Considering the fiscal contributions of immigrant households in the United States.

The following argument often circulates through social media and public discourse in the United States: immigrants are “takers”. They come to the U.S. to take advantage of social assistance programs, such as TANF or WIC, without contributing to public coffers through hard work and taxes. Some social researchers have advanced similar arguments. In 1999, economist George Borjas argued that immigrants tend to cluster in states that are relatively rich in social assistance benefits because they intend to enhance their incomes with those benefits. More recently, the Heritage Foundation released a report that suggested that undocumented immigrants impose undue fiscal burdens upon U.S. taxpayers by drawing upon social assistance programs. However, a new study carried out by the Institute for Immigration Research (IIR) directly confronts these arguments. This study found that the collective income tax contribution of immigrant households is significant, even after accounting for the social assistance that they receive.

The IIR used Current Population Survey data to estimate the total value of state and federal income tax (less credits) that immigrant households contributed in 2012 (see Table 1). It was found that these households contributed an estimated $106 billion in state and federal taxes. The IIR also estimated the value of social assistance benefits that immigrant households received in 2012, which amounted to approximately $45.8 billion. Thus, the net value of state and federal income tax contributed by these households was approximately $61.1 billion. This amount is comparable to the operating budgets of major government agencies, such as the Department of Homeland Security, which requested $57 billion in funding during 2012.

The Balance Sheet

The IIR study also found evidence to suggest that the net income tax contribution of immigrant households increases the longer they remain in the U.S. (see Figure 1). In light of this evidence, it is possible to view the social assistance that immigrants receive as a worthwhile investment provided by U.S. taxpayers. That is, immigrants who receive social assistance use that assistance to improve their economic standing, which leads to a greater amount of income tax revenue over the long-term.

Medians across years in US

In addition to estimating the net income tax contribution of immigrant households, the IIR also compared the proportion of income that immigrant households contribute and compared it to the proportion contributed by native-born households. This comparison was carried out at the state level. It was found that in nine states, immigrant households contributed a greater share of their income to state and federal taxes when compared to native-born households. These states were Oklahoma, South Carolina, Pennsylvania, West Virginia, Vermont, Delaware, Mississippi, Michigan, and Missouri (see Figure 2).

Income Tax per State

In light of this evidence, several conclusions can be drawn. First, immigrants manage to contribute to public coffers, even though they receive some social assistance. Second, immigrant households that receive social assistance are using it to increase their economic position so that they can eventually become self-sufficient. This has the added benefit of increasing their net income tax contribution over time. Finally, in some states, immigrants contribute a greater share of their income to state and federal taxes than native-born households. With respect to these conclusions, the argument that immigrants are “takers” holds little weight.

You can read the entire research brief, “Immigration, Income Tax, and Social Assistance: Examining the fiscal contribution of foreign-born and native-born households in the U.S.”, here.


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