Last week we argued Why Texas Comptroller Needs to Update Report on Undocumented Immigrants. Today we are look into how these undocumented workers, and an immigration reform, contribute to fund federal programs like Medicare, Social Security and the National Debt.
Reform would add a net $606 billion to the Social Security trust fund
Over the coming decades, the Social Security system—which is funded through payroll taxes—will experience rising costs as Baby Boomers retire and begin collecting benefits. Immigration reform provides an opportunity to increase the amount of money being paid into the system without creating any net costs over the next three decades. Since most unauthorized immigrants are young and have many working years ahead of them, they could be paying taxes to fund Social Security at the same time that Baby Boomers are collecting benefits. CAP estimates that if undocumented immigrants could obtain legal status and citizenship, they would contribute a net $606 billion to the Social Security system over the next 36 years. This is enough money to fund the retirement benefits of 2.4 million native-born Americans.
Medicare trustees project that the Medicare trust fund will be depleted by 2026. Immigration reform with a pathway to citizenship would extend the solvency of the trust fund by four years, as undocumented immigrants would go on the books and pay more in taxes. Similar to the long-term benefits of immigration reform to the Social Security system, undocumented immigrants over the next three decades would contribute a net $155 billion to the Medicare trust fund.
Reform would reduce the deficit by $820 billion over the next two decades
CBO estimated that comprehensive immigration reform such as S. 744 would not only pay for itself but would also lead to a significant reduction in the deficit. Specifically, CBO found that additional tax revenues would outpace costs of reform by almost two to one. That is, for every dollar of the cost of immigration reform, two dollars would be paid in taxes. It is not surprising then that CBO found that immigration reform would decrease the deficit by $135 billion over 10 years and $820 billion over 20 years.