NC Budget and Tax Center

The fiscal fallout from flawed executive orders on immigration

Public outcry and legal challenges to President Trump’s Executive Orders on immigration were immediate.  The costs to our country and economy will mount in the coming weeks, months, and could play out over generations if these Executive Orders stand.

They will be felt not just in the immigrant community but among the broader public through various mechanisms.  Here are just FOUR ways in which the Executive Orders on immigration will cost our country and undermine efforts to strengthen our economy.

1. Detention, litigation and deportation costs are likely to rise. The executive orders adopt a policy of removing prioritization in the detention and deportation of undocumented immigrants which has the likely effect of increasing the number of people detained and deported across the country.  At the same time, this policy shifts the responsibilities and cost for policing and detaining immigrants from the federal government to local law enforcement. It is unclear whether the time in detention could also increase as well given that the number of immigration judges will remain constant and thus likely be overloaded with cases as the number of immigrants in the system is increased.

The average cost of detention per day in North Carolina is approximately $90Current detention numbers in North Carolina mean that we are already spending an estimated $1.2 million a year.  The potential increase in detentions could grow that state and local cost figure to a conservative cost of $63 million for holding immigrants detained           in North Carolina.

The costs of deportation are estimated to be on average $10,000 per person.  Estimates of the cost of deporting all undocumented immigrants in the United States are $4.7 trillion over 10 years.  Already, federal spending on interior enforcement has grown by 85 percent since the inception of the US Immigration and Customs Enforcement             agency to $6.1 billion.

2. Building a wall is a cost that will have to be paid for somehow. Thus far, there is no serious and viable plan that would keep Americans from paying to build the wall.

The estimated costs of building the wall is estimated between $15 and $25 billion. The maintenance of the wall has been estimated to be $750 million annually.  The cost of building the wall is equivalent to a third of the country’s investment in medical care for veterans; would cover the entire federal investment to provide high-quality             education for all students and work to close the achievement gap; and could provide affordable housing to 2.2 million Americans. Instead of investing in a wall, with that money the federal government could hire 40,000 teachers for ten years or build 230,000 new homes and cut the number of individuals experiencing homelessness in the country by almost half.

3. Restricting labor flows will impact industry and usher in a new post-free-trade paradigm. As countries retaliate for closing the flow of labor across borders, there will be challenges for investors who seek to place their capital in business operations and investments abroad, barriers to the research and development that has seeded new technologies and ventures here in the U.S. and difficulties for industries that seek a labor force with specialized skills and experience. A whole host of cascading effects on the cost of doing business could also ensue as inputs into our supply chains and markets for our products are reduced driving the cost up of what is available.

The restriction on the mobility of labor will likely make worse the already significant economic loss from failing to realize the skills of immigrants in our labor markets which the Migration Policy Institute estimates in earnings alone is $39.4 billion annually. In the extreme, North Carolina industries under mass deportation would experience a $10.6 billion net loss in productivity.

The literature on the economic harm of restricting immigration flows has reached overall consensus: the benefits of immigrants to the size of the labor force, earnings levels of all workers in the long-term and consumption in the broader economy is positive.

4. Our labor markets and social security systems, to name just two, depend on immigrants to remain vibrant and solvent. The United States is on the pathway to a major demographic shift with the aging of our population.  Immigrants to North Carolina are likely to be younger and also have a higher labor force participation rate playing a critical role in our communities as workers, entrepreneurs, taxpayers and consumers. Estimates suggest that the United States will need to add 25 million workers by 2030 to maintain economic growth and immigrants are important to achieving that target.

Despite the rhetoric, it is important to note that undocumented immigrants also pay taxes including social security taxes even though they cannot access those benefits. This means that their payments are in part keeping the Social Security system solvent right now.

Undocumented immigrants in North Carolina also pay approximately $278 million in state and local taxes. In the United States, undocumented immigrants pay approximately $11.64 billion in state and local taxes contributing to the infrastructure in communities across the country supported by state and local government services.

There are many reasons to oppose the recent Executive Actions on immigration but its costs and drain on our economy should be prominent among the problems listed with these ill-crafted orders.

This piece was contributed to by Victoria Crouse.

 

immigration, NC Budget and Tax Center

Refugees help North Carolina communities thrive

North Carolina has a history of being a good global neighbor as a site for refugee resettlement. In 2015, 69,920 refugees arrived in our country seeking better opportunities. Though small in number (0.022% of the total U.S. population), they and their predecessors have helped enrich communities and revive local economies. They arrive to this country fleeing natural disasters, war zones, and repressive governments. Despite the challenges they face in adjusting to life in a new country, many have succeeded in putting down roots in our state and in achieving a better life for their families. A recent report by the Center for American Progress highlights the successful integration of four refugee groups* in the United States, and demonstrates the positive impact refugees can have on our broader communities. Across the board, refugees who have lived in the United States for 10 years or more have seen positive outcomes in the areas of education, wages, labor force participation, and more.

Growing local economies by participating in the labor market

Refugees often see high rates of labor force participation, which is a strong indicator that they are integrating well into the labor market and helping boost American productivity. For those groups who have lived in the U.S. for 10 years or fewer, all had at least a 45 percent participation rate. When looking at long-term outcomes (those who have lived in the U.S. 10 years or more), all refugee groups saw significant increases in labor force participation.

