The Washington Times has some comments
from the Congressional Budget Office (CBO) , which yesterday released an
analysis of the recently Senate passed Immigration Bill.
The CBO says the $35 billion to be spent on 20,000 new border patrol agents and fencing would stop between a third and a half a half of future illegal immigrants.
Border Control Agents and Fencing The southern border of the US is 1954 miles long and Wikipedia says 350,000 illegals cross this border each year http://en.wikipedia.org/wiki/Mexico%E2%80%93United_States_border. It Is apparent that 20,000 new border patrol agents and 350 miles of new fencing would only serve as an additional deterrent to new border crossing. I will not significantly dispute the CBO estimate of a 33 to 50% reduction in illegal border crossings, but that may be on the high side.
Assuming a 50% reduction in effective illegal entries at the southern border, the question is whether we want to spend $200,000 to eliminate one effective illegal border crossing in a year. ($3.5 billion / 175,000 illegals). We could amortize this over 10 years to give an unrealistic estimate of $2000 per illegal, but it actually would be higher than that because of salary increases for the 20,000 additional border control agents plus maintenance of fencing.
$1 Trillion in New Tax Revenue However, the larger objection I find with the CBO report concerns the statement that adding the additional workers,who are made legal by the amnesty provisions of the Bill, will boost the economy and lead to nearly $1 trillion in new tax revenue over the next 20 years.
I don't see how adding additional workers made legal by the amnesty provisions boosts the economy. I can see a consideration of income tax revenues from new taxpayers formed by the declaration of amnesty.
There are an estimated 12 million illegals in the US (http://www.cis.org/amnesty-for-illegal-immigrants-and-the-employment-picture-for-less-educated-americans,). Eight million illegals are already estimated to be employed. The 4 million illegals unemployed do not now pay income tax. The 8 million already employed likewise do not pay income tax, because their illegality does not make it possible for them to do so.
With the creation of amnesty, the 8 million employed and perhaps half of the 4 million unemployed will be added to the federal income tax role for a total of 10 million people
The CBO says the $35 billion to be spent on 20,000 new border patrol agents and fencing would stop between a third and a half a half of future illegal immigrants.
Border Control Agents and Fencing The southern border of the US is 1954 miles long and Wikipedia says 350,000 illegals cross this border each year http://en.wikipedia.org/wiki/Mexico%E2%80%93United_States_border. It Is apparent that 20,000 new border patrol agents and 350 miles of new fencing would only serve as an additional deterrent to new border crossing. I will not significantly dispute the CBO estimate of a 33 to 50% reduction in illegal border crossings, but that may be on the high side.
Assuming a 50% reduction in effective illegal entries at the southern border, the question is whether we want to spend $200,000 to eliminate one effective illegal border crossing in a year. ($3.5 billion / 175,000 illegals). We could amortize this over 10 years to give an unrealistic estimate of $2000 per illegal, but it actually would be higher than that because of salary increases for the 20,000 additional border control agents plus maintenance of fencing.
$1 Trillion in New Tax Revenue However, the larger objection I find with the CBO report concerns the statement that adding the additional workers,who are made legal by the amnesty provisions of the Bill, will boost the economy and lead to nearly $1 trillion in new tax revenue over the next 20 years.
I don't see how adding additional workers made legal by the amnesty provisions boosts the economy. I can see a consideration of income tax revenues from new taxpayers formed by the declaration of amnesty.
There are an estimated 12 million illegals in the US (http://www.cis.org/amnesty-for-illegal-immigrants-and-the-employment-picture-for-less-educated-americans,). Eight million illegals are already estimated to be employed. The 4 million illegals unemployed do not now pay income tax. The 8 million already employed likewise do not pay income tax, because their illegality does not make it possible for them to do so.
With the creation of amnesty, the 8 million employed and perhaps half of the 4 million unemployed will be added to the federal income tax role for a total of 10 million people
Illegal immigrants are generally unskilled, which means
they are likely to draw a minimum wage of $7.25 an hour. Employers also also
reduce medical expenses and other benefits for each employee by reducing worked
hours below 40 for week. If the average work week is 32 hours for a new amnesty
employee, yearly income will be $12,064 ($7.25 x 32 hours x 52 weeks).
One reference says that a family of 4 will pay 5.3 % of its 2103 income in federal income taxes. A family of 4 likely contains 2 children, which means that for 2 new taxpayers in the family, the family tax bill will be $1278 ($12064 x 2 x 5.3%). For the 10 million new taxpayers, the annual increased tax revenue would be $6.4 billion or $128 billion over 20 years. This is somewhat less than 10% of the $1 trillion claimed by CBO.
