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Ruben De Pena
Professor Paula Shipper
Information Literacy IDS804
05 April 2014
Is the Fiscal Impact of Immigrants in Tennessee Detrimental to the States Economy?
I would like to start this paper by presenting an overview on the ongoing immigration
debate at the national level. I think establishing this framework is of utter importance before
delving into the topic at hand, which is to determine whether the ongoing incursion of
immigrants, particularly workers (both documented and undocumented) has a negative effect on
Tennessees economy, particularly from a fiscal standpoint. Nevertheless, I believe it is
important to recognize the unfeasibility in attempting to present a thorough analysis on the
subject because of limitations in scope and depth of this paper.
It is axiomatic that immigration, legal or otherwise, has always been an integral part of
the American society. However, in recent years, it has become more contentious than ever. That
is particularly true due to the massive influx of immigrants to the United States from Mexico and
other parts of Latin America.
There is no doubt that there are two sides of this ongoing debate, each trying to win both
public and political support toward victory. From an anecdotal perspective, one side of the
debate wants to limit or eradicate altogether the ongoing influx of unauthorized workers into this
country. These proponents blame these foreigners for a number of ills affecting the American
society.
One of the many arguments they sustain is that immigrants, particularly the
undocumented ones, are harmful to the U.S. economy, as they take away American jobs and do

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not even pay taxes; consequently, they become a burden to the American taxpayers. Prominent
syndicated radio and television talk show hosts vehemently voice these concerns with vitriol
while urging politicians to stay away from any immigration reform passage as that would be
equating to nothing but granting amnesty to these undeserving criminals.
It is evident that for many, the issue of immigration, whether legal or not, is repudiated.
They honestly equate immigration as pernicious for the American way of life and the solution
would be to enforce current immigration laws. One of those champions in the anti-immigrant
movement is David Frum, a former presidential speechwriter and contributing editor to the
prominent conservative magazine National Review. Among other things, he states that
It was customary to draw a sharp line dividing (bad) illegal immigration from
(good) legal immigration. But the more closely you studied the issue, the more
problematic that line became. Illegal immigration was not illegal in the same
way that, say, illegal drugs were I began to think that it made more sense to
think of immigration policy as a whole, with a tacitly accepted illegality I
also began to learn that you could hardly name a social problem without
discovering that immigration was aggravating it to the point of unsolvability
How could you even begin to think about this issue without recognizing the huge
immigration-driven increase in the supply of unskilled labor over the same
period? How could the U.S. remain the worlds most productive nation while
simultaneously remixing its population to increase dramatically the proportion of
poorly educated people within it? (Frum, How I Rethought Immigration).

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Moreover, an abundant body of research exists to substantiate the notion that a lot of the
anti-immigrant rhetoric is chiefly aimed at Latinos, and comes from mostly white America. In
this regard, University of Michigan scholars Nicholas A. Valentino, Ted Brader, and Ashley E.
Jardina conclude that while anti-Latino sentiment has both ethnocentric and media elements of
causality to it, they also clearly establish that
Public rhetoric often highlights the economic and cultural costs of immigration,
but rarely touts the benefits of new taxpayers or low-wage laborTwo broad sets
of [economic] explanations have been offeredThese economic forces, therefore
can be divided into two broad categories: Aggregate fiscal burdens that increase
the size of the welfare state, and market competition that threatens individuals in
specific job sectors. In the first case, pressure that immigrants put on a national,
state, and local social welfare agencies may boost opposition due to the fears of
increased taxation, educational costs, and other burdensThe second variant of
the economic explanationthe labor market competition hypothesissuggests
opposition to immigration will be the highest among individuals most likely to
lose their jobs to newcomersWhite Americans attitudes about [primarily
Latino] illegal immigration are quite sensitive to racial cues
[Additionally]Previous work (Brader et al., 2008) has demonstrated just such a
causal role for media coverage of immigration: Bad news for Latino immigrants,
but not immigrants of other groups, causes Whites significant anxiety, and this
anxiety is critical in triggering opposition to immigration(Valentino et al,
Immigration Opposition Among U.S. Whites: General Ethnocentrism or Media
Priming of Attitudes About Latinos?)

