One of the most persistent myths is that immigrants represent an economic burden on the country and on state and local governments. However, the data proves otherwise and reveals a very different reality.
A recent national study analyzing 30 years of tax information (1994–2023) clearly demonstrates that immigrants have contributed more to the country than they have received, helping to sustain public budgets and avoid a debt crisis in the United States.
The specific analysis on the fiscal effects of immigration, Immigrants' Recent Effects on Government Budgets: 1994-2023, was prepared by researchers David Bier, Michael Howard and Julián Salazar, associated with Cato Institute.
The analysis uses official data from government sources to estimate the impact of immigration on public budgets during that period.
Reduction of US budget deficits
Immigrants generated nearly $10.6 trillion more in federal, state, and local taxes than they accounted for in total government spending, according to the report. This data contradicts the narrative that immigration This represents a burden for public finances.
When considering the savings in interest payments on the national debt, the positive fiscal impact of immigrants was even greater. During a 30-year period, between 1994 and 2023, they helped reduce the national debt by approximately $14.5 trillion, according to the same analysis.
The report indicates that this contribution It helped reduce US budget deficits by a third during that period. In 2023 alone, tax savings associated with immigration reached $878 billion.
Non-citizens contributed a significant portion of these benefits, accounting for $6.3 trillion of the total $14.5 trillion in debt savings.
Educational level also influenced the fiscal impact. Immigrants with college degree They generated $11.7 trillion in savings, while those without university studies contributed $2.8 trillion, according to the report.
Fiscal flows of immigrants according to citizenship status and educational level, 1994–2023
| Benefits received | Taxes paid | Net fiscal flow | Interest savings | Total impact | |
|---|---|---|---|---|---|
| All immigrants | $13.6 billion | $24.2 billion | $10.6 billion | $3.9 billion | $14.5 billion |
| Cohort 1990–1993 | $1.1 billion | $2.4 billion | $1.3 billion | $ 397.7 billion | $1.7 billion |
| Naturalized citizens | $7.4 billion | $13.4 billion | $6.0 billion | $2.1 billion | $8.1 billion |
| Non-citizens | $6.2 billion | $10.8 billion | $4.6 billion | $1.7 billion | $6.3 billion |
| With university studies | $3.9 billion | $12.7 billion | $8.8 billion | $2.8 billion | $11.7 billion |
| Without university studies | $9.7 billion | $11.5 billion | $1.8 billion | $1.0 billion | $2.8 billion |
Related: They reveal the crucial contribution of undocumented taxes in North Carolina
What did the study analyze?
The report analyzed the impact of immigrants—documented, non-citizen, and undocumented—on public budgets at the federal, state, and local levels. The study relied on official U.S. government data to provide a comprehensive assessment.
For its analysis, the report considered taxes paid, the use of public services, and access to social benefitsas well as spending on education, public safety, and health. It also assessed the effect of immigration on the country's public debt.
The analysis covers a full 30 years, making it one of the most comprehensive and rigorous studies conducted to date on the fiscal impact of the immigration U.S..
The main finding: immigrants generate a fiscal surplus
Between 1994 and 2023, immigrants generated a cumulative fiscal surplus of approximately $14.5 trillion, adjusted to 2024 values. This means that, throughout that period, they contributed much more in taxes than they received in public services.
This result was not an isolated occurrence, nor was it limited to specific years. According to the analysis, the positive fiscal impact was recorded in each and every year studied, without exception, reinforcing the consistency of the immigrant population's economic contribution.
How do immigrants contribute to the economy?
1. They work more and at productive ages
Immigrants have higher employment rates than the native-born population and, on average, arrive at working age. This translates into a greater tax contribution, as they pay income tax, sales tax, and other indirect taxes, such as those related to rent, gasoline, and consumption. Furthermore, they contribute to the Social Securityalthough many will never receive those benefits.
The study concludes that this high participation in the labor market is one of the main reasons for the positive fiscal impact of immigration.
2. They use fewer expensive public services
Contrary to popular belief, immigrants use several of the most expensive public programs less frequently. These include Social Security and Medicaredue to legal barriers and work history requirements; public education, as most arrive in the country after having completed their training; and the penal system, where they register lower incarceration rates.
