Some Observations on Net Fiscal Transfers to Recent Immigrants Resulting From Income Taxes and Government Transfer Programs

Grady, Patrick (2010): Some Observations on Net Fiscal Transfers to Recent Immigrants Resulting From Income Taxes and Government Transfer Programs.

Abstract

This paper utilizes the comprehensive data on income taxes paid by immigrants and others and the government transfer payments received by immigrants and others provided by the 2006 Census from income tax statistics. The Census data was recently made available to researchers in the 2006 Census PublicUse Microdata File (PUMF), which contains 844,476 records, presenting census data on individuals representing 2.7 per cent of the Canadian population.

The analysis revealed that recent immigrants on average only paid about half as much income tax as native Canadians ($4,172.69 per capita compared to $8,130.82). It also showed that the most recent cohort of immigrants from 2000 to 2004 paid only 40 per cent as much income tax as native Canadians.

In the Other Government Transfer Income category, which is a catch-all for “all transfer payments, excluding those covered as a separate income source (child benefits, old age security pensions and guaranteed income supplements, Canada or Quebec Pension Plan benefits and employment insurance benefits) received from federal, provincial, territorial or municipal programs,immigrants received per capita amounts in 2005 that are $13.05 less than nonimmigrants so there is no prima facie evidence of disproportionate reliance on social assistance from the Census. The one area where recent immigrants got a disproportionate share of government transfers is child benefits. This reflects their larger number of dependent children, which could be a result of their lower average age or greater proclivity to have children. On the other hand, recent immigrants received a lower per capita amount of employment insurance benefits. This could reflect their tendency to locate in areas with stricter eligibility requirements for EI such as the TorontoMetropolitan Region in 2005. Taking into account Other Government Transfer Income,Child Benefits and Employment Insurance, recent immigrants received $346.15 more per capita from Government Transfers than non-immigrants. In total, this would amount to $534 million, an amount that is small in relation to the fiscal transfer resulting from lower per capita income taxes paid.

• Item Type: MPRA Paper
• Language: English
• Keywords: tax paid by immigrants, transfer payments paid to immigrants
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H22 - Incidence; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J61 - Geographic Labor Mobility ; Immigrant Workers

References

Grubel, Herbert (2005) "Immigration and the Welfare State in Canada: Growing Conflicts, Constructive Solutions," Fraser Institute Public Policy Sources, Number 84, September.

Statistics Canada (2009) "2006 Census Public Use Microdata File (PUMF)Individuals File Documentation and User guide," Catalogue no. 95M0028XVB.