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This type of anti-immigrant sentiment seems to be more of an issue in southern states
where the influx of immigrants has grown exponentially in recent decades. As a matter of fact,
While those who harbor such sentiments generally say their real objection is to
illegal aliens, many of their charges are aimed at all Latino
immigrants[additionally] Although most public discourse regarding Latino
immigrants in the Southeast avoids extremism, the social and economic cost of
the new immigration is often exaggerated. A number of politicians, most of whom
have reduced the issue of immigration to the impact of illegals, resort to
inflammatory claims about Latinos (Odem and Lacy 146).
Intellectual circles within many religious organizations, including the Catholic Church,
have also expressed concern about the heated rhetoric in recent years about the immigration issue
and the morality of finding a concerted solution. Some of those voices state that
The graduated urgency of basic, mutually implicative human rights claims
establishes the relative (lexical) priority of migrants claimsthe legitimate
sovereignty of states in regulating migration subserves the global common good,
so that states are morally bound to respect and promote the basic human rights of
both citizen and resident alien, especially the most vulnerableand of these, in
particular, women and childrenThe rhetoric of basic human rights leaves many
questions unresolved. Yet recognizing the graduated urgency of human rights and
correlative duties serve to indicate the lineaments of an equitable immigration
policy (ONeill, A Little Common Sense: The Ethics of Immigration in
Catholic Social Teaching.)

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Obviously, the heated immigration debate exists beyond the United States. There are
millions of people across the globe whose ultimate goal is to set as many barriers as possible to
reduce or eliminate altogether workers migration. A possible reason is that these limitation
proponents either ignore or refuse to accept the evidence that migration is actually a human
activity, as clearly editorialized renowned researchers Bridget Anderson, Nandita Sharma, and
Cynthia Wright in a recent publication:
A general problem with the above approaches is their shared assumption
concerning the human practice of migration. For them, migration is always-ready
a problem: an aberrant form of behaviour in need of fixingTheir ideal view of
the world is one in which people seldom, if ever, move and societies remain more
or less closed. Such a view belies the history of humanity. Historians,
archaeologists, biologists, and the tales of people tell all point to the fact that
around the world the human beings have always moved and that they have done
so for reasons not dissimilar to the reasons people move today (Anderson et al,
Editorial: Why No Borders?

In regards to the real driving force behind ongoing efforts to curb immigration, Irene
Ario De La Rubia wrote a book review article on the issue and she concludes, among other
things, that
In many countries, especially the USA, public perception of how well
immigration policy is working, whether accurate or not, coupled with political
pressure from interest groups, are the driving forces behind a states immigration
policy. Desire for consistency in the largely ideology is nowhere in sight. Yet

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maintaining the debate on a primarily philosophical level, while it might not allow
us to move forward with any practical policy creation, it does provide an ideal
that we can strive for if striving to create a well thought out immigration policy
(De La Rubia, Debating the Ethics of Immigration: Is There a Right to Exclude?By Christopher Health Wellman and Phillip Cole.)
As it has been clearly established, the immigration debate continues to be heated today
due a number of factors that vary from state to state. The evidence suggests that a common
denominator is the assumption that the continuous entry of immigrant workers is economically
unsustainable, particularly from a fiscal perspective. However, is this a solid argument? Do they
really produce a fiscal imbalance particularly at state level? Is it true that legal immigrant
workers pay little or no taxes? Is there sufficient evidence to substantiate that illegal workers do
not pay taxes at all?
For many Americans it could be shocking to hear that immigrants, regardless of their
legal status, pay as much sales and real estate taxes as citizens do. Now, it is true that many
immigrants work in the informal economy, which means they get paid in cash and that income is
not reported for federal, state, or social security tax deduction.
However, that situation is also common among many citizens. For example, it is very
likely that a babysitter in a given American neighborhood will receive cash payment under the
table for his/her services. The problem is these workers in the informal economy, whether
immigrants or citizens, do not have access to any of the protections that workers in the formal
economy enjoy, such as health insurance and other benefits (Chompsky 37).
How about some of the illegal immigrants who work with a fake social security number?
When that happens, the workers themselves are in disadvantage because while taxes are

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deducted from their paychecks, the fact they are officially undocumented workers will prevent
them from ever having access to the benefits they are paying for, such as social security and
unemployment benefits. What about all that collected money deducted from these undocumented
individuals using a false social security number? Who gets it?
Even with a false social security number, the federal and state taxes that are
deducted from a workers paycheck will go into federal and state coffers. Social
security payments are either credited to whoevers number was used, or, if a
worker uses a number that doesnt belong to anybody, they go into the Social
Security Administrations earnings suspense file. As of 2005, Social Security
was receiving about $7 billion a year through false social security
numbersallowing it to break even, because thats about the same amount as the
difference between what it paid out in benefits and what it received in payroll
taxes. According to the New York Times, illegal immigrant workers in the United
States are now providing the system with a subsidy of as much as $7 billion a
year. (ibid, 37).

