Wednesday, May 16, 2007

Ancillary costs of legalization

The Heritage Foundation calculates that the retirement cost of giving amnesty to all current illegal immigrants would amount to nearly $2.5 trillion dollars. This is based on a conservative estimate of 9.3 million current illegals.

The calculation of this figure is as follows. In March 2006, there were 9.3 million adult illegal immigrants in the U.S. Most illegal immigrants are low-skill. On average, each elderly low-skill immigrant creates a net cost (benefits minus taxes) for the taxpayer of about $17,000 per year. (This includes federal state and local government costs.) If the government gave amnesty to 9.3 million illegal immigrants, most of them would eventually become eligible for Social Security and Medicare benefits or Supplemental Security Income and Medicaid benefits.

However, not all of the 9.3 million adults given amnesty would survive till age 67. Normal mortality rates would probably reduce the population by roughly 15 percent before age 67. That would mean 7.9 million individuals would reach 67 and enter retirement.

Of those reaching 67, the average life expectancy would be around 18 years. The net governmental cost (benefits minus taxes) of these elderly individuals would be around $17,000 per year. Over eighteen years of expected life, costs would equal $360,000 per elderly amnesty recipient. A cost of $306,000 per amnesty recipient times 7.9 million amnesty recipients would be $2.4 trillion. These costs would hit the U.S. taxpayer at exactly the point that the Social Security system is expected to go into crisis.

Not exactly chump change.

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