By David J. Bier, Michael Howard, and Julián Salazar, CATO Institute
Read the report published by the Cato Institute
Immigrants contribute to the US economy in many ways. Their primary contribution is the goods and services they produce. Meanwhile, a report published by the Cato Institute concludes that they also reduce the burden of government spending for the US-born population.
“Removing the US immigrant population would not only deprive the government of tax revenue; it would also deprive the country of workers and shrink the US economy,” says the report.
“Immigrants appear to have already staved off a dire fiscal crisis. Rather than treating them as the cause of America’s fiscal struggles, we should consider immigrants part of the solution,” concludes the report by the CATO Institute.
Highlights from the report
- Every year from 1994 to 2023, immigrants have paid more in taxes than they received in benefits.
- Immigrants generated nearly $10.6 trillion more in federal, state, and local taxes than they induced in total government spending.
- Accounting for savings on interest payments on the national debt, immigrants saved $14.5 trillion in debt over this 30-year period.
- Noncitizens accounted for $6.3 trillion of the $14.5 trillion debt savings.
- College graduate immigrants accounted for $11.7 trillion in savings; non-college graduates accounted for $2.8 trillion.
- Immigrants in all categories of educational attainment, including high school dropouts, lowered the ratio of deficit to gross domestic product (GDP) during the 30-year period.
- Without the contributions of immigrants, public debt at all levels would already be above 200% percent of US GDP—nearly twice the 2023 level and a threshold some analysts believe would trigger a debt crisis.
- In 1994, the immigrant share of government expenditures was 18% below their share of the population; in 2023, it was 25% below.
Undocumented Immigrant Data
- Immigrants paid $9.6 trillion in taxes to state and local governments but cost those governments only $4.7 trillion—bringing in $6.6 trillion at the state and local levels.
- Noncitizen immigrants—about half of whom were in the United States illegally—were also fiscally positive to all levels of government.
- Immigrants without US citizenship accounted for nearly half (44%) of the positive net fiscal contribution from all immigrants from 1994 to 2023: $6.3 trillion in real terms including interest savings.
- Low-skilled immigrants—defined as immigrants with less than a bachelor’s degree—were fiscally positive from 1994 to 2023. The same was true of low-skilled noncitizens, most of whom were in the United States illegally.
- Low-skilled immigrants paid $11.5 trillion in federal, state, and local taxes, of which about half was from low-skilled noncitizens. Low-skilled immigrants received an overall $9.7 trillion in benefits, for a net-positive effect of $2.8 trillion after interest savings.
- Immigrants also directly or indirectly pay property taxes, corporate taxes, sales taxes, excise taxes, and many state fines and fees.