In my present job as Community Outreach Specialist for the Metropolitan Nashville

Public School system, one of my key responsibilities is to provide at least one professional
development session for recently hired school administrators, faculty members and support staff
on issues of diversity, primarily from the context of best practices to reach out to Latino students
and families. While there are more than 100 countries represented in my districts student
enrollment, 80% of those are Latinos and significant portions of those are enrolled in the English
Learners program.

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A topic that I usually bring up for discussion in those professional development sessions
is the correlation of immigrants fiscal contributions at federal and state level versus the benefits
they receive. In reality, anecdotal and empirical evidence exist that support the notion that
immigrants, regardless of immigration status contribute more in taxes than the benefits they
receive. In fact,

Several state-level studies have tried to assess the level of state and federal taxes
that immigrants, documented and undocumented, pay compared to the level of
state and federal services that they receive. Early studieshave come to similar
conclusions. Immigrants, documented and undocumented are more likely to pay
taxes than they are to use public services. Undocumented immigrants arent
eligible for most public services and live in fear of revealing themselves to any
government authoritiesNationally, one study estimates that households headed
by undocumented immigrants use less than half the amount of federal services
that households headed by documented immigrants or citizens (Chomsky 3940).

Other important studies also conclude the same. One of those is a publication that the
Center for American Progress published in 2012 about several important facts on immigration
today. With verifiable data, they are able to dispel the myth many Americans have that not only
the majority of immigrants are illegal, but that immigrants are a liability to our economy. Among
other things, they conclude that out of the almost 40 million foreign-born persons in the U.S. in
2010, 44% were naturalized citizens, 24% were legal permanent residents, 29% were
unauthorized migrants and 3% were temporary legal residents, such as students or temporary

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workers (Center for American Progress, The Facts on Immigration Today). They also conclude
that immigrants are a net plus for the U.S. economy, by providing the following compelling
information:

$1.5 trillionThe amount of money that would be added to U.S. cumulative gross
domestic product over 10 years with a comprehensive immigration reform plan that
includes legalization for all undocumented immigrants currently living in the United
States.

$11.2 billionThe amount of money households headed by unauthorized immigrants

paid in state and local taxes in 2010.

$4.5 billion to $5.4 billionThe amount of additional net tax revenue that would
accrue to the federal government over three years if all undocumented immigrants
currently living in the United States were legalized.

In contrast

$2.6 trillionThe amount of money that would evaporate from U.S. cumulative GDP
over 10 years if all undocumented immigrants in the country were deported or selfdeport.

$285 billionThe cost of removing the entire undocumented population from the
United States over a five-year period, including continued border- and interiorenforcement efforts.

$23,482The cost of apprehending, detaining, processing, and transporting one

individual in deportation proceedings (ibid, The Facts of Immigration Today).

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As it has been established, the evidence supports the theory that contributions of
immigrants to the U.S. economy overall are on the positive side. However, it is unclear how
many states of the union are actually on the positive side of the balance. Therefore, I have chosen
my home state of Tennessee as the focus of this paper to determine, from a fiscal perspective, if
the impact of immigrant workers to the states economy is favorable or not.

Tennessee is also a very interesting state to investigate the fiscal impact of immigrants to
its economy because, according to an analysis that Brown and Patten conducted for the Pew
Hispanic Center, the states foreign-born population experienced an unprecedented growth from
159, 343 in the year 2000 to 282, 541 in 2012. That is more than 77% growth in just twelve years
(Brown, Anna, and Eileen Patten. "Statistical Portrait of the Foreign-Born Population in the
United States, 2012.").

