December 22, 2016 | Backgrounder on Immigration
Estimates indicate that there are at least 10 million adult illegal immigrants in the U.S. If granted amnesty or earned citizenship, these illegal immigrants would gain access to benefits under Social Security, Medicare, the Affordable Care Act (“Obamacare”), and over 90 federal means-tested welfare programs. The value of the benefits that amnesty recipients would receive would greatly exceed any taxes and fines to be paid, and the net cost to taxpayers would be in the trillions of dollars.
In September 2016, the National Academy of Sciences (NAS) released a major report, The Economic and Fiscal Consequences of Immigration, analyzing the fiscal balance (total government benefits received, minus total taxes paid) for immigrants with different levels of education. In particular, the report provides 75-year fiscal projections for the fiscal balance of immigrants and their descendants based on the immigrant’s education level. Since the education level of current illegal immigrants is generally known, the NAS fiscal balance projections can be used to estimate the fiscal cost of current illegal immigrants after an amnesty.
The NAS report does not distinguish between legal and illegal immigrants, but since it does provide fiscal projections at different education levels, and because the education level of current adult illegal immigrants is approximately known, the NAS projections enable us to project the fiscal costs of illegal immigrants if they were granted amnesty or earned citizenship as a group.
The study clearly shows that the net fiscal impact (benefits received minus taxes paid) of immigrants varies greatly according to their education level. According to the NAS research, each immigrant without a high school diploma would impose an average long-term net fiscal cost of over $650,000 on taxpayers. Thus, the education level of illegal immigrants has a large impact on the fiscal cost of amnesty.
There are currently around 10 million adult illegal immigrants in the U.S. with an average age of 35. Chart 1 compares the education levels of illegal immigrant adults to legal immigrants and non-immigrants. As a group, illegal immigrants are poorly educated; nearly half do not have a high school diploma, and only 11 percent have a college degree. Adult illegal immigrants are six times more likely to lack a high school diploma than are U.S.-born residents.
Illegal immigrants currently benefit from routine government services such as roads, sewers, police, and fire protection. The children of illegal immigrants currently receive heavily subsidized public education at an average cost of $12,000 per child per year. Children of illegal immigrants born in the U.S. are eligible for the same welfare benefits (such as food stamps, Medicaid, Obamacare, and Temporary Assistance for Needy Families) that children born to U.S. citizens are eligible to receive. Because illegal immigrant families already receive many government benefits and services, they currently impose a fiscal cost on taxpayers: The benefits they receive exceed the taxes paid.
Amnesty or earned citizenship would provide current illegal immigrants access to an additional level of expensive government entitlements and benefits. All of the major comprehensive immigration reform or earned citizenship bills debated in Congress since 2006 would have granted nearly all current illegal immigrants eligibility for future Social Security and Medicare benefits after 10 years of work. These bills also would have provided amnesty recipients access to almost the entire U.S. welfare system after modest delays. It is true that after amnesty, former illegal immigrants would be more likely to work “on the books” and therefore would pay somewhat more in taxes. However, the increase in tax payments would be dwarfed by the cost of added entitlements.
In effect, amnesty would give current illegal immigrants access to the same government benefits as those for which current legal immigrants are eligible. Thus, as a general rule of thumb, the long-term fiscal balance of an illegal immigrant after amnesty would be roughly equal to the cost of a current legal immigrant with the same age and education level.
In general, less-educated individuals, whether they are illegal immigrants, legal immigrants, or non-immigrants, receive far more in government benefits than they pay in taxes. For example, a household headed by a legal immigrant without a high school degree typically receives about $4.00 in benefits for every $1.00 of taxes paid. Because illegal immigrants tend to have low levels of education, granting them access to Social Security, Medicare, Obamacare, and means-tested welfare would lead to substantial long-term costs for taxpayers.
Table 1 applies the NAS projected 75-year fiscal balances for immigrants by education level to the current adult illegal immigrant population. This provides an estimate of the aggregate fiscal cost of illegal immigrants subsequent to a grant of amnesty or earned citizenship. The NAS projected fiscal estimates for immigrants include federal and state benefits that would be received, minus all taxes to be paid, for both the first and second generation of immigrants.
