KY Policy Blog

Passage of the Dream Act Would Benefit Kentucky

By Anna Baumann
December 21, 2017

In September, the Trump Administration announced the end of DACA (Deferred Action for Childhood Arrivals), a program established by executive order that granted immigrant youth who were brought to the U.S. as children temporary relief from deportation and authorized them to work. By passing the Dream Act, Congress can restore and even strengthen the legal protections for these young Kentuckians who contribute to our commonwealth by going to school, working, paying taxes and more. In the absence of a Dream Act, Dreamers, their families and our communities will be harmed.

Passing the Dream Act Would Boost Kentucky’s Economic Growth

The Dream Act would provide legal resident status as well as the opportunity to naturalize based on Dreamers’ education, employment and service qualifications. This provision would encourage many young immigrants to pursue higher education and training. Because a more educated workforce is a more productive workforce, and because Dreamers could pursue careers that best match their skills, the Dream Act would boost economic growth.

The Center for American Progress estimates that if Congress passes the Dream Act, Kentucky’s $197 billion Gross State Product would see a long-term annual increase of $100 million (see graph below). That estimate grows to $334 million a year when it is assumed that half of the people eligible to obtain lawful permanent residence do so by getting either a 2-year or 4-year college degree.

In their analysis of the federal impacts of the Dream Act, the Congressional Budget Office estimates the legislation would increase tax revenues as well as social spending for a net cost to the federal government of $26 billion over 10 years. The underlying revenue estimate is based on an increase in the reporting of employment income, and does not include additional revenue associated with higher earnings and greater productivity stemming from the Dream Act.

Conversely, if Congress does not pass the Dream Act and DACA protections continue to expire for these young Kentuckians, they will also lose access to channels for full tax compliance, their drivers’ licenses and in-state tuition. Their contributions to Kentucky’s economy will diminish along with their ability to pursue productive careers in fields that suit them.

Tax Revenues in Kentucky Would Go Up with Dream Act

The Institute on Taxation and Economic Policy (ITEP) estimates that 6,000 (formerly) DACA-eligible Kentuckians currently contribute a total of $8.1 million in local and state taxes annually through sales and excise taxes, property taxes and income taxes. Their effective tax rate of 9.1 percent is higher than that paid by the wealthiest 1 percent of Kentuckians.

If Congress passes a Dream Act and these young immigrants are provided with work authorization and a pathway to citizenship, their earnings as well as their tax contributions would increase. ITEP estimates tax contributions would rise by $4.6 million (see chart below). In the absence of the Dream Act, however, DACA protections, employment and education opportunities, and tax contributions will erode – the latter by $4.4 million.

Passage of the Dream Act is important for Kentucky’s economy and for the young immigrants who call Kentucky home.

 

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