A Summary of State Studies On Fiscal Impacts of Immigrants

 

March 17, 2009

Several states and organizations have conducted studies on the fiscal and economic impacts of immigrants or on specific immigration laws.  Because of the complexity of researching unauthorized immigrants, studies are limited in scope and size.  Some address all foreign-born, while others address only illegal immigrants or Hispanic residents (without addressing citizenship or immigration status).  Estimates of tax revenues typically focus on income, sales and property tax. Some studies examine health, education and law enforcement costs, while others focus only on education.  A few go beyond traditional assessment of taxes paid versus services used to examine the multiplier effects of immigrants in the labor force and economy. 

The following sections summarize fiscal impact studies done in Arizona, Arkansas, Colorado, Georgia, Illinois, Iowa, Kansas, Missouri, Minnesota, New Mexico, New York, North Carolina, Oklahoma, Texas, Utah, Virginia and Washington D.C.

Arizona


Gans, Judith. Immigrants in Arizona: Fiscal and Economic Impacts. Udall Center for Studies in Public Policy. 2007.

This study found that in 2004 the total state tax revenue from immigrant workers was around $2.4 billion, with $1.5 billion coming from unauthorized workers, and $860 million from naturalized citizens. The fiscal cost of education, health care, and law enforcement was $1.4 billion. The total net state fiscal impact of immigrant was positive, $940 million.[1]

Arkansas

  • Capps, Randy, Everett Henderson, John D. Kasarda, James H. Johnson Jr., Stephen J. Appold, Derrek L. Croney, Donald J. Hernandez, Michael Fix. A Profile of Immigrants: Executive Summary. Winthrop Rockefeller Foundation. April 2007.

In 2004, the net fiscal impact of immigrants on the Arkansas state budget was small and positive. The cost to the state budget, including education, health services, and corrections, was $237 million in 2004.  Immigrants paid direct and indirect tax contributions of $257 million, leaving a $19 million surplus to the state.[2]

 
Colorado 

  • Baker, Robin. Testimony to the Alternative Hearing on Immigration. The Bell Policy Center. August 29, 2006.
  • Baker, Robin and Rich Jones. State and Local Taxes Paid in Colorado by Undocumented Immigrants. The Bell Policy Center. Issue Brief #3, June 2006.
  • Immigration:  Effects on Colorado and the Nation: a Review of Research. The Bell Policy Center. December 29, 2005. 

According to Robin Baker's Testimony to the Alternative Hearing on Immigration, an estimated 225,000 to 275,000 unauthorized immigrants live in Colorado (2007). Federally mandated services for these immigrants (K-12 education, emergency health support, incarceration) cost state and local governments $225 million (2005). In 2005, undocumented immigrants paid between $159 million to $194 million in state and local taxes, which covers 70 to 86 percent of $225 million for federally mandated services. Unauthorized immigrants cost the state between $31 million and $66 million.[3]

The study Immigration: Effects on Colorado and the Nation: A Review of Research analyzed the cost of checking citizenship documentation and resident status. In total, costs for implementing these services in Colorado would be $4.3 million for FY 2005-06, and $2.6 million in FY 2006-07. Total savings from reducing human services family/children's programs and child welfare services would be $460,606 for FY2005-06 and FY2006-07. The net costs of checking citizenship and residence status for people applying for government services would be $3.8 million in FY2005-06 and $2.1 million in FY2006-07.[4]

 The study State and Local Taxes in Colorado Paid by Undocumented Immigrants, found that the average undocumented worker in 2005 paid $1,265 in sales tax, $105 in property tax, $49 in income tax, totaling $1,861.[5] 

Georgia

  • An Analysis of the Economic Impact of Undocumented Workers on Business Activity in the US with Estimated Effects by State and by Industry. The Perryman Group. April 2008.
  • Coffey, Sarah Beth. Undocumented Immigrants in Georgia: Tax Contribution and Fiscal Concerns. The Georgia Budget and Policy Institute. January 2006.

