The Contradictions of Michelle Malkin

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,

  1. There is an underground economy.
  2. Immigrants make up the bulk of this part of our economy.
  3. There are few if any taxes collected on this economic activity.
  4. 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.

FILED UNDER: Economics and Business, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. madawaskan says:

    Another point -the Bill is more than what has been proposed before and there would be more barriers to entry-not less.

    It is a huge decision to want to move to another country; pull up roots, break away from family and the familiar, and move to a relatively unknown environment. One that is publicly declaring its new found animosity.

    The numbers are numbers the limiting factor is the will power to overcome the fear of leaving what you always knew as home and moving to an unknown environment. I think that is driven by economic hardship not a question of the supposed uneducated masses reading the Senate Bill S. 2611.

    btw-Michelle Malkin rolls out of bed after Memorial Day weekend and the first post she makes is about perhaps IMPEACHING a wartime President -for sealing the FBI report and then she links to an impeachment post at Polipundit. I guess they are hoping Senselessbrenner can make hay out of that…

    I guess Michelle’s Minions-ever the patriots-don’t question her motives…that would be blasphemy.

  2. Malkin et al are very selective in how they “report” in illegal immigrants. The average illegal immigrant family pays $80,000 more in taxes than they ever take out of the system.

    (I can’t remember what time period this reflects, but I know the numbers are right.)

  3. LJD says:

    The average illegal immigrant family pays $80,000 more in taxes than they ever take out of the system.

    Huh? Show me one illegal family that pays even $80,000. I would really like to see your source.

    On a side note, wait and see how many illegals willingly pay the $2000 penalty to become citizens, and how many choose to remain illegal because they can;t come up with the dough.

  4. Rick DeMent says:

    Why does anyone take the ramblings of a sensationalist polemic seriously? I mean really? She adds nothing to serious debate. She is popular for the same wrong reasons that Micheal Moore, Rush Limbaugh and other of their ilk are, because she pisses people off.

    Even caller out her mushy thinking give her too much credit. Idiots should be ignored. (then again who would listen to me?)

  5. Bithead says:

    * Immigrants make up the bulk of this part of our economy.

    Point of order:

    It’s ‘Illegals’ not ‘Immigrants’ There’s a major difference here, and you do your argument no good by miscasting hers.

  6. lily says:

    out where I live there is a very active underground economy, but the people involved are all born-in-Americans. They do housecleaning, gardening, elder care, critter sitting, home remodels and repair, you name it for cash. The ‘they” I am referring to are the lower income working people of this county. They have moved to a black market economy mostly because they can’t afford to work at regular jobs that provide no benefits and take a big hunk in taxes (particulary since our tax code is so biased in favor of the rich.) There are two solutions: change the tax code so that those who got pay more that does who have less pay a smaller porportion in taxes or require employers to provide benefits. As it is I can see why a person faced with the choice of a “real” job without benefits and and underground job without benefits or taxes, would pick the latter.
    I suspect this phenomenon is fairly common in semirural areas.

  7. Steve Verdon says:

    Huh? Show me one illegal family that pays even $80,000. I would really like to see your source.

    Me too, but before we jump on Michael and call him all sorts of names, keep in mind the number he may be talking about is a life time number, not an annual one.

  8. Saed says:

    The money is in the middle men that hire the illegals. Politicians are getting rich on the illegal activity.

    the companies that hire should be fined alot, then we can count the money.

  9. LJD says:

    O.k. Let’s assume an individual worker starts at age 18 and ‘retires’ at 65. That’s 47 working years. Take $80,000 divided by 47 and you get $1702 per year.
    Assuming they do not take ANYTHING in services, this number is supposed to be significant, how exactly?
    If this number is over a ‘lifetime’ how do you calculate that for a FAMILY?

  10. Steve Verdon says:

    LJD,

    There are number of ways to do the calculation. However, I’m not in the mood to teach you economics, discounting and net present value. Try google.

  11. smartass says:

    There are number of ways to do the calculation. However, I�m not in the mood to teach you economics, discounting and net present value. Try google.

    Cop out.

  12. Steve Verdon says:

    Why, he wouldn’t believe what I wrote anyways. He’s made up his mind. I have better things to do with my time. That he can’t see how such a calculation could be done really isn’t my problem.

  13. LJD says:

    Forgive my being the dense one here, but I wasn’t aware that I was even disagreeing with you Steve-o. I would add that insulting your readers is not the way to keep the readership going.

    Why would you make a post, and then run away from relevant discussion?

    The question asked was: how, when where, has any illegal family contributed $80,000 more than the benefits they received? It remains unanswered.

  14. Steve Verdon says:

    LJD,

    1. I didn’t make the comment about the $80,000.

    2. While I did comment about the $80,000 it was to note that one should look at such a number in terms of the individuals life cycle.

    If you are really serious about this stuff, then try this article by a former professor of mine and a couple of other good economists. In particular look at the section on dynamic general-equilibrium analysis.