CBO: DREAM Act Would Cut Deficit By $1.4 Billion Over 10 Years

The Congressional Budget Office (CBO) has released its cost estimate on S.3992 The DREAM Act, and the results are encouraging.

For all of the budget hawk members of Congress who are currently on the fence over whether or not to support this legislation, one of the main findings of the CBO report is that it actually reduces the deficit by $1.4 billion over ten years. The CBO report says:

CBO and JCT estimate that enacting the bill would reduce deficits by about $1.4 billion over the 2011-2020 period. That result reflects an increase in on-budget deficits of about $1.4 billion over that period and a decrease in off-budget deficits of about $2.8 billion over the same period.

Additionally according to the report, the DREAM Act would actually raise revenue over ten years to the tune of $2.3 billion dollars:

Because some unauthorized workers would become authorized workers under the bill, JCT anticipates that S. 3992 would lead to increased reporting of employment income, which would add to receipts from both social insurance taxes (a portion of which would be recorded as off-budget revenues) and individual income taxes. However, the reporting of that income also would result in larger tax deductions by businesses for their labor compensation, which would reduce their profits.

Because businesses operate in both corporate and noncorporate form, those deductions would reduce both corporate and individual income tax receipts, offsetting some of the increases discussed above.

In addition, some of the revenue increases would be offset because some currently unauthorized workers who have income taxes withheld would file tax returns and claim refunds. Furthermore, because those workers would be able to work legally in the country, they would become eligible for many of the tax-reducing provisions available to workers with children, including the dependent exemption, child tax credit, earned income credit, and head-of-household filing status. Application of those provisions would either reduce income taxes or increase outlays from refundable tax credits. In total, JCT estimates that S. 3992 would increase revenues by $2.3 billion in the 2011-2020 period.

This long... and complicated explanation is important because it points to a larger point which is all too often missing from the current debate around the DREAM Act, and immigration reform:

If undocumented students, or immigrants in general are given an opportunity to pay into the system; to "file tax returns and claim refunds," ultimately this raises revenue for everyone.

The reality remains as we are seeing with the DREAM Activist's who have revealed themselves, there are large numbers of immigrants who are here, who do contribute, and can contribute more in tax revenues if given a chance. Hopefully, all of those fiscal hawks in Congress take this into account when deciding how to vote for DREAM.

The full CBO report is below:

DREAM Act CBO Report