The Fiscal Burden of Illegal Immigration on United States Taxpayers

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Executive Summary
This report estimates the annual costs of illegal immigration at the federal, state and local level to be about $113 billion; nearly $29 billion at the federal level and $84 billion at the state and local level. The study also estimates tax collections from illegal alien workers, both those in the above-ground economy and those in the underground economy. Those receipts do not come close to the level of expenditures and, in any case, are misleading as an offset because over time unemployed and underemployed U.S. workers would replace illegal alien workers.

Key Findings

Illegal immigration costs U.S. taxpayers about $113 billion a year at the federal, state and local level. The bulk of the costs — some $84 billion — are absorbed by state and local governments.
The annual outlay that illegal aliens cost U.S. taxpayers is an average amount per native-headed household of $1,117. The fiscal impact per household varies considerably because the greatest share of the burden falls on state and local taxpayers whose burden depends on the size of the illegal alien population in that locality
Education for the children of illegal aliens constitutes the single largest cost to taxpayers, at an annual price tag of nearly $52 billion. Nearly all of those costs are absorbed by state and local governments.
At the federal level, about one-third of outlays are matched by tax collections from illegal aliens. At the state and local level, an average of less than 5 percent of the public costs associated with illegal immigration is recouped through taxes collected from illegal aliens.
Most illegal aliens do not pay income taxes. Among those who do, much of the revenues collected are refunded to the illegal aliens when they file tax returns. Many are also claiming tax credits resulting in payments from the U.S. Treasury.
With many state budgets in deficit, policymakers have an obligation to look for ways to reduce the fiscal burden of illegal migration. California, facing a budget deficit of $14.4 billion in 2010-2011, is hit with an estimated $21.8 billion in annual expenditures on illegal aliens. New York’s $6.8 billion deficit is smaller than its $9.5 billion in yearly illegal alien costs.

The report examines the likely consequences if an amnesty for the illegal alien population were adopted similar to the one adopted in 1986. The report notes that while tax collections from the illegal alien population would likely increase only marginally, the new legal status would make them eligible for receiving Social Security retirement benefits that would further jeopardize the future of the already shaky system. An amnesty would also result in this large population of illegal aliens becoming eligible for numerous social assistance programs available for low-income populations for which they are not now eligible. The overall result would, therefore, be an accentuation of the already enormous fiscal burden.

Methodology
All studies assessing the impact of illegal aliens begin with estimates of the size of that population. We use a population of 13 million broken down by state.

In our cost estimates we also include the minor children of illegal aliens born in the United States. That adds another 3.4 million children to the 1.3 million children who are illegal aliens themselves. We include these U.S. citizen children of illegal aliens because the fiscal outlays for them are a direct result of the illegal migration that led to their U.S. birth. We do so as well in the assumption that if the parents leave voluntarily or involuntarily they will take these children with them. The birth of these children and their subsequent medical care represent a large share of the estimated Medicaid and Child Health Insurance Program expenditures associated with illegal aliens.

We use data collected by the federal and state governments on school expenses, Limited English Proficiency enrollment, school meal programs, university enrollment, and other public assistance programs administered at the federal and state level. Estimates of incarceration expenses are based on data collected in the State Criminal Alien Assistance Program in which state and local detention facilities seek federal compensation for the cost of detention of criminal and deportable aliens. Estimates for other administration of justice expenditures are based on data collected from the states by the U.S. Department of Justice. General government expenditures are estimated for other non-enumerated functions of government at both the federal and local level. An example would be the cost of fire departments or the cost of the legislature.

Medical costs that amount to 10 percent of overall state and local outlays on illegal aliens derive from our estimate of the childbirths to illegal alien mothers covered by Medicaid, the subsequent medical insurance and treatment of those children and an estimate of uncompensated cost of emergency medical treatment received by illegal aliens. The latter expenditure estimate is based on state and local government studies of uncompensated medical care.

The tax collections from illegal aliens assume eight million illegal alien workers, one-half of whom are in the underground economy. Those in the above-ground economy are assumed to have an average family income of $31,200 (60 hr. workweek @ $10/hr.) with two children.

Conclusion
The report notes that today’s debate over what to do about illegal aliens places the country at a crossroads. One choice is pursuing a strategy that discourages future illegal migration and increasingly diminishes the current illegal alien population through denial of job opportunities and deportations. The other choice would repeat the unfortunate decision made in 1986 to adopt an amnesty that invited continued illegal migration.

July 2010, Revised February 2011

The full report is available in pdf format.