From these groups of immigrants, research by the American Immigration Council study
establishes that

Latinos and Asians (both foreign-born and native-born) account for 1 in 16

Tennesseans and wield $10.9 billion in consumer purchasing power. At last
count, the sales and receipts of businesses owned by Latinos and Asians totaled
$5.4 billion and employed more than 38,000 people. At time when the economy is
still recovering, Tennessee can ill-afford to alienate such a critical component of
its labor force, tax base, and business community (American Immigration
Council, "New Americans in Tennessee: The Political and Economic Power of
Immigrants, Latinos, and Asians in the Volunteer State.).

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What about undocumented immigrant workers: Do they represent a fiscal burden for
Tennessee? The same aforementioned study indicates that
[they] paid $157.4 million in state and local taxes in 2010, according to data
from the institute for taxation and Economic Policy, which includes:

$52,013 in state income taxes.

$8.7 million in property taxes.

$148.7 million in sales taxes.

(ibid, New Americans in Tennessee: The Political and Economic Power of

Immigrants, Latinos, and Asians in the Volunteer State.).
While data have proven that immigrants fiscal contribution to Tennessees economy is
strong, do benefits the state provides to immigrants outweigh the taxes they pay? In other words,
what is the net fiscal impact? Is it, after all, negative? A 2012 comprehensive analysis by the
Center of Business and Economic Research of the University of Tennessee provides some
interesting findings:

Most studies conclude that the net fiscal impact of immigrants is positive. Tax
revenues collected from immigrants exceeds the cost of services they use. In this
regard, immigrants fare favorably when compared to their low-income, nativeborn counterparts. The principal reason for this is that immigrants do not receive
as many social benefits as their counterparts. In fact, immigrants pay many taxes
for services they cannot receive. This fiscal benefit is not equally divided across
local, state and federal governments, however; while the net fiscal impact of

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immigrants at the federal level is certainly positive the net fiscal impact of
unauthorized immigrants is negative, but modest, at state and local levels
Costs: The chief costs to state and local government of immigration come
from education, health care, and law enforcement. Of these, K-12 education is by
far the largest in Tennessee. According to Tennessees 2011-2012 budget, 45
cents of each state tax dollar is expected to go to education; of this 45 cents, about
three-quarters will go to K-12 education. This far exceeds any other state
expenditure. If native-born children of immigrants will soon account for 10
percent of all children statewide, then the impact of immigration on K-12
education costs is quite large. For health care expenses, numerous studies show
that immigrants use less heath care than their native born counterparts. One
possible cause of this is the fear among immigrants that they risk being deported
if they seek medical attention. The primary costs occur when uninsured
immigrants seek emergency medical care; these costs are reimbursed to the
hospital by TennCare. In Tennessee, 90 percent of the emergency services
reimbursed by TennCare are for labor and delivery (Mattson 2007). The third
largest possible cost of immigrants comes from the law enforcement system.
Benefits: Immigrants benefit state and local governments primarily through their
contributions as consumers and workers. As consumers, immigrants pay sales
taxes and excise taxes on gas, alcohol and cigarettes. Sales taxes are the most
important component of the state revenues in Tennessee. Since low-income
households tend to pay more in sales taxes per dollar of income, and since
Tennessee depends more on sales taxes than most other states, Hispanic persons

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in Tennessee probably contribute more to state and local taxes than in many other
states. Immigrants also contribute to local taxes through the property taxes they
pay directly or indirectly through their rents, as well as through the property taxes
of the firms that employ immigrants or sell goods and services to them. In
addition, immigrants pay various payroll taxes. The Social Security
Administration estimates that 75 percent of illegal immigrants are on the books
and pay federal Social Security and Medicare taxes, even though they are
ineligible to receive benefits. Similar numbers also probably pay unemployment
insurance taxes through employer contributions, even though they are ineligible to
receive benefits. Another source of tax revenue is the various business taxes that
firms must pay on income. To the extent that immigrants increase the productivity
of the economy, this increment in tax revenue can be attributed to immigrants
(Nagle et al, A Profile of Hispanic Population in the State of Tennessee).

