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April 05, 2005

Immigrants will Save Social Security

For years, I've argued that new immigrants will save social security, with an expanded population of working immigrants confounding official estimates that ignore them.

But immigrants are contributing to the stability of the social security system even more dramatically than I thought, since tax payments by illegal immigrants -- with no commensurate liability for retirement payments in the future -- are a massive source of payments into the trust fund today. Those payments:

...added up to about 10 percent of last year's surplus - the difference between what the system currently receives in payroll taxes and what it doles out in pension benefits...generating $6 billion to $7 billion in Social Security tax revenue and about $1.5 billion in Medicare taxes.
Since these are made under fake IDs, those workers will never be credited for those payments in the future.

This also highlights why undocumented immigrants would gain from selling green cards. Some commentators objected that it's too much of a financial burden, but such immigrants are already losing thousands of dollars worth of social security credit each year because of their non-legal status -- along with losing out on many other social benefits and lower wages -- so paying a reasonable price for a green card would actually be a good economic deal for almost all such immigrants.

Posted by Nathan at April 5, 2005 08:22 AM