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Fact check: How do different studies and organizations estimate the annual cost of undocumented immigration to US taxpayers?
Executive Summary
A wide range of studies and organizations produce sharply different estimates of the annual fiscal impact of undocumented or recent immigration on U.S. taxpayers because they measure different populations, timeframes, and budgetary levels. Advocacy analyses like FAIR's recent report cite a net annual taxpayer burden in the low hundreds of billions, whereas nonpartisan budget offices and academic updates find outcomes that can be net positive for the federal balance over a decade while imposing localized state and local costs. These discrepancies reflect divergent methodological choices—population denominators (undocumented only vs. all immigrants and descendants), which programs and tax flows are counted, and whether short‑term annual accounting or long‑term lifetime effects are emphasized [1] [2] [3] [4] [5] [6].
1. Why the headline numbers diverge so dramatically — Methodology drives the story
Different reports produce different headline totals because each defines the affected population and fiscal flows differently. FAIR’s recent estimate of $150.7 billion per year in net costs reports gross expenditures of $182 billion and subtracts $31 billion in taxes to arrive at that net figure; it frames the calculation as an annual, aggregate burden tied specifically to “illegal” immigrants and explicitly includes state, local, and federal outlays [1]. FAIR’s earlier 2010 analysis used a larger undocumented population assumption and produced a roughly $99.6 billion annual net burden by summing federal and state‑local costs and explicitly modeling refundable tax credits that reduce net federal tax receipts [2]. By contrast, analyses such as the CBO’s mid‑2024 work model the fiscal effects of a broad immigration surge—counting revenues, mandatory outlays, and interest—over a ten‑year window and find a net federal deficit reduction of about $0.9 trillion from 2024–2034, with significant revenue gains outpacing federal outlays in that period [3]. These methodological gaps—population base, time horizon, program inclusion, and treatment of tax credits—explain most of the variance among headline figures.
2. Federal vs. state and local budgets — One government’s gain can be another’s pain
Reports show a common pattern: federal fiscal effects often differ from state and local impacts. The CBO’s analysis quantifies a net federal benefit over a decade because immigrants contribute substantial payroll and income taxes and are not fully eligible for many federal means‑tested benefits immediately, generating increased revenue relative to additional federal mandatory spending and interest costs [3]. Conversely, the CBO and FAIR both identify sizable state and local costs—education, emergency health services, and local welfare‑type programs—which tend to be funded at those levels and create net burdens for municipalities and states where immigrant concentrations are high [5] [2] [1]. The CBO estimated a direct net state and local cost of about $9.2 billion in 2023, noting broader longer‑term effects that could raise that figure [5]. The split across government levels is therefore crucial: an overall federal net benefit does not negate meaningful fiscal pressures on local services and budgets.
3. Short‑term annual accounting versus lifetime and intergenerational perspectives
Short‑term annual accounting focuses on current-year revenues and outlays, which tend to highlight immediate education and health spending and current tax receipts; this is the frame used by FAIR’s annualized estimates [1] [2]. Longer‑term lifetime studies and recent academic updates incorporate the fiscal contributions of immigrants’ descendants and the economic assimilation of younger, more educated arrivals—finding that younger, better‑educated immigrants pay more in taxes and draw fewer benefits over their lifetimes, potentially reducing long‑run deficits and debt [6]. The 2025 update to fiscal-impact modeling emphasizes these demographic and human‑capital differences and explicitly adjusts for descendants, producing different long‑term implications than annual snapshots [4]. Choosing an annual ledger versus a lifetime or intergenerational lens reshapes whether immigration appears as a net burden or a net benefit.
4. Reading the numbers: agendas, transparency, and common ground for policymakers
The variation in findings reflects not only empirical choices but also organizational missions and policy priorities. FAIR’s reports are produced by an organization advocating for immigration restriction and frame costs to highlight fiscal burdens [1] [2]. CBO and academic updates aim for nonpartisan modelling and often produce more nuanced, multi‑year results showing net federal gains across a decade while acknowledging state and local strains [3] [4]. The practical takeaway for policymakers is that there is no single correct “annual cost”; rather, debates should focus on explicitly stated assumptions—population definitions, time horizons, program scopes, and treatment of descendants—and on targeted policy responses that address state‑level fiscal stress while recognizing federal revenue gains and labor‑market dynamics [3] [5] [6].