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Fact check: What is the estimated annual cost of undocumented immigration to US taxpayers?
Executive Summary
The claim that undocumented immigration creates a specific annual net cost to U.S. taxpayers cannot be stated as a single agreed figure; recent analyses show undocumented immigrants paid roughly $97–$100 billion in federal, state, and local taxes in 2022, while other studies model that large-scale enforcement actions would impose hundreds of billions to nearly a trillion dollars in fiscal and economic costs over multi-year horizons [1] [2] [3]. Policymaking conclusions hinge on whether one counts tax contributions, public service use, and macroeconomic feedbacks — different studies emphasize different elements and timeframes, producing divergent cost estimates [4] [5].
1. Conflicting Headlines: Tax Revenue vs. Net Cost — What the Numbers Say
Recent tax-focused work from the Institute on Taxation and Economic Policy (ITEP) and related reporting found undocumented immigrants paid between $96.7 billion and roughly $100 billion in federal, state, and local taxes in 2022, with about $59.4 billion to the federal level and $37.3–$40 billion to state and local governments [1] [4]. These studies emphasize direct fiscal contributions, including Social Security withholding estimated at $25.7 billion, even though many payers are ineligible for benefits, which changes the net-benefit calculation compared with gross tax receipts [2]. These figures challenge simple assertions that undocumented immigrants are a net drain when only gross taxes are measured [4].
2. The Other Side: Modeling Costs of Deportation and Enforcement
Separate research focuses not on annual accounting of current populations but on the fiscal impact of large-scale deportation or enforcement policies. The Penn Wharton Budget Model estimated a four-year deportation policy would raise primary deficits by about $270 billion to $350 billion, while a ten-year program could cost $862 billion to $987 billion before and after economic feedbacks, respectively [3]. Reports modeling mass deportations project dramatic GDP declines, job losses, and inflationary price effects, arguing that enforcement-heavy approaches carry substantial macroeconomic and fiscal penalties that outweigh simplistic short-term savings [5] [6].
3. Why ‘Annual Cost’ Is a Misleading Frame
Studies differ in scope: some tally current-year tax receipts and public spending flows, others simulate future policy shocks and dynamic macroeconomic feedbacks. As a result, an “annual cost” figure is method-dependent and often omits broader effects like productivity, labor shortages, and long-term contributions of children and working-age adults. Tax-receipt studies highlight contributions that reduce net fiscal burdens, while deportation-cost models stress avoided economic activity and enforcement outlays that increase deficits. Policymakers must decide whether to count immediate flows, lifetime fiscal impacts, or costs of policy actions — each yields different answers [1] [3].
4. Timing and Scale Change the Math Dramatically
The same population can look like a net contributor in cross-sectional tax accounting yet become a large fiscal liability if removed abruptly or if policy shifts change eligibility and services. The Penn Wharton scenarios demonstrate that a policy-driven shock (mass deportation) multiplies fiscal costs over years, producing deficits measured in hundreds of billions to nearly a trillion dollars, while static tax-accounting for a single year shows positive tax contributions near $100 billion [3] [2]. This divergence underlines that short-run versus long-run, static versus dynamic perspectives produce opposing policy takeaways.
5. Political Narratives and Research Agendas Shape Emphasis
Studies emphasizing tax payments often appear in reporting that counters claims of immediate taxpayer burden, while deportation-cost models are typically cited by analysts warning against aggressive enforcement. Both types of work are methodologically defensible but reveal possible agendas: tax-focused analyses counter deficit-based anti-immigrant claims, whereas deportation-cost models argue that enforcement would be economically catastrophic. Readers should note these orientations when interpreting headline numbers and examine whether reports include public-service usage, demographic effects, and economic feedbacks [4] [5].
6. Bottom Line for Policymakers and the Public
There is no single, agreed “annual cost” figure; the most recent empirical tax accounting places documented contributions near $97–$100 billion in 2022, while policy-scenario modeling warns that large-scale enforcement could create hundreds of billions to nearly a trillion dollars in deficits over multi-year periods. Any responsible fiscal assessment must combine current-year tax and spending flows, projected lifetime effects, and the fiscal consequences of alternative policies; failing to specify which lens is used produces misleading claims and poor policy choices [1] [3].