Gyroscopic Investing

I accept there are criminals among the deportation target group. But there is a material number of people who are not committing crimes in the United States (not counting the act of entry), and they are working in jobs that often times others do not want to do.

Let's think about this in simple terms of revenue and expense.
The revenue loss is the loss of tax revenue and labor productivity of deported people
The expense is the resources expended, direct and indirect, to round up, detain and physically deport thousands (millions?)

Do undocumented people pay taxes? Most people instinctively assume no. According to two non-partisan studies I have read, this is not the case.

A significant percentage of undocumented immigrants in the United States do pay taxes, although precise estimates vary depending on the methodology used. Here's an overview of the most reliable statistics:

1. Tax Participation of Undocumented Immigrants
Federal, State, and Local Taxes: The Institute on Taxation and Economic Policy (ITEP) reports that approximately 50-75% of undocumented immigrants contribute to federal, state, and local taxes, including:
Payroll taxes: Many undocumented immigrants pay Social Security and Medicare taxes through employer withholding, even though they cannot access benefits.
State and local taxes: These include property taxes (paid directly or indirectly through rent) and sales taxes on goods and services.

2. Use of ITINs (Individual Taxpayer Identification Numbers)
The IRS allows undocumented immigrants to file income tax returns using an Individual Taxpayer Identification Number (ITIN).
In 2020, over 2.5 million ITIN filers contributed an estimated $5.9 billion in federal income taxes and about $1.6 billion in payroll taxes.
ITIN filers typically include undocumented immigrants who voluntarily comply with tax laws to maintain a record of tax contributions, which can be helpful for potential legalization efforts.

Those in formal employment pay through employer withholding.
Those in informal employment contribute primarily through sales and consumption taxes and, in some cases, income tax filings with ITINs.

Here are some numbers:

Tax Participation Rate 50-75% of undocumented immigrants pay federal, state, and local taxes.
Federal, State, and Local Taxes Includes payroll taxes (Social Security & Medicare), income taxes, sales, and property taxes.
ITIN Filers Over 2.5 million ITIN filers in 2020 contributed $5.9B (federal income) & $1.6B (payroll taxes).
Annual Tax Contributions ~$11.7 billion in state and local taxes by undocumented immigrants annually.
Social Security Taxes ~$12 billion annually contributed to Social Security by undocumented workers.
Contribution Channels Taxes paid via employer withholding, ITIN filings, sales taxes, and property (direct/indirect)

It becomes more interesting when we consider that those among the undocumented that pay in are not eligible to take anything out in the form of benefits, so it is a net revenue. For the rest of us, the net number becomes what we have paid in minus what we have taken and will eventually take out.

Why do undocumented people bother to pay in at all? According to Cato Institute's paper, it is because they are trying to improve their case for eventual legal immigration. Most immigration attorneys will advise their clients to pay taxes to improve their odds of obtaining legal status.

What about the cost of deportation? I've tried to get to the bottom of it and it's not easy. Between arrest, legal processing, detention and actual deportation, it is looking like a big number, like in the range of $30,000 per deportee. So figure $30B per 1MM deportees. Estimates are that there are 11MM undocumented people in the US. But nobody thinks they will successfully deport them all.

So the net impact of both sides of the equation could be quite large $50B+?
All this in mind, I ask again, is this program economically rational?

When asked this question directly, Tom Homan's answer has been "that's the price of security". Is it worth it?

glennds wrote: ↑Tue Jan 28, 2025 5:17 pm

When asked this question directly, Tom Homan's answer has been "that's the price of security". Is it worth it?

Every time I hear him speak I think "Union thug!"

He was asked on this week's NBC Meet the Press and he responded in a nonsensical, stupid way. Like how can you put a price on this and that?

Well, every single one of us does it every single day.

I've oftentimes said if you cannot put a price on keeping children safe then we'd mandate 15 mile per hour speed limits and no on driving anything smaller than a tank. Would that not result in far less children vehicle deaths and injuries?

But, of course, we don't because we are willing to pay the cost in terms of children deaths and injuries so we can drive huge vehicles at fast speeds.

How much is mass? Clearly, there’s a limit.
Undocumented workers are undoubtedly a functioning part of the U.S. economy and depending on the extent of deportations, there could be a lot of pain felt by those who live here:

The restaurant industry could be hurt worse than it was by Covid.
Construction is going to suffer.
Prices are going to go up. Groceries and more.

We will still have mass immigration.

