March 29, 2011

How Much Will Denmark Punish Immigrants Economically?

After the American Century

Danish politicians in recent weeks have been suggesting that newly arrived immigrants from outside the EU should not receive health care and other benefits as soon as they arrive. Rather, they should pay for them for a period of time, for example one or two years, before becoming eligible. Many Danes like this idea, and since the immigrants themselves cannot vote, so the political parties lose nothing by attacking them. Increasingly, the image in the media of the immigrant is that of a parasite.

In fact, immigrants to Denmark with jobs automatically pay for their medical care and other benefits through taxes. It seems absurd to demand that they pay what amounts to an additional tax. Denmark has the world's highest taxes, with the average salaried person paying about 50%.

Consider a counter-argument. An adult immigrant has not cost Denmark anything in terms of schooling, medical care, or other social services. He or she immediately can go to work and contribute taxes to the state.  In contrast,  Danes themselves cost money for at least twenty years before they can begin to pay back the cost of their upbringing, education, and care.  Comparing the cost of the adult immigrant with any Dane of 20, an economist could only conclude that the immigrant is a better "buy."

In the case of someone like myself, arriving with a PhD and working from the day of arrival almost thirty years ago, the Danish state has made a huge profit. I have made tiny demands on the medical system. My costly education at excellent American universities was completed before arrival, and I have never needed unemployment payments, retraining programs, or any other transfer payments. Meanwhile, I have been paying more than 50% of my salary in taxes. Moreover, the Danish laws limit my state pension, and I will receive less than any native-born citizen, regardless of what they have done or not done. So my retirement will also cost Denmark less the retirement of a Dane.

Looking at this in purely economic terms, the Danish state could save lots of money if it stopped training PhDs, doctors, and engineers and hired foreigners instead. I am not advocating that policy. But I am pointing out that if economics really drove immigration policy, then one would not punish immigrants by asking them to pay an extra tax. Rather, one would find ways to lure them into the country rather than erecting new barriers to keep them away.

What then is really driving this demand that immigrants pay more taxes than the Danes themselves? Is it not xenophobia? Is it not the fear of others? The Minister in charge of immigration declares himself against integration, demanding nothing less than full assimilation of foreigners. His predecessor illegally denied citizenship to many people with foreign backgrounds, even though they have grown up in Denmark, speak the language as natives, and have jobs.

And what is the likely effect of such laws, if they are enacted? What is already the effect of such illegal actions and such pronouncements from Ministers? People like myself may no longer migrate to Denmark, or they will soon leave once they realize that they face tax discrimination, pension discrimination, and hostile remarks from elected officials.

Meanwhile, Denmark will still end up giving asylum to victims of torture, refugees, and others who have suffered injustice, many of whom will not be able to work. In short, the proposed policy will drive away those who would come ready to make a contribution at the highest level, but it will not excuse Denmark from its humanitarian responsibilities. Quite possibly, the proposed law will not put more money in the treasury. Instead, it may drive away potential educated immigrants who can work, and simply impoverish the country - and not only in economic terms.