Immigrants pay "higher-than-average taxes," study shows

A new study by the libertarian-leaning Cato Institute finds that despite the rhetoric in Washington, immigrants pay more into America’s social safety net than they use.

The study covers thirty years, from 1993 to 2023, and finds that immigrants have reduced deficits by some $14.5 trillion — and pay more in taxes than the average person.

For more, “Marketplace Morning Report” host David Brancaccio spoke with David Bier, one of the co-authors of the study and the Director of Immigration Studies at the Cato Institute. The following is an edited transcript of their conversation.

David Brancaccio: Broad brush, the presence of immigrants helps ease the federal budget deficit?

David Bier: Absolutely, the biggest finding is that immigrants have generated a cumulative $14.5 trillion, in real 2024 dollars, in deficit reductions over the last 30 years.

Brancaccio: Now, “immigrants” is a huge class of people who moved here. What happens if the question is, do undocumented immigrants, people in the U.S. without permission, illegally, does that calculation hold up?

Bier: If you look at just their net benefit, it’s about $1.7 trillion. And what's really going on there is that illegal immigrants are largely excluded from the biggest public benefits programs — and those are Social Security and Medicare.

Brancaccio: And unless a person is being paid “under the table,” they may be paying into those systems.

Bier: Right, there are some people who just get paid under the table. They aren't paying in as much as a legal immigrant is, but they are paying taxes, particularly at the state and local level. And even if we look at just federal income taxes, a majority of the illegal immigrant population is on the books. They are paying into that system, and then they're not drawing that benefit out later when they retire.

Brancaccio: David, help me understand. I remember a line in the report, that if immigrant workers were earning lower wages per hour, they can still pay more in taxes than the average person?

Bier: Yeah, so even though they earn lower wages, because they work so many more hours, they end up paying more in taxes than their share of the population would predict.

Brancaccio: Now, I mean, I saw that line in the paper, “Even by this conservative analysis, immigrants may have already prevented a fiscal crisis.” Can we move that forward? Can we extrapolate from that finding that an America with stricter immigration policies, the ones now in place, does that suggest the fiscal health of the country will get worse?

Bier: Absolutely, yes. If we end up in a situation where we cut off immigration, our working age population would go into decline before our retiree population goes in decline. So, it's an enormous problem. Immigration alone is not going to fix it, but it's certainly helping and pushing in the right direction.