According to Undocumented Immigrants in Georgia: Tax Contribution and Fiscal Concerns, the average undocumented family in Georgia pays from $2,340 to $2,470 in state, local, income, and property taxes combined (based on an undocumented population of 228,000 to 250,000). State, local, income and sales tax contributions from undocumented immigrants in Georgia are estimated between $215.6 million and $252.5 million.[6] 

 An Analysis of the Impact of Undocumented Workers on Business Activity in the US with Estimated Effects by State and by Industry cites that without the undocumented workforce in Georgia (using 2007 dollars for monetary value), in a static scenario, the state would lose $7,120 in expenditures per capita, $2,639 in output losses per capita, and $1,699 in income losses per capita. The static scenario estimates represent the immediate losses resulting from enforcement-only programs. In a dynamic scenario, expenditure losses per capita would be $2,234, $992 for output losses per capita, and $622 for income losses per capita. The dynamic scenario estimates represent losses after market adjustments and new hiring has occurred.[7]

Illinois

  •  Mehta, Chirag; Theodore, Nik, Mora, Iliana; and Wade, Jennifer. Undocumented Immigrants in the Chicago Economy. Chicago: UIC Center for Urban Economic Development. 2002.
  • Education for All. The Center for Urban Economic Development, University of Illinois at Chicago. March 2003.

According to Education for All, the anticipated state cost of implementing Illinois HB 60, which allowed immigrants to become eligible for in-state tuition in 2003, was $11.6 million in the first year and $46.4 million in four years.[8]

The Undocumented Immigrants in the Chicago Economy study reported that 70 percent of undocumented workers paid their employers payroll taxes; in 2002, Illinois collected $69.2 million in income taxes from undocumented immigrants.[9]


Iowa

  •  Pearson, Beth and Michael Sheehan. Undocumented Immigrants in Iowa. Iowa Policy Project. October 2007.

The Iowa Policy Project estimated that each undocumented immigrant family pays $1,671 a year, amounting to a total of tax payments for unauthorized immigrants in Iowa between $40 and $62 million a year, assuming a 50% payment rate.[10]

In terms of the cost of K-12 education for unauthorized immigrants, the Iowa Policy Project determined that between 5,445 to 8,415 unauthorized immigrants are between the ages of 5 and 18. Using the per-pupil education cost in Iowa of $6,497, costs to the state for providing K-12 education to unauthorized immigrants is between $35 million and $54 million (2005).[11] 

 According to the study, overall, the tax payments made by unauthorized immigrants are 80% of the taxes paid by legally documented families with similar incomes; however, unauthorized immigrants do not qualify for as many services.[12]

Kansas

  • Illegal Immigrants: Reviewing Studies That Have Assessed Their Economic Impact. Legislative Post Audit Committee. 2008.

This review discusses the costs and revenues assosciated with immigration in several states. It does not provide statistics specific to Kansas. For more information: http://www.kslegislature.org/postaudit/audits_perform/08pa19.pdf


Missouri

  • Ehresman, Ruth. Undocumented Workers: Impact on Missouri’s Economy. The Missouri Budget Project. June 2006.

 Tax contributions from workers in 2005, including sales, income, and property tax, was estimated between $29 million and $57 million (based on a 50% compliance rate with employers). This study estimated the cost for educating the children of unauthorized immigrant workers between $17.5 and $32.6 million in 2005.[13]  
Minnesota 

  • Noncitizens and Minnesota Law: A Guide for Legislators, Minnesota House Research. December 2004.
  • The Impact of Illegal Immigration on Minnesota, Office of Strategic Planning and Results Management, Minnesota Department of Administration. 2005. 

The study in Noncitizens and Minnesota Law: A Guide for Legislators found that the cost of K-12 education for unauthorized students and children of unauthorized immigrants in fiscal year 2004 was between $118 million and $158 million.[14] Around 2,500 -3,000 unauthorized students were in enrolled in Minnesota colleges and universities.[15] The Impact of Illegal Immigration on Minnesota  found that out of the total students receiving K-12 public education in Minnesota in 2004, 2% were non-citizens.[16] 


New Mexico

  • Undocumented Immigrants in New Mexico: State Tax Contributions and Fiscal Concerns. New Mexico Voices for Children, Fiscal Policy Project. May 2006.  

