A friend visiting from California today was deploring the condition of her home state. “When I was going to California public schools in the 1960s, they were some of the best in the nation, at least as good as my son’s elite private school is today.” She thought the rest of the state government services had fallen apart too. What was her explanation for the problem? “The schools don’t get the funding they need,” she said, “and neither does the rest of the state”. An ardent supporter of Barack Obama, she blamed California Republicans for the mournful state of affairs. I asked her how it was possible that the state government was underfunded. California collects a higher percentage of its residents’ income in taxes than other U.S. states and at least as much as it was collecting in the 1960s, surely (source). If at least as much money is going in at the top, how can the problem be a simple one of “not enough money”?
Her explanation was simple: illegal immigrants. They burdened the school systems with their prodigious birthrate. They got paid under the table and therefore did not pay taxes.
I pointed out that even an immigrant paid in cash paid sales tax. Los Angeles has the highest sales tax rate in the U.S., at 9.75 percent (combining state and local). An immigrant who rented an apartment paid property tax through his or her landlord. An immigrant who drove a car paid state and federal gas taxes as well as registration fees. An immigrant who uses someone else’s Social Security number is paying payroll taxes and having income tax withheld.
A Sacramento Bee article supports her argument to some extent, noting that one third of California’s schoolchildren are themselves illegal immigrants. The parents of these kids no doubt have, on average, some lower wage jobs. But the entire U.S. economy in the supposedly glorious public school days of the 1960s consisted of what are, by current standards, lower wage jobs. How come we could afford to educate a laborer’s children in 1965 but we can’t afford to do it in 2009? The immigration status of the parent or child should not affect the cost to teach the child to read, write, and do math.
How much importance does each subculture in a society place on learning? If some students are allowed the attitude brought in from their family or neighborhood that learning is not to be taken seriously, then won’t the more serious students and the better teachers be brought down to a lower common denominator? In other words, the problem may be mainly a cultural one which, unfortunately, can take generations to change.
Simple logic dictates that it must cost much more to support low wage workers in a welfare state than they can possibly pay in taxes – therefore illegal immigrants must be a cost on society as they simply don’t earn enough money to ‘pay their share’.
California has a very large illegal immigrant population, therefore it must be a significant cost to the state – and various estimates put that burden at between $6 – $12 billion annually.
Is that a lot of money? Yep. And it’s a real problem.
But does it explain the full issues with state spending? Nope.
As Phil has written abou textensively, public sector unions are leading the charge to bankrupt the state. The vast majority of the state budget goes to union wages – and no politician has the balls to take on the unions. So we hemorrhage.
Beyond just current salaries and benefits, the public unions won unimaginable pension grants. Many police, prison, and firefighters can retire at age 50 with 90% of their salary and full healthcare – for life! Teachers and janitors may have to wait to age 55 to retire with 80%+ of their salary and full healthcare – for life! This adds up.
Ten years ago, public pensions were a couple hundred million dollars – today, that has grown over 10 times to over $3 billion. Forecasts put it at over $5 billion in the near future and that many city, school, and state government bodies will be paying over 30% of their budgets to pensions.
Until we deal with (disband?!) public sector unions, California simply doesn’t have a chance.
Not to mention that illegal immigrants pay Social Security taxes but will not be able to claim benefits because of their undocumented status.
The funniest thing is that many immigrants piggy-back on someone else’s SSN, and they are very careful about preserving their credit record because they don’t want to be detected. In doing so, they often improve the credit rating of the one they are impersonating…
The problems in California are simply due to out-of-control public employee salaries on one hand (specially prison guards and teachers), and poorly conceived initiatives submitted to the referendum and often passed by an ignorant and apathetic populace. These usually mandate spending levels on pet programs, and do not allow for retrenchment in recession-induced revenue shortfalls. An activist judiciary compounds the problem by mandating expenditures, e.g. prisoners’ medical care, which is rife with fraud and abuse, is in receivership since 2007 and an unelected federal judge mandates how much the state will spend on prisoners ($8Bn), to a far better level care than a significant number of law-abiding citizens.
Not that abolishing the distinctly Californian initiative progress would improve things, as the politicians are even worse.
Ultimately, the voters will get what they deserve. If they are not mature enough to elect responsible and competent politicians, they richly deserve what they get (I am a California resident, but not a citizen).
Agreed, although local to me, Seattle has a mighty high sales tax I’ll point out – 10.50% at restaurants soon, 10% today. 9.5% on other purchases (wikipedia). And similar to CA, a massive budget problem.
The extraneous costs to education feel more to blame – large increases (relative to other staff) in administration, having new “chief executive officers” at schools, directors of “blah”, massive building investments, and the inability to properly consider pay-for-performance thanks to the unions.
Hi Phil,
I’ve been enjoying your recent blog posts. You make some good points. However, I think you got the facts from the Sacramento Bee article wrong. The way I read it, out of the 14% of schoolchildren that have at least one parent in the country illegally, 1/3 are themselves immigrants. Which brings the total to roughly 5%.
Typo: the Bee says one-third _of the 14% of students with at least one illegal parent_ are themselves illegal immigrants.
The problem is Prop 13 in 1978. It amended the California Constitution to severely limit property taxes. Property taxes are the primary source of revenue to pay for schools. Secondarily, California made a crap-load of money off capital gains during the dot-com boom. They then found places to spend all that money. Now there are no capital gains taxes.