Additionally, refugees often see wage increases over time, which is partly due to changes in occupation as they integrate into communities. Many also experience occupational mobility. On average, among those who have lived in the U.S. for 10 years or more, there is a significant increase in the number of refugees moving from blue collar jobs into white collar jobs.    Read more

Commentary, NC Budget and Tax Center

Recent executive actions and rhetoric could weaken North Carolina’s economy

Recent executive actions and words are likely to cost more lives than they save, and they are already eroding the United States’ standing as a bulwark for democracy and human rights. Beyond the social and political consequences, these decisions could have profound and long-lasting economic ramifications as well.

As we documented in a report from 2015, immigrants are essential to the economic health of communities across North Carolina, both rural and urban. Among other important economic facts, the report provides evidence for three central economic lessons that we should keep in mind right now.

Welcoming communities are more prosperous: On average, counties with large immigrant populations have lower unemployment rates, lower levels of poverty, and higher wages than counties with few immigrants. Even just comparing among rural communities, counties with larger immigrant populations generally fare better than counties with fewer immigrant residents.

Immigrants are essential to the small business community: Main street North Carolina would suffer dramatically if immigrants were not swelling the ranks of willing local entrepreneurs. More than 20% of Main Street business owners in North Carolina are immigrants and immigrants account for more than 80% of the new Main Street business owners since 2000. The next time you drive down Main Street, or visit your local shopping mall, imagine what it would look like if 4 out of every 5 business opened since 2000 were still shuttered.

Revitalizing neighborhoods and reversing population decline: Both as entrepreneurs and residents, immigrants have helped to breathe renewed life into communities across the state. The majority of immigrants live in North Carolina’s urban areas, but some of the most profound local benefits have been felt in small towns and rural communities where immigrants have muted or reversed population decline and bolstered local economies. In fact, nine of the ten counties that have seen at least a tenfold increase in immigrant residents since 1990 are in rural parts of the state.

NC Budget and Tax Center

Don’t let tax refund delays cost you: Three things you need to know

Many North Carolina taxpayers will have to wait a little longer this year to receive their federal tax refund than in previous years. A federal law passed in late 2015, the PATH ACT, aims to prevent tax identity fraud, one of the fastest growing types of fraud. Because of this law, the IRS will delay issuing refunds for taxpayers claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until February 15. It should be noted, however, that the share of tax returns that incorrectly claim the EITC, the noncompliance rate, is lower than various other parts of the federal tax code.

As North Carolina taxpayers prepare to complete and file their tax return, here are some facts and resources that are available to help taxpayers keep more of their tax refund dollars in their pockets.

  • North Carolina taxpayers can have their tax returns completed and filed free of charge at Volunteer Income Tax Assistance (VITA) sites located across the state. VITA tax preparers are trained and certified, and so tax filers can be confident that their tax return is completed and filed accurately. To find a VITA location, visit the IRS site (click here) and use the VITA/TCE Locator Tool near the bottom of the webpage, or call 1-800-227-7669.
  • The IRS also has a Free File Program, which provides online tax preparation software that helps qualifying individuals with an income of $64,000 or less file their federal taxes free of charge. Taxpayers are encouraged to use these services – the Free File Program and VITA sites – to help them navigate this year’s delay and keep 100 percent of their federal refund. These free tax preparation services help consumers avoid alternative tax preparation services that offer quicker refunds but cost more as the result of high-interest payday loans or costly short-term advances.
  • Tax filers should be sure to know how much they are charged by tax preparers to complete and file their taxes, prior to performing the services. Tax preparer entities are required by law to inform customers of the charges and fees associated with their respective services – these costs should be provided prior to performing the services. If this information is not publicly available, tax filers can contact the North Carolina Department of Justice, Consumer Protection Division and report this issue.

Nearly 1 million North Carolina tax returns claimed the federal EITC and more than 715,000 claimed the ACTC, according to the most current available IRS data. Helping taxpayers reduce the risk of falling victim to tax identity fraud is important, which can be detrimental to taxpayers in the long run. Furthermore, ensuring that tax returns are filed accurately is important to upholding the integrity of our federal tax system. Using free tax preparation services such as VITA sites and the IRS Free File Program helps in meeting these goals, while allowing taxpayers to keep more of their tax return.

NC Budget and Tax Center

Change of administrations comes amid longest run of growth in modern U.S. history, but also fundamental economic challenges

Depictions of the North Carolina economy range from overly rosy to falsely apocalyptic, but the reality falls squarely in the middle, according to labor market data released today. The final state-level economic readings for 2016 show a decidedly mixed economic picture.

“These have not been the best of times, but they haven’t been the worst of times either,” said Patrick McHugh, policy analyst with the Budget & Tax Center, a project of the NC Justice Center. “The United States has experienced the longest period of a national economic expansion in generations over the last six-plus years. But growth has been modest, wages are just starting to improve, and some communities have never fully recovered.”

The December labor market data underscore a number of important economic realities, including: Read more