includes the estimated price markup by retailers for taxable items the retailers buy.
“It’s a fairly straightforward thing to do,” Gardner said. He said accounting for that pass-through cost is common among economists.
Perhaps. For many Alabamians, Gardner’s pass-through theory may be too clever by half.
Gardner said his sales-tax pass-through accounted for one-quarter to one-third of the total $98 million sales tax figure. Using his most conservative figure, that would have immigrants paying about $66 million directly in sales taxes.
Add the $25 million in projected income taxes to that $66 million, and you’ve got undocumented immigrants directly paying about $90 million in taxes.
It’s still a sizable number. But like all illegal immigration statistics, it’s an estimate stacked on top of another estimate stacked on top of another. And Gardner acknowledges that, no matter how sound the methodology, no hard number is trustworthy.
Still, he’s unfazed by suggestions that he’s ballparking it.
“If you listen to the political rhetoric lately, you won’t hear that the contribution is $130 million –- you’ll hear that it’s zero,” he said. “That’s the take-home message here. We don’t know exactly how much undocumented immigrants are paying in taxes, but it’s not zero.”
Have immigration laws had a ‘chilling effect’ in other states?
TRUTH RATING: 4 of 5
“Similar laws in other states have had a chilling effect on state businesses, putting state-based industries that count heavily on foreign talent and investments at risk,” Sefsaf wrote. She went on to mention the German-based steelmaker ThyssenKrupp and Korean automaker Hyundai as examples of valuable industries in Alabama -– strongly implying that a Hyundai or a ThyssenKrupp has already bypassed some other state because of the immigration issue.
Like the fish that got away, Sefsaf’s lost industries can’t be proven or disproven.
She said the law is bound to create second thoughts in the minds of large foreign-based employers, because of problems that could arise even with highly-skilled, legal immigrants.
“Our immigration system has a huge backlog,” she said. “It’s not uncommon for a legal worker’s visa to expire while it’s awaiting renewal, and immigration law allows a certain grace period. But do police in Alabama know that?”
Still, Sefsaf acknowledges that she doesn’t have an example of a large industry that has avoided states with strict immigration laws.
Sefsaf did provide The Star with reports from the Center for American Progress, a progressive think tank. Those reports estimate the economic impact of similar immigration laws in Arizona and Georgia.
One of the Arizona reports predicts a loss of hundreds of millions of dollars to that state’s tourism industry. So far, it seems unlikely that a similar loss will occur in Alabama. Entertainers, activist groups and some cities and school districts boycotted Arizona to protest its immigration law, a move that has yet to be tried with Alabama.
The report from Georgia is more sobering. It predicts an impact of up to $300 million due to the exodus of agricultural workers after Georgia’s passage of an Arizona-style law.
There’s evidence that that prediction is already coming true. The Georgia Fruit and Vegetable Association reported Tuesday that $74.9 million worth of crops went unpicked this year, due to a labor shortage. An industry survey in June estimated that 11,000 positions in agriculture were unfilled, and the Atlanta Journal-Constitution reported Thursday that Georgia officials are considering a plan to put inmates to work in the fields to fill the gap. Earlier this week, according to the Journal-Constitution, Georgia Agriculture Commissioner Gary Black addressed a congressional committee on the potential for a guest-worker program that would allow the state to fill its labor gap.
A similar effect may be underway in Alabama. Several Associated Press reports this week have quoted local farmers and builders saying they’re having trouble filling jobs, though no hard numbers on the effect of the bill are available yet.
The Arizona and Georgia examples are likely to fade into the background soon, as Alabama’s law –- the toughest in the country, some say -– takes effect.
“Everybody and their mother’s going to be studying you now,” Sefsaf said. “You’re the guinea pigs.”