Do immigrants, including undocumented individuals, contribute more to the economy of the United States in taxes than they utilize in services? The question has endured for nearly as long as the overall immigration debate.
Some studies have focused on broad economic impact, which takes into account not just the specific contributions of individuals but also their wider reverberation in the economy — the owner of a food truck, for instance, who makes an income and spends on goods and services, has a specific economic impact individually but a far wider influence if one includes the incomes and spending of his employees, the mechanic who services his truck, the wholesalers of his food and so on.
Other studies narrow or broaden definitions — an undocumented person’s federal taxes, for example, compared to the federal services such a person receives. Or that same person’s contributions to state or local tax bases compared to services received from those entities.
And, of course, many researchers bring an axe to grind, hoping to present data in such a way as to reinforce an idea: Supporters of mass deportation look for evidence that immigrants are a burden, while critics of removal mine data for evidence to the contrary.
As all that suggests, it’s a divisive topic, with conclusions that seem at least as driven by politics as by data. However, a recent report from an unlikely source firmly declares that immigrants, including those without papers, are much more of a benefit than a drain.
In February, the libertarian Cato Institute released a white paper that examined data from 1994 to 2023. The findings are stark: It reported that in each individual year, “The U.S. immigrant population generated more in taxes than they received in benefits from all levels of government.” It also said during that three-decade span, immigrants created a cumulative fiscal surplus of $14.5 trillion — in 2024 dollars.
When it came specifically to undocumented immigrants, it’s still a net positive: The report finds they likely reduced the federal deficit by $1.7 trillion over those 30 years.
The Cato paper updates a widely cited 2017 report from the National Academies of Sciences, Engineering and Medicine on the financial impacts of immigration. Its findings are all the more notable given that Cato’s work is often cited by conservatives and libertarians. It’s not the ACLU.
The question of whether immigrants contribute to or take from the economy generally extends from employment: Unless they are being paid under the table or in cash, working immigrants, including those who are undocumented (who may be employed under borrowed or stolen identities, the report notes), are subject to payroll and income taxes and other deductions we all see. Yet they are largely excluded from benefits programs such as Social Security and Medicare.
As a result, undocumented migrants help prop up those systems, contributing without drawing from them, in effect subsidizing Social Security and Medicare for the American citizens entitled to claim their benefits.
Some maintain that even without these amenities, immigrants consume more than they contribute. A 2024 report from the conservative Center for Immigration Studies starts by stating, “Illegal immigrants are a net fiscal drain,” and finds that undocumented individuals have an estimated $68,000 lifetime deficit in terms of contributions and expenditures. Why? “They have a low average education level, which results in low average earnings and tax payments,” the report states. “It also means a larger share qualify for welfare programs.”
The findings are very different in the Cato study. It states that immigrants generate more income and taxes than the average American. It adds, “Even if immigrants earn lower hourly wages, they can still account for more total income per capita than the U.S.-born population by working cumulatively more hours.”
It also finds that although immigrants are much more likely to be in poverty, they are not more likely to receive welfare. Immigrants also generate 17% more in taxes per capita than U.S.-born individuals, while at the same time costing the government less (through Social Security, government retirement payments and more).
Even when there are expenses, the Cato report says that spending on immigrants does not spark government deficits. In the period when immigrants created that $14.5 trillion surplus, the U.S. population cost the government nearly $45 trillion.
“In other words,” the report states, “immigrants cut the U.S. budget deficits by nearly one-third in real terms.”