One reference says that a family of 4 will pay 5.3 % of its 2103 income in federal income taxes. A family of 4 likely contains 2 children, which means that for 2 new taxpayers in the family, the family tax bill will be $1278 ($12064 x 2 x 5.3%). For the 10 million new taxpayers, the annual increased tax revenue would be $6.4 billion or $128 billion over 20 years. This is somewhat less than 10% of the $1 trillion claimed by CBO.
Another reference involves the IRS withholding tax
calculator. For the "family of four", I assumed that each of the two adults
would be considered a head of family with one child as a dependent. Filling in
all the boxes with some reasonable deductions for medical expense and childcare,
the calculator reported, "Based on the information you previously entered, your
anticipated income tax for 2013 is $0. If you do not change your withholding
arrangement, your withholding for 2013 will equal your tax and you will have
nothing withheld. Your balance due will equal zero and you will not receive a
refund". In other words zero increased tax revenue per year from 10 million new
amnesty taxpayers.
The IRS also has an Unearned Income Tax Credit. The IRS
says, "The EITC Earned Income Tax Credit is a benefit for working people who
have low to moderate income. A tax credit means more money in your pocket. It
reduces the amount of the tax you owe and may also give you a refund".
To determine the Unearned Income Tax Credit for new amnesty taxpayers with one child, I used the EITC Assistant Tool ( http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)-%E2%80%93--Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.). It reported, that the earned income tax credit is $3160. This is an IRS refund to taxpayers, who already pay no tax. Assume that half of the 10 million new amnesty tax payers apply for this credit. This calculates as a drain of $31.6 billion on tax revenue income to the federal government. Since the CBO likes 20 years, that's a negative $632 billion; a far cry from the positive $1 trillion claimed by CBO.
I will grant that I've used some assumptions in challenging the CBO claim of an increased $1 trillion in tax revenue over the next 20 years, but these assumptions seem reasonable to me. Contrarily, I've not seen any calculations or basis of estimates for the CBO claimed $1 trillion.
To determine the Unearned Income Tax Credit for new amnesty taxpayers with one child, I used the EITC Assistant Tool ( http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)-%E2%80%93--Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.). It reported, that the earned income tax credit is $3160. This is an IRS refund to taxpayers, who already pay no tax. Assume that half of the 10 million new amnesty tax payers apply for this credit. This calculates as a drain of $31.6 billion on tax revenue income to the federal government. Since the CBO likes 20 years, that's a negative $632 billion; a far cry from the positive $1 trillion claimed by CBO.
I will grant that I've used some assumptions in challenging the CBO claim of an increased $1 trillion in tax revenue over the next 20 years, but these assumptions seem reasonable to me. Contrarily, I've not seen any calculations or basis of estimates for the CBO claimed $1 trillion.
We need the CBO to do an analysis of CBO analyses. The first CBO analysis of ObamaCare said it would be less than $1 Trillion.
ReplyDeleteI will quote from Forbes magazine in a July 2012 article titled:
CBO: Obamacare Will Spend More, Tax More, and Reduce the Deficit Less Than We Previously Thought
“Today, the CBO believes that Obamacare will spend more money, raise more tax revenue, and reduce the deficit less than the agency thought in 2010. And things could get worse.
In 2010, the CBO estimated that Obamacare’s spending on new programs would amount to $929 billion from 2013-2019, and a ten-year cost of $944 billion. Those figures increased to $956 billion and $1,442 billion respectively in 2011, and $1,053 billion and $1,856 billion in 2012.
By “spending on new programs” I mean all the spending in Obamacare on new programs, principally the cost of expanding coverage via Medicaid and the new exchanges. These figures don’t include the cuts to Medicare.
What’s remarkable is that this increased spending comes despite the fact that the CBO estimated that state cutbacks in the Medicaid program, in the wake of the Supreme Court ruling, would reduce government spending by $84 billion from 2012-2022.
In 2010, the CBO estimated that Obamacare’s tax increases would amount to $626 billion from 2013-2019, and $631 billion over ten years. In 2011, the CBO estimated totals of $624 and $968 billion, respectively.
In the most recent report, the CBO projected a 2013-2019 total of $672 billion, and a ten-year total of $1,221 billion.”
I didn’t believe the 2010 projections and I don’t believe the 2012 projections either. The CBO will continue to raise the cost to reflect the actual occurring in the system, this will continue for the rest of my life. The same can be said for their projections on Immigration.
The CBO at the end of the day is a lie that Congress uses to disguise the real cost of their hair brained ideas. They have proven time and time again not to reflect the actual cost, but provide the political cover Congress needs to pass the trashy legislation. They are supposed to be ‘independent’ but nothing could be further from the truth. So a CBO projection to me is at best a low guess and at worse a devised deception of what the economic impact of legislation will be. It is not accurate and unreliable. No prudent human will bank on their numbers.