Immigrants Cut the Deficit by $14.5 Trillion Over 30 Years: Analysis
Immigrants have been net-positive contributors to federal, state and local governments for decades, according to a new report from the Cato Institute, a libertarian think tank.
According to Cato, immigrants — both legal and undocumented — paid more in taxes at all levels of government than they received in benefits over a 30-year period starting in 1994. Their cumulative fiscal surplus came to $14.5 trillion in constant 2024 dollars during that time, a figure that includes $3.9 trillion saved in lower interest payments on the national debt.
Without that surplus, the national debt as of 2023 would have been nearly twice as high as it was, equaling 205% of gross domestic product.
The Cato analysts say their estimate is conservative, since they did not model the positive but indirect fiscal effects resulting from higher economic growth produced by millions of additional workers.
“How can immigrants be so fiscally beneficial when the country overall is running such extreme deficits?” the Cato paper asks. “The answer is that a big part of the US budget is pure public goods—primarily the military and interest payments on past debt accrued before the immigrants came—which don’t scale with population growth. These are essentially fixed costs or sunk obligations that the United States will have to cover whether immigrants come or not.”
Overall, immigrants pay more taxes than average, because they work at higher rates than non-immigrants. They cost less as retirees, in part because they are less likely to retire, but also because some pay into Social Security but are unable to claim benefits due to their lack of citizenship. Immigrants cost school systems less than average, too, because so many arrive after school age.
“Immigrants are not to blame for government deficits,” the Cato analysts said in conclusion. “Indeed, they reduced the deficit by about $14.5 trillion.”
