In the modern American economy, those with relatively little education (immigrant or native) earn modest wages on average, and by design they make modest tax contributions. Because of their relatively low incomes, the less educated, or their dependent children, are often eligible for welfare and other means-tested programs. As a result, the less educated use more in services than they pay in taxes. This is true for less-educated natives, less-educated legal immigrants, and less-educated illegal immigrants. There is simply no question about this basic fact.
The relationship between educational attainment and net fiscal impact is the key to understanding the fiscal impact of immigrants, legal or illegal. Figure 2 at the end of the report makes clear why less-educated immigrants are a net fiscal drain on average. Households headed by immigrants with a high school education or less have high rates of welfare use and relatively low income tax liability. Figure 3 shows that less-educated natives also have high rates of welfare use and low income tax liability. This is an indication that it is education levels, not being an immigrant per se that creates the costs.
In the case of illegal immigrants, the vast majority of adults have modest levels of education, averaging only 10 years of schooling. This fact is the primary reason they are a net fiscal drain, not their legal status.
It must also be understood that use of welfare and work often go together. Of immigrant-headed households using welfare in 2011, 86 percent had at least one worker during the year. The non-cash welfare system is specifically designed to help low-income workers, especially those with children. There are also a number of other programs in addition to welfare that provide assistance to low-income workers, such as the Earned Income Tax Credit and the cash portion of the Additional Child Tax Credit.
The just-released Heritage Foundation study found that households headed by a legal immigrant who had not graduated high school used, on average, $36,993 more in services than they paid in taxes. Households headed by a legal immigrant with only a high school education created a net fiscal deficit of $18,327, those with some college created a deficit of $7,489 and those headed by an immigrant with at least a college education created a fiscal benefit of $24,529.24 This analysis confirms the finding from the NRC study discussed in the bullets and the results in Figures 2 and 3 — education is the key to understanding the fiscal impact of immigrants.
There is no better predictor of one's income, tax payments, or use of public services in modern America than one's education level. The vast majority of immigrants come as adults, and it should come as no surprise that the education they bring with them is a key determinant of their net fiscal impact.
CONCLUSION
Immigration makes the U.S. economy larger. However, for the native-born population immigration (legal and illegal) is primarily a redistributive policy; it does not substantially raise the overall income of native-born Americans. As for the fiscal impact of immigration, the education level of the immigrants in question is the key to understanding their fiscal impact. If you take nothing else away from my testimony, it should be remembered that it is simply not possible to fund social programs by bringing in large numbers of immigrants with relatively little education. This is central to the debate on illegal immigration given that such a large share of illegal immigrants have modest levels of education. The fiscal problem created by less-educated immigrants exists even though the vast majority of immigrants, including illegal immigrants, work and did not come to America to get welfare. The realities of the modern American economy coupled with the modern American administrative state make large fiscal costs an unavoidable problem of large scale, less-educated immigration. However, all the available evidence indicates that skilled immigration should be a significant fiscal benefit.
