	Introduction

This report reviews estimates of fiscal impacts to the federal, state, and local governments of the foreign born who reside in the United States. The report examines the academic and policy literature on fiscal impacts of two populations: the entire foreign-born population and the unauthorized alien population. These frameworks typically describe elements necessary to produce accurate and comprehensive impact estimates: defining precisely the foreign-born population analyzed; distinguishing among the foreign born by legal status, education, decade of U.S. arrival, or other policy-relevant criteria; determining an appropriate unit of analysis for computing fiscal impacts; deciding which public service costs and tax revenues to include; making assumptions about the extent to which the foreign born use public services and contribute taxes relative to native residents; and deciding over how many generations to compute impacts. How Should U.S.-Born Children be Treated? According to his own calculations, removing this assumption changed the estimated $111,000 net fiscal surplus to a $21,000 net fiscal deficit (in 2010 dollars). The foreign born, like the native born, impose their largest costs on U.S. taxpayers as children through their consumption of public education, and as the elderly through their consumption of public health services from programs like Medicare and their receipt of Social Security retirement benefits. Yet, the majority of the foreign born who come to the United States as young adults and reside permanently pay taxes and contribute to programs like Social Security for most of their working lives. The relatively young ages at arrival for most foreign born help explain why many fiscal impact studies reviewed by the authors of The New Americans, for example, found that foreign-born residents over the long term generated net fiscal surpluses. Fiscal impacts differ at the state and federal levels. Foreign-born residents' relatively young age distribution accentuates the degree to which states and localities incur greater fiscal costs from the foreign born than the federal government. Federal programs such as Social Security and Medicare are oriented toward assisting the elderly, while state and local level jurisdictions are often responsible for services consumed by younger persons, such as public education and criminal justice administration. Studies of the fiscal impact of unauthorized aliens reach less consensus than those of the total foreign-born population. Three national estimates of the net fiscal impact of unauthorized aliens evaluated in a 1995 GAO report varied considerably and left the agency unable to definitively quantify such impacts. Subsequent state-level studies emphasized fiscal impacts from the most costly public services: public education, health care, and law enforcement. Many also estimated tax and other fiscal contributions. Studies estimating fiscal impacts for unauthorized aliens were more likely to yield estimated net fiscal deficits than those that estimated fiscal impacts for all foreign born. On average, unauthorized aliens tend to be younger and less educated, thereby earning lower wages and salaries than all foreign-born workers. As a consequence, they are more likely to use public education for their children and contribute relatively less in tax revenues compared to all foreign born. However, deriving more specific conclusions or estimates from studies of unauthorized aliens reviewed in this report remains elusive due to differences in study methodology and variation in costs across states where these analyses were conducted.
This report reviews estimates of fiscal impacts to the federal, state, and local governments of the foreign born who reside in the United States. It examines the academic and policy literature on fiscal impacts of two populations: all U.S. foreign born and unauthorized aliens. Computing such fiscal impacts involves numerous methodological and conceptual challenges, and resulting estimates vary considerably according to the assumptions used, including those about the time frame considered, the treatment of U.S.-born children, the unit of analysis used, and which costs and revenues are included.
For the total foreign-born population, the findings of a 1996 analysis commissioned by the National Research Council entitled The New Americans remain authoritative and relevant. The report estimated that each new immigrant at that time, with his or her descendents, would generate an average net fiscal surplus. The authors illustrated how their estimate varied according to foreign-born residents' age composition and educational attainment. Varied assumptions about education generated substantially different impacts. For instance, immigrants with above-average education generated a considerably larger than average net fiscal surplus; those with below-average education levels generated a net fiscal deficit. Reducing the time frame of the analysis to fewer generations changes the average net fiscal surplus into an average net fiscal deficit.
This study and others confirm that the foreign born, like the native born, impose their largest costs on U.S. taxpayers as children, through their consumption of public education, and as the elderly, through their consumption of government-funded public health programs. Yet, the majority of the foreign born come to the United States as young adults, where they pay taxes and contribute to programs like Social Security for most of their working lives. Relatively young ages at arrival for most foreign born help explain why many fiscal impact studies found that foreign-born residents generated net fiscal surpluses over the long term.
Findings from all of the studies reviewed in this report indicate different impacts at the state and federal levels. Many federal programs, such as Social Security and Medicaid, are oriented toward assisting the elderly, while many state and local level jurisdictions are responsible for services consumed by younger persons, such as public education and criminal justice administration. Foreign-born residents' relatively young age distribution thus accentuates the degree to which states and localities incur greater fiscal costs from the foreign born than the federal government.
Fiscal impact studies of unauthorized aliens reach less consensus than those of the total foreign-born population. Three national estimates evaluated in a 1995 General Accounting Office (GAO) report varied considerably and left the agency unable to definitively quantify such fiscal impacts. Subsequent state-level studies emphasized fiscal impacts of costly public services: public education, health care, and law enforcement. Many estimated tax and other fiscal contributions.
Studies estimating fiscal impacts for unauthorized aliens are more likely to yield estimated net fiscal deficits than those estimating fiscal impacts for all foreign born, because unauthorized aliens, on average, tend to be younger and less educated. Consequently, they are more likely to use public education for their children and contribute relatively less in tax revenues compared to all foreign born. Given their unauthorized status, they are also less likely themselves to receive public benefits, although their U.S.-born children may be more likely to qualify for such benefits. However, deriving more specific conclusions or estimates from studies of unauthorized aliens reviewed in this report remains elusive due to variation in study design and methodology.