Evidently, South Nashville is one of the areas in Tennessee that has experienced one of
the most explosive economic growths in recent years because of immigrants entrepreneurship.
These new businesses add hundreds of jobs to the local economy and a significant amount of
revenue to the local, state, and federal coffers. This immigrant-driven economic and fiscal
contribution has even gained national attention:

Nashville is a good place for immigrants to go into business, according to Forbes

magazine, which recently ranked the city as No. 3 among the nations best
metropolitan areas for minority entrepreneurs. The magazine noted that
Nashvilles immigrant population soared 83 percent, to 107,000 between 2000

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and 2008, the fastest growth rate among the nations largest cities, adding that
many of them have gone into business for themselves. The city ranks fourth
among the nations top 52 markets for Hispanic self-employment, Forbes said.
While there are a number of growing immigrants groups herethe biggest
increase has been Hispanics, particularly from Mexico and Central America
That has led to a boom in Hispanic-owned businesses, which now total more than
1,400 in the Nashville area, up about 60 percent in just the past five
years (Williams, Nashville Sees Boom in Hispanic-Owned Businesses).

In conclusion, given the anecdotal and research evidence presented, I can sustain that
contributions of immigrants to the Tennessee economy are overall positive, which is consistent
with their contributions at the national level. Immigrants pay more taxes in Tennessee than the
benefits they receive. Nonetheless, the data at hand also shows that the fiscal impact of
undocumented immigrants in Tennessee is slightly negative, and that pattern can be and should
be reversed.

Therefore, while it is beyond the scope of this paper to be an advocacy tool to condone
unrestricted immigration, I believe that the ongoing vilifying rhetoric against immigrants,
particularly undocumented Latino workers, is counterintuitive and will not be conducive to
solving the immigration issue in our country. Instead, it seems to me the solution would be for
politicians to agree upon an effective, sustainable immigration reform. I believe it makes sense
fiscally and economically overall, that we move away from policies geared toward immigrationenforcement only because

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Just like native-born citizens, immigrants pay personal taxes (like income tax
and property tax), business taxes (like corporate profit taxes, dividends, and
property taxes), and sales taxes[They also] make significant contributions to the
overall prosperity of local economies. So, what would happen if all the
undocumented immigrants were driven from the United States? Conversely, what
would happen if the countrys undocumented immigrants were offered a path to
legalize their status?... (Hinojosa-Ojeda, The Economic Benefits of
Comprehensive Immigration Reform).

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Works Cited
American Immigration Council. "New Americans in Tennessee: The Political and Economic
Power of Immigrants, Latinos, and Asians in the Volunteer State." Immigration Policy
Center. Apr. 2013. Web. 06 May 2014.
Anderson, Bridget, Nandita Sharma, and Cynthia Wright. Editorial: Why No Borders?.
Refuge 2009: 5+. Academic Search Premier. Web. 6 Apr. 2014.
Brown, Anna, and Eileen Patten. "Statistical Portrait of the Foreign-Born Population in the
United States, 2012." Pew Research Centers Hispanic Trends Project RSS. Pew Hispanic
Center, 29 Apr. 2014. Web. 06 May 2014.
Center for American Progress Immigration Team. "The Facts on Immigration Today." Center for
American Progress. 06 July 2012. Web. 02 May 2014.
Chompsky, Aviva. They Take Our Jobs! and 20 Other Myths About Immigration.
Boston: Beacon Press, 2007. Print.
De La Rubia, Irene Ario. Debating the Ethics of Immigration: Is There a Right to Exclude?By Christopher Heath Wellman and Phillip Cole. Nations & Nationalism 19.2 (2013):
400-401. Academic Search Premier. Web. 6 Apr. 2014.
Frum, David. "How I Rethought Immigration." National Review 25 June 2007: 34. MasterFILE
Premier. Web. 3 May 2014.
Hinojosa-Ojeda, Ral. "The Economic Benefits of Comprehensive Immigration Reform." CATO
Journal 32.1 (2012): 175-199. Academic Search Premier. Web. 2 Apr. 2014.
Nagle, Nicholas N., Randy Gustafson, and Charlynn Burd. A Profile of Hispanic Population in
the State of Tennessee. Knoxville: Tennessee State Data Center, University of
Tennessee, 2012. Web. 15 Abr. 2014. <http://cber.bus.utk.edu/census/hisp/bfox288.pdf>

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Odem, Mary E., and Elaine Lacy. "Popular Attitudes and Public Polices: Southern Responses to
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Valentino, Nicholas A., Ted Brader, and Ashley E. Jardina. "Immigration Opposition Among
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Williams, G. C. "Nashville Sees Boom in Hispanic-Owned Businesses." The Tennessean.
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