The Fiscal Impact of Immigration
Small-government advocates should oppose amnesty and support selective immigration policies.

Illegal immigrants in Chicago attend a workshop on applying for legal work status, August, 2012.



The graph includes both legal and illegal immigrants, which actually reduces the welfare use rates somewhat. That is, less educated legal immigrants have even higher welfare use than less educated illegal immigrants. This is why Heritage’s study finds that giving illegal immigrants legal status raises costs dramatically.

Proponents of amnesty, led by the Cato Institute, have offered some rather silly arguments to attack Heritage. First, some critics contend that less educated immigrants are no worse for the nation’s fisc than less educated native-born Americans. This is mostly true. But it in no way justifies allowing into the country additional less educated immigrants, who will compound the problem.

Some also argue that Rector’s methodology is non-standard because it looks at taxes paid and services used by households rather than individuals. In fact, this is the standard way to look at the issue. The National Research Council (NRC) used households in some of the fiscal analyses it did of immigrants, as did the Urban Institute in its tax studies in 1995 and 2006. Princeton economist Thomas Espenshade also used households in his fiscal analysis of New Jersey’s immigrants.

The late Julian Simon, who was at Cato and shaped the institute’s views of immigration, used this approach as well, with data from the 1970s. But now that the numbers do not come out positive, Cato does not like Simon’s method. The way Heritage looked at the fiscal impact of immigrants is the main way most researchers have done this kind of work.

The primary concern about looking at households is that this approach includes U.S.-born children, who critics argue should not be counted. But Simon himself pointed out that the fiscal impact must include both the immigrant and the family “he brings or acquires.” After all, the children are here only because their parents have been allowed into the country. It is also worth noting that the NRC study in 1997 did an analysis that excluded U.S.-born children, and it still found that less educated immigrants were a large fiscal drain.

Others argue that because the Schumer-Rubio bill limits welfare access for the first ten years after legalization, there is nothing to worry about. But the Heritage study shows that illegal-immigrant households already receive about $4,500 a year on average from means-tested programs. The U.S.-born children of illegal immigrants have access to all programs, the ban does not apply to every program, and the administration of these programs is far from airtight. Finally, as the Heritage study makes clear, when the ten-year window expires, the costs explode.