Let’s say that this administration overdoes the deportations in the next four years. Perhaps one part of the upshot will be a more streamlined path to legal immigration. (Here’s hoping. My experience with it has been frustrating to say the least).

You’ve got me thinking about Europe, too, since both Macron and Scholz have called for mass deportations.

And, as you know, neither belongs to a right wing party.
The main difference, of course is that a huge amount of immigrants in both France and Germany are not partcipating in the economy. They’re unemployed. Those countries have failed to integrate their immigrants to a great extent.

Tonight, we have HTS (a Syrian group) threatening to burn down the newly rebuilt Notre Dame cathedral. The situation is more dire there than here. If they can pull it off, mass deportation would be *good* for the economy in those nations.

glennds wrote: ↑Tue Jan 28, 2025 5:17 pm Let's think about this in simple terms of revenue and expense.

How do we decide which laws should be evaluated this way?

flyingpylon wrote: ↑Tue Jan 28, 2025 7:07 pm

glennds wrote: ↑Tue Jan 28, 2025 5:17 pm Let's think about this in simple terms of revenue and expense.

How do we decide which laws should be evaluated this way?

Maybe materiality. If the remediation of the violations is escalating into the $30B-$50B range, then the practicalities of economics come into play.

Personally I would have supported a President doing something along the following:
1. Start by securing/sealing the border to stem the inflow of migrants

2. Assemble a team of wonks to put together an immigration reform plan to take to Congress and try and close the asylum loopholes, set up a legal path that will screen people appropriately but not so convoluted that it encourages illegal routes. Yes this is a big and lengthy project, but we have to eat the frog at some point.

3. Distinguish between the illegal residents on a criteria system.
Distinguish those who are actively committing crimes from those that are not, those that are paying taxes in versus those who are not.
Develop a block grant system to fund local police departments to set up teams supported by ICE to catch and deport the active criminals. I think local police know their jurisdictions better than ICE.
Set up an amnesty system for the rest with the goal of getting them legal, productive, paying taxes. If they don't play ball, they get deported.
There are fees involved paid by the migrant that will help offset some of the intense administration that goes with all of this. I'm betting it is cheaper than detainment and deportation.

The number of deportees goes down by what, 90%? The inflow is stemmed. Taxes revenue is flowing. Labor shortages are avoided. The growing tax base will support the aging Boomers and forestall the collapse of SS and Medicare.

glennds wrote: ↑Wed Jan 29, 2025 9:31 am Develop a block grant system to fund local police departments to set up teams supported by ICE to catch and deport the active criminals. I think local police know their jurisdictions better than ICE.
Set up an amnesty system for the rest with the goal of getting them legal, productive, paying taxes. If they don't play ball, they get deported.

What if local police aren’t cooperating, i.e. in so-called sanctuary cities?

dualstow wrote: ↑Wed Jan 29, 2025 9:37 am

glennds wrote: ↑Wed Jan 29, 2025 9:31 am Develop a block grant system to fund local police departments to set up teams supported by ICE to catch and deport the active criminals. I think local police know their jurisdictions better than ICE.
Set up an amnesty system for the rest with the goal of getting them legal, productive, paying taxes. If they don't play ball, they get deported.

What if local police aren’t cooperating, i.e. in so-called sanctuary cities?

Good question.

In my idealized vision, the President would be getting an immigration bill through Congress while the border is being sealed/secured under his own authority. I wonder if the legislation could provide a carrot and stick situation. If a state doesn't comply, it's more than just not getting the funding. Maybe they suffer other penalties. I'm sure a diabolical enough President with a tariff mentality could figure out some good sticks to embed in the bill.
The number of states interested in sanctuary cities is far outweighed by the number that aren't so I don't think the sanctuary city states are enough to block legislation, certainly not in the Senate, likely not in the House.
I'd like to think Dems have just had a clear wake-up call that a majority of the public is immigration concerned. So if there was any subject that could realistically be bi-partisan today, this ought to be on the short list.

Plus if there's a limited amnesty window for migrants that are willing to play ball, I would think a good % would jump at it voluntarily out of self interest. The % that proactively pay taxes under ITINs is evidence of a motivation to "get legal".
So the sanctuary city is mostly protecting the active criminals and the non-cooperative, more than protecting victims, which is standing on melting ice if you ask me.
Maybe the stick could be the Feds get the right to deploy ICE in scale in those non-compliant cities and charge them for it.
Just some thoughts.