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The Trump case – is immigration killing the US?

In November 2016, the United States of America will vote to elect their 58th president. Campaigning has already began, and even though Republicans and Democrats have not yet chosen their candidate, Donald Trump appears to be the forerunner for the GOP nomination, while Hillary Clinton and Bernie Sanders battle for the Democrats’ preference.

One of the focal points of discussion and main sources of division is the country’s immigration policy – While Obama has been working to streamline it and allow for easier integration and legalization for those willing to work and has his party’s backing, Trump argues for an aggressive containment and deportation policy to ensure the interests of Americans.

Trump’s argument rests quite significantly on a public finance topic – tax cost of the immigrants.

The Trump case

Trump states, as a main pillar of his thinking, that “Any immigration plan must improve jobs, wages and security for all Americans.” [1]. While he does not oppose immigration, he is intent on ensuring it only happens in a way that benefits Americans – something that he claims is not currently the case and requires measures opposite to the ones argued for by Democrats.

Following Obama’s executive action on immigration, undocumented workers will be able to claim tax refunds for work performed illegally [2][3]. This is strictly against what Donald Trump stands for, adding to the already very high alleged costs in tax credit to illegal workers [1]. He is in favour of eliminating tax benefits for illegal work, and more generally of making sure immigrants who are admitted to the country do not come to live off the state – “Applicants for entry to the United States should be required to certify that they can pay for their own housing, healthcare and other needs before coming to the U.S.” [1]. A great part of the immigrants currently in the US live in poverty or just above it, as can be seen in figure 1, and stress the welfare state (though it is light in the US, it is not non-existent, as Medicaid will cover at least emergency services even for illegals [4] – check exhibit 2).

Exhibit 1 – Immigrants and poverty from select countries [5]

Exhibit 1 – Immigrants and poverty from select countries [5]

Exhibit 2 – Welfare use of immigrants from select countries [5]

Exhibit 2 – Welfare use of immigrants from select countries [5]

Reading into the facts

Current American immigration policy is highly redistributive. The typical immigrants are poorly educated and receive benefits substantially in excess of the taxes they pay. Does the increase in GDP they bring about compensate for their costs? The pie increases, but so does the amount of people who feed off of it. Differing opinions on the total effect of this is what creates the Republican/Democrat divide. Picking sides is a tricky subject – Trump coming across as brazen but determined to uphold American interests, and Obama and his potential Democrat successors promoting a more sensible image, though possibly lacking in strength. With a year to go before the elections still, this will be far from the last we hear on the matter – The rest of the world, directly affected by this issue, listens intently.

Henrique Alpalhão

Further readings

[1] Donald Trump’s presidential campaign website

[2] Forbes: Obama’s Immigration Action Means Tax Refunds For Illegals, Says IRS

[3] WTHR: Illegal immigrants say tax credits are needed

[4] CMS – Eligibility for non-citizens in Medicaid and CHIP

[5] CIS – Immigrants in the US: A profile of America’s foreign-born population

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Author: studentnovasbe

Master student in Nova Sbe

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