Immigration in Texas

Free Market Solutions

Alex Nowrasteh
Cato Institute

Texas Scope of Issue

All immigrants: 4.3 million 16.5%
Naturalized: 1.5 million 5.6%
Immigrant non-citizen: 2.9 million
10.9%
Illegal immigrants: 1.7-2 million
6.4%-7.6%
Immigrants in economy:
Lower incomes.
Higher employment and LFPR.
Concentrated in construction, agriculture,
leisure, manufacturing, arts.

Three Actions Texas Can

Take
Welfare reform, E-Verify, & guest
worker visas.
Goal: Increase net benefits and
decrease net costs of all immigration.
Fiscal effects Lower budget outlays
and taxes.
Economic effects Increase
economic growth.
Firm expansion.
Private investment.

First Action: Welfare

Reform

Deny non-citizens access to means-tested

welfare.
Current law legal & illegal immigrants.
State by state.

Constitutional, easy, and popular.

Public education, Plyler v. Doe (1982).

Poor immigrants use less welfare than poor

natives.
Immigration as an argument against welfare.
Decreases budget outlays, boosts LFPRs.

Welfare
[LPRs] generally are ineligible for five
years after entry and then eligible at state
option.*
Temporary Assistance for Needy Families
(TANF):
Resident of Texas,
Child under 19,
Low income,
Minimal work requirements,
U.S. national, citizen, legal alien, or
permanent resident.

~$126 million in 2013.

*Noncitizen Eligibility for Federal Public Assistance: Policy Overview and Trends, CRS, 9/2014.

E-Verify
Electronic eligibility employment
eligibility verification system. Exclude
illegal immigrants from workforce.
Including ALL E-Verify checks, $140
average cost per check.
2% false positive for legal immigrants.
27,000 denied work initially.

0.2% error rate for citizens.

30,000 citizens denied work initially.

E-Verify Doesnt Work

Arizona mandated in 2008 for all hires.
Only ~70% of employers used it. Fraud

Where enforced, no job gain for natives.

At best, temporarily decreased illegal
immigrant population by 16%.
Does not turn of jobs magnet.
Diminished expected wage for illegal
immigrants by 5% in AZ. Gain from
illegally immigrants fell from 253% to
241%.
If it works, it hurts economy. If it doesnt
work, it hurts economy.

State or City Based Visas

Regional decisions based on local
circumstances.
States can attract immigrants to fill houses, jobs,
start businesses, or shore up tax base.
Detroit Visa and Utah.

Get around Federal political deadlock.

States can currently enforce immigration law more
strictly, why not allow them to liberalize it?

Republican states would be biggest users of

this program.
Constitutional under current interpretations.

Conclusion
Welfare reform.
Easiest, beneficial for states budget and
economy.

E-Verify.
Middle, hurts state economy and
ineffective at pushing out unlawful
immigrants.

State-based guest worker visas.

Difficult, but a game-changer if
successful.

Measuring the Fiscal

Impact
Judging the fiscal impact of immigration:
Immigrations impact on economic growth and,
hence, tax revenues and
Immigrations impact on government outlays and
welfare use.
If increase in revenues is greater than increase in
outlays, the impact is positive.

No Texas analysis for all immigrants, what

else can we look at?
Economic theory, analyses of other states,
and the national fiscal impact of
immigration.

States: Net Fiscal Impact of

Immigration
Texas, 2005. Illegals had net +$424.7 million.
Arkansas, 2010. Immigrant individual had net
-$127 fiscal impact or -$31 million total.
Maryland, 2008. No difference.
Indiana, 2009. +227.2 million.
Florida, 2002-2004. Immigrant individuals had
average net +$1,496.67 fiscal impact.
Arizona, 2004. +$941.5 million total.
New Jersey, 1997. Immigrant households had
average net +$744 fiscal impact.
New Jersey, 1994. No difference.

Texas Source for Tax

Revenue
Tax

Percent of State Revenue, FY

2010

Property

45.2%

Sales

44.3%

Licenses/MV/Fees/Other

10.5%

Individual Income Tax

Corporate Income