This study estimates that the cost of education for unauthorized students is between $49 million and $67 million, using two studies from the Pew Center and the INS.[17] Each study found a different estimate of tax payments made by unauthorized immigrants. 

The Pew Center found $69.26 million were paid in taxes. Using this estimate, the state made $1.814 million from immigrant taxes after the cost of education.[18] The INS estimated $50.371 million were paid in taxes by unauthorized immigrants, so the government gained $1.25 million after the cost of education.[19] 


New York

  • Passel, Jeffrey S., and Rebecca Clark. Immigrants in New York: Their Legal Status, Incomes, and Taxes. Washington, DC: The Urban Institute. 1998. 

In 1998, this study found that with respect to average total tax contributions, legal foreign born immigrants in New York City pay roughly the same in taxes as natives ($6,300 compared to $6,500 for natives). Naturalized citizens ended up paying more than non-immigrants ($8,600 compared to $6,400 for non-immigrants). Legal permanent residents and refugees paid the least in average individual taxes ($5,000 and $2,200). 

The study also looked at the percentage of  income each group paid in taxes. Natives paid 30.7%, while legally present immigrants paid 29.1%. Refugees paid 20.9%, and unauthorized aliens paid 15.4%. 

The third way this study measured tax contributions was by household. This measurement revealed that immigrant households pay far less in taxes than natives: legally foreign born households paid $13,300, naturalized citizen households paid $15,600, while native households paid $17, 800. 


North Carolina

  • Johnson, James H. and John D. Kasarda. The Economic Impact of the Hispanic Population on the State of North Carolina. The University of North Carolina. January 2006.

This study looks beyond comparisons of tax contributions and costs of services for Hispanic populations, and examines the implications of Hispanic workers on the total economic output and competitiveness of the state. It provides breakdowns of Hispanic self-employed workers by industry, average personal wages and salary earnings, taxes paid by Hispanics, etc.  (The study includes all Hispanics, whether citizen, legal, or unauthorized.) 

The study estimates that Hispanics spent $9 billion in in North Carolina in 2004. Total tax contributions from the Hispanic population are estimated at $756 million annually.  State costs were estimated at $817 annually (K-12 education -  $467 million; health care - $299 million; and corrections - $51 million).  This leaves the state with a net cost of $61 million.  The report notes that these costs should be put in context of the the broader contributions of Hispanics to the state’s economic output and cost competitiveness [20] 


Oklahoma

  • A Computable General Equilibrium (CGE) Analysis of the Impact of the Okalahoma Taxpayer and Citizen Protection Act of 2007. The Economic Impact Group, LLC. Edmonton, Oklahoma: March 24, 2008.  

In March 2008, the Economic Impact Group analyzed the possible effects of decline in the Oklahoma workforce, from low to high outflow of foreign born workers, after the passage of SB 1804. If 25,000 foreign born workers leave the state (low impact), in the short run (no offsetting in migration) the outflow would  produce a 0.58 percent reduction in the Oklahoma Gross State Product (GSP), or $785.5 million (relative to 2006 production levels). If 50,000 foreign born workers leave the state (medium impact), GSP would decline by 1.32 percent, or $1.8 billion. If 90,000 foreign born workers leave the state (high impact), GSP would decline by 2.27 percent, or $3 billion. According to the study, the 50,000 worker outflow is the most plausible scenario; 50,000 foreign born workers would constitute approximately 3 percent of the Oklahoma labor force.[21] 


Texas

  • Combs, Susan. Undocumented Immigrants in Texas: A Financial Analysis of the Impact to the State Budget and Economy. Texas Comptroller of Public Accounts. December 2006. 

The study estimates total revenue, including state revenues and school property tax, from unauthorized immigrants to be $1.58 billion. The total estimated cost of unauthorized immigrants, including education, health care, and incarceration, was $1.16 million leaving the net benefit to the state at $424 million in fiscal year 2005.  However, localities incurred costs of $1.44 billion in health care and law enforcement costs not reimbursed by the state.  Finally, the report notes that the absence of the estimated 1.4 million unauthorized immigrants in fiscal 2005 would have been a lost to the gross state product of $17.7 billion.[22] 

In 2000-2001, the total cost of public education for 125,000 unauthorized immigrant students was $806 million. In 2004-2005, the total cost of public education for 135,000 unauthorized immigrant students was $957 million.[23] 


Utah

  • A Review of the Public Education of Undocumented Children. Utah Legislative Auditor General. 2007.

