Immigration Shaping America - Population Reference Bureau

eviewed the fiscal impact studies
prepared in support of these suits
and reached two major conclusions.
First, an immigrant’s fiscal balance—
the taxes paid minus the cost of services
consumed—depends primarily
on the immigrant’s earnings. In California,
households headed by Latin
American immigrants received, on
average, almost $5,000 more in federal,
state, and local services than
they paid in taxes in 1996, largely
because they had below-average
incomes and thus paid lower taxes,
while they had more children attending
public schools than households
headed by U.S.-born Californians. 55
California households headed by
U.S.-born people paid, on average,
$2,700 more in federal taxes than they
received in federal benefits in 1996,
while immigrants had exactly the
opposite fiscal balance: They received
$2,700 more in federal benefits than
they paid in federal taxes. The average
native-born household paid
$1,200 more in taxes to cover the
deficit in California. Applying these
state estimates to the total U.S. population,
researchers calculated that the 89
million households headed by U.S.-
born people paid an extra $200 each
in 1996 to cover the gap between taxes
paid and services consumed by 9 million
immigrant-headed households.
The immigrant deficit amounted to
$15 billion to $20 billion per year for
the United States. 56
Second, the NRC study confirmed
the imbalance among the federal,
state, and local government taxes
paid by immigrants and the expenditures
made for their benefit. The
taxes immigrants pay are mostly
income taxes withheld by the federal
government. These revenues pay for
social security and health care benefits
for older residents. Immigrants
often pay a small amount in state and
local taxes because they have low
earnings. The services immigrants
consume, however, such as education
for their children, are mostly paid for
by state and local governments. These
and similar findings have prompted
many states to request a revenue-sharing
arrangement with the federal
government to deal with the fiscal
impacts of immigrants.
Fiscal studies are snapshots of taxes
paid and the cost of services provided
at a point in time. If immigrants’ earnings
rise over time, so will their tax
contributions, and the fiscal deficit
may decrease. Similarly, the cost of
providing education to immigrant children
today could be regarded as an
investment that will reward the country
with higher-income workers tomorrow.
The NRC analysis attempted to
glean longer-term effects from these
snapshots. The researchers projected
future population, immigrant and
native earnings, taxes, and use of government
services. They also examined
typical life-cycle trajectories for children
who attend public schools, pay
taxes during their working lives, and
then rely on publicly supported health
and social services after they retire.
The NRC concluded that the longterm
economic value of an immigrant
depends strongly on his or her age
at arrival and his or her years of education.
On average, adult immigrants
arriving with less than a high school
education impose a net fiscal cost on
the United States of $89,000 (in 1996
dollars) over their lifetimes; those
with only a high school education
cost $31,000 over their lifetimes (see
Figure 5, page 30). Adult immigrants
with more than 12 years of schooling
provided a $105,000 lifetime gain for
the United States—the value of the
taxes they paid exceeded the value of
benefits received by this amount.
Migration From
Mexico and NAFTA
About 30 percent of the immigrants
living in the United States today are
from Mexico, but there was relatively
little movement across the border
until the early 20th century. In 1800,
Mexico and the United States had
roughly equal population size, about
6 million. In 1848, a large portion of
northern Mexico was transferred to
31