Todd: If California takes in a larger percentage of its citizens’ incomes than other states, shouldn’t they still have enough to pay for schools, even if the mix of taxes is slightly different than, say, Ohio’s? Suppose that I’m a Bank of America/Merrill employee and make $7 million per year in taxpayer-funded bonus. Can I say “I don’t have any dividend or interest income and therefore I am too poor to shop at Whole Foods”? Does Bill Gates say “I had almost no W2 income during my working life, only about $80 billion in capital gains. Therefore I have to watch my expenses”?
Confused political arguments about education spending often start on the wrong foot by thinking of the state’s spending as a subsidy to the parent but the math works out much more sensibly if you think of it as a subsidy to the kid. When we pay for a kid’s education, we should think of it as making a long-term investment in that kid’s productivity which the kid then pays back – with interest and then some – by paying all sorts of taxes after he/she leaves school and joins the workforce.
If you think of it that way it’s much more obvious that people who have a fewer kids aren’t really (on net over time) subsidizing those who have more kids and locals aren’t really on net subsidizing immigrants. Anybody who shows up in the US with a bunch of kids to educate is giving us more likely future taxpayers exactly in proportion to the degree that they are giving us more current kid-related expenses.
Immigrants typically come here during their productive years after their own schooling has already been paid for by someone else, and they bring or produce kids who will be far more productive (and hence lucrative to the state) in their future profession than the immigrants were. The only way you can turn that into a lose for the US is if the kids get educated here and then leave right away.
(Although if the poor kids are educated in Los Angeles and then, say, move to Phoenix because it’s cheaper to live there, Arizona benefits at California’s expense. But that doesn’t seem to be what people like Mike above are worried about when they do the accounting. Should California have an exit tax like the US does? 🙂 )
@Todd C: If Prop 13 is the ‘problem’, then why have property tax revenues increased over 800% since it was passed – and at a rate that far exceeds population and inflation? Obviously Prop 13 works to prevent Grandma from losing her house due to the jack boot of the state, but price increases and churn have ensured that the tax increased at an astonishing rate.
Read Dan Walters at the Sacramento Bee (and he’s far from conservative):
http://www.sacbee.com/walters/story/2002341.html?mi_rss=Dan%20Walters#none
@Phil: Back to your original question – How come we could afford to educate a laborer’s children in 1965 but we can’t afford to do it in 2009?
The answer is the same as to the question: How could we support unfettered immigration (give us your huddled masses) a hundred years ago, but can’t afford illegal immigration today?
It’s the growth of the welfare state.
Providing ‘free’ education, health care, food stamps, and the rest of the safety net is expensive. It requires a society that is predominantly middle class to make it work. Illegal immigration floods the ranks of the poor and shifts the balance – education, health and welfare costs go up, but there is now a smaller percentage of middle class to pay for it. This creates a very real burden on society and, quite rationally, people demand services be restricted and that the flow of poor and needy across the border be stopped.
In the earlier years of our country, before the welfare state, immigration could be unfettered and it worked. If immigrants succeeded, wonderful – society benefited. If they failed, there was no forced cost to wider society. Charities, churches, and local communities took care of the needy. If you were better off, you were encouraged to donate money and volunteer time to help others. This provided freedom and opportunity – and built better people.
@Glen Rapheal
I think you are assuming that kids of illegal aliens will be net tax payers over their lifetimes, and I don’t believe this is true. If everyone was a net tax payer, ie they paid for their portion of not only social services, but also defense, road construction, etc… then how could the US ever run a deficit? If a lot of Americans are not net tax payers (which I think is obvious), why would you think that the children of illegal aliens, who have less education on average than US citizens, would be net tax payers?
TimG: Even if every person in the U.S. paid exactly the same amount of tax, and nobody was freeloading from any other taxpayer, we would still run a deficit, wouldn’t we? King Obama and Congress are planning to spend $9 trillion more than they collect from the peasantry over the next 10 years. I think it is definitely unfair to blame illegal immigrants for deficit spending. After all, among all of the residents here in the U.S., this is the one group that almost surely did not vote for any of our current politicians!
PhilG,
I would count the deficit against everyone’s future share of the tax bill. Everyone will either have to pay it back (made you laugh), or (more likely) live with the repercussions of not paying it back. If most people were presented with their portion of the bill they would be shocked, which is why we are in trouble. “Net Tax” payer is an accounting fiction, but I think its useful in thinking about who we should let into the country. If you get the benefit of living in the US and its legacy resources then I think you should be expected pay your portion of the costs of US government (and its legacy debts), even if those costs are inflated by poor expensive choices like the wars and bank bailouts. Or more simply, we cannot afford to support as many unproductive immigrants because we our now poorer ourselves.
You might try and argue that we want to spread those large fixed legacy cost across more people, but that only works if the people end up being productive. On the balance people with limited high school / English ability are not. Illegal immigrants from Latin America and their children are not a good substitute skill wise for workers in a developed country. The US educational system doesn’t have the magical fairy dust to change this.
I do not blame illegals for federal deficit spending, but I do think they the deserve some (not all or most) blame for all of the following: California’s deficit spending, cost shifting in health care, the power of unions in California (think expanding school and prison populations), and a decline in general societal function in Ca.
California had a great school system in the 1960’s? As a kid in school here through the 1960’s, I find that a bit of an overstatement. Of course my perception is colored by the schools I attended, and the area in which I then lived.
On the flip side, the area in which my kids grew up has pretty good schools. Parents have transferred their kids out of private schools, when they found the local public schools were as good or better.
I think where you live makes a huge difference.