How Many Taxpayers Does it Take to…..

Obviously, it depends how much they pay in taxes. We have too many loopholes at the top – different tax rates, off-shore avoidance rules that only favor the biggest, slick estate tax “outs” that allow mega-estates to pass from one generation to the next avoiding the clear estate tax rates almost entirely – and declining earning power in most of the rest. We have, according to The Economist, $2.7 trillion of unfunded state and municipal pensions and retiree healthcare obligations, and our “fight big wars while cutting taxes” federal deficit has only grown under the strain of the great recession. Detroit is our mirror and our darkest fear.

And if you think Detroit is just an anomaly, try the beginnings of a parallel vision in the mega-wealthy Silicon Valley: “San Jose [the third largest city in California] now spends one-fifth of its $1.1 billion general fund on pensions and retiree health care, and the amount keeps rising. To free up the money, services have been cut, libraries and community centers closed, the number of city workers trimmed, salaries reduced, and new facilities left unused for lack of staff. From potholes to home burglaries, the city’s problems are growing… ‘We’re Silicon Valley, we’re not Detroit,’ said Xavier Campos, a Democratic city councilman representing San Jose’s poor East Side. ‘It shouldn’t be happening here. We’re not the Rust Belt.’” New York Times, September 23^rd. It’s happening everywhere. We need more taxes? How about those loopholes and the number of folks paying taxes?

Well, if you can close lots of those loopholes, the ship will list a little less as it limps along. Do we have the stomach to do this? Not in this Congress and not in most state legislatures. Congress saves money by shutting off programs – except a few that favor their contributors – and perhaps by shutting down the entire government. Cutting infrastructure, education and research actually cuts our future earning power rather significantly, which of course reduces the ability to generate the tax base we need. Austerity didn’t work so well in Europe as we can plainly see.

How about adding new taxpayers, folks who today are loathe to work in jobs where they need to report their undocumented presence just to fill to legitimate employment forms? People whose kids wind up in our public schools and who are often treated gratis at local emergency rooms. If there were a path to legitimacy, requiring registration and paying of taxes, exactly how many new taxpayers would that involve?

The experts at Pew Research examined the recent trends of illegal immigration to reassess the hard numbers. Back in 1995, the number was estimated to be around 3.5 million undocumented workers, mostly concentrated in California and New York. By 2007, that number had risen to 12.2 million scattered across the country, but the recession dried up even the menial jobs that so many of these undocumented workers are willing to accept. The bottom of the recession trough was 2009, when estimates place the total at 11.3 million. A slight uptick in our job situation, and we are holding at roughly 11.7 million.

Contrary to popular belief, they are not all from Mexico: “The Pew study released [September 22^nd] found that the number of Mexican immigrants living illegally in the United States has dropped steadily to just over 6 million, down from a high of 6.9 million in 2007 and the lowest number since 2004. By contrast, the number of unauthorized immigrants from other nations has reached an all-time high of 5.7 million, the study found.” Washington Post, September 23^rd.

There are issues and subtexts in allowing such people to process their way to citizenship. While GOP powers emphasize border security and crime rates, even though Hispanics are mostly Roman Catholics where abortion is forbidden, the underlying reality is that these minorities tend to support more liberal candidates and not Republicans. But with overall demographic trends indicating that a “majority of minorities” will control anyway, there are more than a few Republicans worried that their actions will simply push these potential voters even further away from the GOP.

“The Democratic-controlled Senate has approved a far-reaching plan to add new layers of security along the U.S.-Mexican border, provide more legal channels for immigration and allow those here illegally to gain citizenship over 13 years if they pay fines, learn English, remain employed [and pay taxes!] and do not commit crimes… But the Republican-led House has shelved that plan and is focused instead on a series of piecemeal bills that do not include measures to legalize undocumented immigrants.” The Post.

Back in 1986, the Reagan administration promulgated legislation that cleared the path for approximately 2.5 million undocumented workers to become residents and ultimately, possibly citizens. In today’s world, the Institute on Taxation and Economic Policy (ITEP) estimated that these workers would, if given a path to citizenship, add additional money to the currently assumed $10.6 billion in taxes and other governmental assessment that they are estimated to have paid in 2010:

“The taxpaying power of undocumented immigrants would grow were they able to acquire legal status. According to ITEP: ‘Legalization would increase immigrant wages both because of their increased bargaining power with employers and because of their increased investment in their own language and skill development, thus increasing the taxes paid by those same immigrants. But, the most significant revenue gain comes from simply having these immigrants fully participate in the federal, state and local tax system, requiring them to pay state personal income taxes.’ ITEP estimates that, provided the opportunity to earn legal status, formerly undocumented immigrants would pay a total of $12.7 billion in state and local taxes each year, including: $8.5 billion in sales and excise taxes. $2.8 billion in income taxes. $1.3 billion in property taxes.” As quoted at ImmigrationImpact.com, July 12, 2013.

Mainstreaming also reduces the cost of governmental benefits consumed without offsetting revenue. Over generations, menial workers transition to high forms of labor, eventually into higher management, education and the professions. Los Angeles, Chicago, Miami, New York, etc., etc. are clear venues where these trends are clear. We are a nation of immigrants… but for some reason, too many Americans actually fear the process that gave them life in this great nation.

I’m Peter Dekom, and it’s time to show fear the door.