On average, the fiscal cost of an immigrant to the government is considerably lower than that of a person born in the United States.
Undocumented immigrants pay taxes and strengthen public finances
The study shows that undocumented immigrants also contribute more than they receive. Although they typically have lower incomes and face significant restrictions in accessing public benefits, they do pay taxes, including payroll taxes—many through ITINs or borrowed numbers—as well as sales, income, and property taxes, either directly or indirectly.
The analysis estimates that, as a result, undocumented immigrants reduced the public deficit by at least $1.7 trillion.
Positive fiscal impact
Non-citizen immigrants —approximately half of whom resided in the United States illegally— also had a positive fiscal impact on federal, state, and local budgets, the report highlights.
Between 1994 and 2023, non-U.S. immigrants accounted for almost half (44%) of the net positive tax contribution of the entire immigrant population, totaling $6.3 trillion in real terms, including interest savings.
Unlike the immigrant population as a whole, non-citizens had below-average incomes. The study indicates that their positive net tax contribution is mainly explained by the fact that they received below-average public benefits.
The analysis also highlights that non-citizens did not generate additional costs in so-called pure public goods, such as past debt and military spending, which helped to reduce the per capita cost of these items for the government.
Furthermore, non-citizens received 75% less in old-age benefits compared to the average U.S. resident. Their participation in needs-based programs was similar to that of other residents.
In terms of public spending, they used approximately half of the educational resources and were 21% less costly per capita in prisons and police surveillance for serious crimes over the 30-year period analyzed.
The tax revenues of naturalized citizens and non-citizens exceed the benefits they receive at both the federal and state levels. l
Tax payments, benefits received and interest savings of immigrants, non-citizens and naturalized citizens, 1994–2023
| Category | All immigrants | Naturalized citizens | Non-citizens |
|---|---|---|---|
| Tax | $24.2 billion | $13.4 billion | $10.8 billion |
| Benefits | $13.6 billion | $7.4 billion | $6.2 billion |
| Net balance | $10.6 billion | $6.0 billion | $4.6 billion |
| Interest saved | $3.9 billion | $2.1 billion | $1.7 billion |
| Net balance with interest saved | $14.5 billion | $8.1 billion | $6.3 billion |
What happens to immigrants with less education?
According to the report, another common myth is that immigrants with lower levels of education "cost" the country money. However, the data shows a different reality. Even those with low levels of education have higher-than-average employment rates, pay taxes consistently, and use the most expensive public services less frequently.
Overall, immigrants with lower levels of education also generated a positive fiscal impact and helped to reduce debt relative to the size of the economy.
The children of immigrants: the greatest future benefit
The study also examined the second generation—children born in the United States to immigrant parents. Although many are still young, the data indicate that they achieve higher levels of education, earn higher incomes, and pay more taxes than previous generations.
The report concludes that the children of immigrants are shaping up to be the most fiscally productive generation in the country's modern history and will play a key role in sustaining the economic and fiscal system in the coming decades.
Immigrants have a positive fiscal impact even when including the children of second-generation immigrants.
Taxes and benefits received, 1994–2023
| Category | All immigrants | Immigrants and their children |
|---|---|---|
| Tax | $24.19 billion | $34.51 billion |
| Benefits | $13.60 billion | $28.65 billion |
| Net fiscal impact | $10.59 billion | $5.86 billion |
| Interest saved | $3.88 billion | $2.07 billion |
| Net fiscal impact with interest saved | $14.47 billion | $7.93 billion |
A key impact: avoiding a national debt crisis
According to the study, if immigrants were not in the United States, the national debt would be higher. “In addition to paying taxes, immigrants are a key part of the workforce; without them, there would be fewer workers and the economy would be much smaller,” the researchers point out.
Without immigrants, Gross Domestic Product (GDP) would have been reduced by at least $4.8 trillion in 2023, resulting in a weaker economy and a significant increase in public debt.
Between 1994 and 2023, the proportion of labor income from immigrants nearly doubled. “Their economic contribution is greater than their proportion of the population, so losing them would have a disproportionate impact,” they conclude.
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