The 75,000 to 100,000 immigrants living in Utah incurred a cost of $54.9 million to $85.4 million in education costs from the state and local levels.  The study did not include the revenues generated by illegal immigrants. 


Virginia

  • Fiscal Facts: Tax Contributions of Virginia's Undocumented Immigrants. The Commonwealth Institute. 2008.

This study found that the estimated 250,00-300,000 illegal immigrants provided $145 million to $174 million in state income, excise and property taxes annually. The study did not address the societal costs of illegal immigrants.[24] 


Washington D.C.

  •  Capps, Randy, Everett Henderson, Jeffrey Passel, Michael Fix. Civic Contributions: Taxes Paid by Immigrants in the Washington D.C. Metropolitan Area. The Community Foundation. May 2006. 

This study of Washington D.C. found that better-educated households pay higher taxes whether they are headed by immigrants or natives. In 1999–2000, the average tax payment was three times as high for households headed by immigrants with a four-year college degree as for those headed by immigrants without a high school degree: $36,000 versus $12,000. English speaking immigrant households also paid more taxes than natives, but native households paid more taxes than non-English speaking immigrant households. The study asserted that by enhancing English language classes for LEP immigrants, those immigrants could enhance their income and pay more taxes.[25]  

Immigrant households in the Washington, DC, metropolitan region had a total income of $29.5 billion in 1999–2000, and they paid $9.8 billion in taxes; representing 19 percent of the region’s total household income and 18 percent of all taxes paid.[26] 

Prepared by Kerry Birnbach, State-Federal Relations Fellow, NCSL

Edited by Ann Morse, Program Director, NCSL

 

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 Notes

[1] Gans, Judith. "Immigrants in Arizona: Fiscal and Economic Impacts." Udall Center for Studies in Public Policy. 2007. http://udallcenter.arizona.edu/immigration/publications/impactofimmigrants08.pdf

[2] Capps, Randy, Everett Henderson, John D. Kasarda, James H. Johnson Jr., Stephen J. Appold, Derrek L. Croney, Donald J. Hernandez, Michael Fix. A Profile of Immigrants: Executive Summary. Winthrop Rockefeller Foundation. April 2007. http://www.urban.org/UploadedPDF/411441_Arkansas_Summary.pdf

[3] Baker, Robin. Testimony to the Alternative Hearing on Immigration. The Bell Policy Center. August 29, 2006. http://www.thebell.org/PUBS/testimony/2006/08-29immigration.pdf.

[4] Immigration:  Effects on Colorado and the Nation: a Review of Research. The Bell Policy Center. December 29, 2005.  http://www.thebell.org/pdf/IMG-brief12-05.pdf

[5] Immigration: State and Local Taxes in Colorado Paid by Undocumented Immigrants. The Bell Policy Center. June 30, 2006. http://www.thebell.org/PUBS/IssBrf/2006/06ImmigTaxes.pdf.

[6] Coffey, Sarah Beth. Undocumented Immigrants in Georgia: Tax Contribution and Fiscal Concerns. The Georgia Budget and Policy Institute. January 2006.

[7] An Analysis of the Economic Impact of Undocumented Workers on Business Activity in the US with Estimated Effects by State and by Industry. The Perryman Group. April 2008.

[8] Education for All. The Center for Urban Economic Development, University of Illinois at Chicago. March 2003.

[9] Mehta, Chirag; Theodore, Nik, Mora, Iliana; and Wade, Jennifer. Undocumented Immigrants in the Chicago Economy. Chicago: UIC Center for Urban Economic Development. 2002.

