Immigration boosts federal tax revenue, but states and localities bear unique costs
Immigration is a central theme in this year's presidential election, as former President Donald Trump seeks to capitalize on voter discontent over a recent surge in unauthorized immigration to the U.S.
Polling suggests immigration is a top concern for Americans in 2024, and immigration-court data shows that swing states including Pennsylvania, Georgia and Arizona are among those with the greatest increase in unauthorized migrants since 2021.
Winning these bellwether contests could be decisive for Trump or Vice President Kamala Harris, the Democratic nominee, in the November election.
Immigration, both legal and illegal, tends to grow the national economy and improve the federal fiscal budget outlook, according to a July report from the Congressional Budget Office. That's because even undocumented immigrants typically pay more in income and payroll taxes than they receive in federal benefits.
It's a different story for many state and local governments.
"The research literature has generally found that increases inimmigration raise state and local governments' spending - particularly on education, health care, and housing - more than their revenues," the report said.
A record share of Americans said in February that they see illegal immigration as a "critical threat to the vital interests of the United States," and the issue ranks as the No. 1 most important problem facing the country, according to Gallup.
A separate Gallup poll released last month showed that for the first time since 2005, a majority of Americans would like to see a decrease in all immigration.
Housing, emergency healthcare and education costs
One reason for the discontent could be related to the strains that a disorderly surge in immigration can put on state and local infrastructure and services.
"Illegal immigration is a drain on public resources because the services they are likely to use are more expensive than the contributions they make through any taxes [undocumented] immigrants may pay," Jessica Vaughan, director of policy studies at the Center for Immigration Studies, told MarketWatch.
CIS is a think tank that advocates for less immigration and tougher enforcement of laws meant to dissuade illegal immigration.
The CBO estimates that between 2021 and 2026, 8.7 million more immigrants will come to the U.S. than had been expected based on prepandemic trends.
The Federation for American Immigration Reform, which also advocates for reduced immigration, estimates that illegal immigration costs more than $150 billion in government services annually, mostly borne by states and localities.
State and local governments must find ways to provide shelter, emergency healthcare and education to these populations, even if local laws are inhospitable to undocumented immigrants.
Several swing states are home to large numbers of unauthorized immigrants or have seen a large surge in their numbers since 2021, according to federal court data compiled by the Transactional Records Access Clearinghouse at Syracuse University.
While these data aren't a comprehensive account of where all undocumented immigrants are residing, TRAC says they do provide a general sense of which destinations are attractive.
The most popular destinations are large states with strong economies, including Texas, Florida, California, Illinois, New Jersey and New York.
But several key swing states have also seen their unauthorized populations grow, according to court filings.
State Unauthorized migrant population Percent increase since 2021 Rank
Georgia 45,747 401% 7
North Carolina 32,681 446% 9
Pennsylvania 25,721 241% 11
Arizona 24,563 734% 13
Nevada 15,931 562% 22
Michigan 13,162 775% 26
Wisconsin 10,768 467% 28 Vaughan recently authored a study on the budgetary impact of the migrant surge on Massachusetts, which ranks 10th in states with the most migrants, in part because of the relatively generous social services provided there.
The state has a right-to-shelter law, which requires the state to provide emergency shelter for families meeting certain requirements, and a growing immigrant population is putting strain on the program.
The initiative now costs more than $1 billion per year, and Massachusetts Gov. Maura Healy, a Democrat, had to sign legislation limiting the program earlier this year.
FAIR estimated in 2023 that through education, police and corrections services, and healthcare and public assistance, the unauthorized-migrant population cost Pennsylvania $1.64 billion. For the other swing states, the costs run from $1.12 billion for Michigan to $3.2 billion for Arizona.
Not all analysts believe these tallies accurately communicate the benefits and costs of immigration to public finances and local economies, because they don't take into account an immigrant's overall economic impact, including that of their descendants.
In addition, it's difficult to estimate the marginal cost of a new migrant to state in terms of services like education and public safety.
"Beyond the immediately visible impacts in terms of costs - education and healthcare in particular - and the benefits from tax payments, there are far more diffuse impacts from the fact that immigrants are consumers and generators of productivity," said Michelle Mittelstadt, director of communications at the Migration Policy Institute, a nonpartisan group that seeks to improve immigration and integration policies.
MPI hasn't conducted an analysis of the fiscal costs to state governments over the migrant surge.
The typical recent immigrant boosts the U.S economy at a present value of $13,000 when accounting for taxes paid, benefits received and economic activity done by the immigrant and his likely descendants, according to estimates in a 2023 report from the libertarian Cato Institute on the lifetime fiscal impact of immigrants on the U.S. economy.
In the long run, "immigrants pay more taxes than they consume in benefits on average," Alex Nowrasteh, Cato's vice president for economic and social policy studies, wrote at the time. "But the results differ based on their age of arrival in the United States and their ultimate level of education."
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