Arizona’s recently-passed immigration law has drawn heated debate on both sides of the immigration issue, but there has
been little focus on what economic impact illegal immigration has on border states – a phenomenon that’s likely larger than
many people realize.
Putting the law and morality of illegal entry aside, several studies have shown the illegal immigrant population is more
of an economic contributor to state and local economies than politicians like to tell an angry electorate. The numbers can
be broken down into the fiscal cost (or gain) of illegal immigrants to states, along with the economic contribution of the
The most thorough study on the fiscal and economic impact of immigration was done by the non-partisan Texas Comptrollers’
Office in 2006, which showed Texas earned more in taxes and economic output from illegal immigrants than governments spent
to provide services.
According to the Comptrollers’ office, state and local governments spent $1.16 billion to provide services like education,
health care and safety, but raised an estimated $1.58 billion in tax revenues. Based on the data, the Texas taxpayer made
a $424.7 million profit on its illegal immigrant population in 2006.
Fiscally, illegal immigrants contribute mostly to state and local coffers primarily through sales and property taxes, which
are mostly unavoidable. A majority of illegal immigrants pay federal, state and local income tax as well – 50% to 75%, according
the Congressional Budget office.
Figures found in studies such as Texas’ 2006 study, or another 2007 study by the CBO, which did a survey of all data for
the past 30 years and concluded that fiscal impact of services provided to illegal immigrants “is mostly modest,” stands in
contrast to political rhetoric that fueled the passage of Arizona SB1070.
“The additional economic activity and tax revenue that undocumented workers provide to state and local governments simply
overwhelms the fiscal cost to provide services,” said Dan Griswald, an immigration policy expert with the libertarian think
tank CATO Institute.
Arizona and Texas’ economies and tax policies are similar enough that conclusions can be drawn that Arizona may also receive
net economic and fiscal benefits from illegal immigrants. Both states rely on sales taxes and fees on cigarettes and alcohol
for large portions of tax revenue generation, according to the Tax Foundation. One difference is Arizona assesses both a personal
and corporate income tax, which Texas does not.
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