[10] Pearson, Beth and Michael Sheehan. Undocumented Immigrants in Iowa. Iowa Policy Project. October 2007. http://www.iowapolicyproject.org/2007docs/071025-undoc.pdf

[11] Pearson, Beth and Michael Sheehan. Undocumented Immigrants in Iowa. Iowa Policy Project. October 2007. http://www.iowapolicyproject.org/2007docs/071025-undoc.pdf

[12] Pearson, Beth and Michael Sheehan. Undocumented Immigrants in Iowa. Iowa Policy Project. October 2007. http://www.iowapolicyproject.org/2007docs/071025-undoc.pdf

[13] Ehresman, Ruth. "Undocumented Workers: Impact on Missouri’s Economy." The Missouri Budget Project. June 2006. http://www.mobudget.org/Undocumented%20Workers%20Impact%20on%20Missouri%20Economy%20June%2006.pdf

[14] The Pew Hispanic Center, as cited in The Impact of Illegal Immigration on Minnesota, Office of Strategic Planning and Results Management, Minnesota Department of Administration. 2005. http://www.mnforsustain.org/immg_mn_state_illegals_cost_study.htm#A.%20K-12%20Costs

[15]  The Urban Institute, as cited in  The Impact of Illegal Immigration on Minnesota, Office of Strategic Planning and Results Management, Minnesota Department of Administration. 2005. http://www.mnforsustain.org/immg_mn_state_illegals_cost_study.htm#A.%20K-12%20Costs

[16] Noncitizens and Minnesota Law: A Guide for Legislators, Minnesota House Research, December 2004 .

[17] Undocumented Immigrants in New Mexico: State Tax Contributions and Fiscal Concerns. New Mexico Voices for Children, Fiscal Policy Project. May 2006. http://www.nmvoices.org/attachments/immigrant_tax_report.pdf

[18] Size and Characteristics of the Unauthorized Migrant Population in the U.S.: Estimates Based on the March 2005

Current Population Survey. (http://pewhispanic.org/reports/report.php?ReportID=61) in Undocumented Immigrants in New Mexico: State Tax Contributions and Fiscal Concerns. New Mexico Voices for Children, Fiscal Policy Project. May 2006.  http://www.nmvoices.org/attachments/immigrant_tax_report.pdf

[19] Undocumented Immigrants in New Mexico: State Tax Contributions and Fiscal Concerns. New Mexico Voices for Children, Fiscal Policy Project. May 2006. http://www.nmvoices.org/attachments/immigrant_tax_report.pdf

 

[20] Johnson, James H. and John D. Kasarda. The Economic Impact of the Hispanic Population on the State of North Carolina. January 2006. The University of North Carolina. http://www.kenan-flagler.unc.edu/assets/documents/2006_KenanInstitute_HispanicStudy.pdf

 

[21] A Computable General Equilibrium (CGE) Analysis of the Impact of the Oklahoma Taxpayer and Citizen Protection Act of 2007.  Economic Impact Group, LLC. Edmond, Oklahoma. March 24 2008. http://www.tulsaworld.com/webextra/content/2008/EconomicImpactGroup.pdf)

[22] Undocumented Immigrants in Texas: A Financial Analysis of the Impact to the State Budget and Economy. Susan Combs, Texas Comptroller of Public Accounts. December 2006. http://www.window.state.tx.us/specialrpt/undocumented/3education.html

[23] Undocumented Immigrants in Texas: A Financial Analysis of the Impact to the State Budget and Economy. Susan Combs, Texas Comptroller of Public Accounts. December 2006. http://www.window.state.tx.us/specialrpt/undocumented/3education.html

[24] Fiscal Facts:  Tax Contributions of Virginia's Undocumented Immigrants.  http://www.hhr.virginia.gov/Initiatives/ImmigrationCommission/09-23-08/Comm_Institute_Imm_Study.pdf

[25] Capps, Randy, Everett Henderson, Jeffrey Passel, Michael Fix. Civic Contributions: Taxes Paid by Immigrants in the Washington D.C. Metropolitan Area. The Community Foundation. May 2006. http://www.urban.org/UploadedPDF/411338_civic_contributions.pdf

[26] Capps, Randy and Everett Henderson, Jeffrey Passel, Michael Fix. Civic Contributions: Taxes Paid by Immigrants in the Washington D.C. Metropolitan Area. The Community Foundation. May 2006. http://www.urban.org/UploadedPDF/411338_civic_contributions.pdf

 

Last Updated March 17, 2009