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Study: HB 56 Will Shrink Alabama's Economy by $2.3 Billion

Posted: Feb 01, 2012

MONTGOMERY, Ala. – A new study from economist Dr. Samuel Addy, the director of the Center for Business and Economic Research at the University of Alabama, provides the latest conclusive evidence that HB 56 has been, and will continue to be an economic disaster for the state of Alabama. Dr. Addy concludes that “Instead of boosting state economic growth, the law is certain to be a drag on economic development even without considering costs associated with its implementation and enforcement...While the law’s costs are certain and some are large, it is not clear that the benefits will be realized.”

Among Dr. Addy’s key findings:

By driving some immigrants out of the state and others underground, the law will damage the economy by shrinking demand for the goods and services that Alabama businesses provide. Dr. Addy estimates that HB 56 will shrink the state’s GDP by at least $2.3 billion (1% of the state’s 2010 GDP), and possibly as much as $10.8 billion (6% of 2010 GDP).

Supporters of HB 56 have misleadingly pointed to the declining unemployment rate among Alabamians to argue that the law is “working.” However, Dr. Addy points out: “recent data show employment falling in the four sectors (agriculture, construction, accommodation, and food and drinking places) that are often alleged to employ migrant and unauthorized workers.” Dr. Addy estimates that the law will ultimately cost Alabama 70,000-140,000 jobs.

The supporters of HB 56 who deny that immigrants pay taxes might be surprised to learn that HB 56 is costing the state $57-$265 million in state taxes, with an additional $20-$90 million loss in local sales taxes. This is a staggering cost to the state budget even without considering the costs of enforcing the law and defending it in court all the way to the U.S. Supreme Court, which will cause the cost to balloon even more.

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