Based on the education level of illegal immigrants, the NAS figures project that the net fiscal cost (benefits minus taxes) for 10 million adult illegal immigrants after receiving amnesty would have a net present value of negative $1.29 trillion. The concept of “net present value” is complex; it places a much lower value on future expenditures than on current expenditures.
One way to explain net present value is that it represents the total amount of money that would have to be raised today and put in a bank account earning 3 percent interest above the inflation rate in order to cover future costs. This means that if amnesty were enacted, the government would have to raise taxes immediately by $1.29 trillion and put that sum into a high-yield bank account to cover the future fiscal losses that would result from the net fiscal costs of amnesty recipients and their children.
The $1.29 trillion figure equals $15,300 for each U.S. household currently paying federal income tax. To cover the future cost of illegal immigrants after amnesty, each taxpaying U.S. household, on average, would have to pay an immediate lump sum of over $15,000.
Of course, if the federal government were to grant amnesty, it would not actually raise current taxes by $1.29 trillion and put the money in a high-yield bank to cover the future costs. Instead, in the government’s normal pattern, the costs would be unfunded and passed on to future years’ taxpayers. Converting a net present value figure into future outlays requires information on the exact distribution of costs over time; unfortunately, such data are not provided by the NAS. However, a very rough estimate of the future net outlays to be paid by taxpayers (in constant 2012 dollars) for illegal immigrants after amnesty is around $3.6 trillion over 75 years. The average long-term fiscal loss per adult illegal immigrant (in constant 2012 dollars) would be around $360,000.
There are several factors that could raise or lower this estimate of projected costs.
Earned citizenship bills typically would require illegal immigrants to pay a small fine before being put on the pathway to citizenship. For example, the “Gang of Eight” bill (S. 774) in 2013 would have charged each illegal immigrant a fine of $1,000. In exchange for paying this fine, the illegal immigrant would have been given access to Obamacare, Social Security, Medicare, and over 90 different means-tested welfare benefit programs, as well as the right to vote in U.S. elections. The net fiscal cost of amnesty recipients would clearly be hundreds of times greater than any fine they would pay.
In effect, earned citizenship bills “fine” U.S. taxpayers to pay extensive benefits to former illegal immigrants. Under such proposals, the illegal immigrant’s “right” to lay claim to these taxpayer funds results from their violation of U.S. immigration law in the first place. In the end, amnesty or earned citizenship would greatly reward individuals for breaking U.S. laws, impose enormous costs on U.S. taxpayers, and encourage increased new waves of illegal immigration.—Robert Rector is a Senior Research Fellow in the Institute for Family, Community, and Opportunity at The Heritage Foundation. Jamie Bryan Hall is a Senior Policy Analyst in the Center for Data Analysis, of the Institute for Economic Freedom and Opportunity, at The Heritage Foundation.
 National Academies of Sciences, Engineering, and Medicine; Division of Behavioral and Social Sciences and Education; Committee on National Statistics; Panel on the Economic and Fiscal Consequences of Immigration, The Economic and Fiscal Consequences of Immigration (Washington: National Academies Press, 2016), https://www.nap.edu/catalog/23550/the-economic-and-fiscal-consequences-of-immigration (accessed December 2, 2016).
 Ibid., p. 351.
 The NAS study finds that the average net present value of the fiscal cost of each adult immigrant without a high school degree entering the U.S. is –$237,000. See ibid., p. 341, Table 8-12, which reflects the total impact figure from the calculation for all immigrants with no budget adjustments. The estimated non-discounted cost in 2012 constant dollars is $662,000.
 Estimated from Bryan Baker and Nancy Rytina, “Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2012,” U.S. Department of Homeland Security, Office of Immigration Statistics, Population Estimates, March 2013, p. 5, https://www.dhs.gov/sites/default/files/publications/ois_ill_pe_2012_2.pdf (accessed December 1, 2016).
 Heritage Foundation calculations based on U.S. Department of Commerce, U.S. Census Bureau, Current Population Survey, 2011 Annual Social and Economic (ASEC) Supplement, https://dataferrett.census.gov (accessed March 13, 2015).
 Robert Rector, “The Fiscal Consequences of Executive Amnesty,” testimony before the Committee on Oversight and Government Reform, U.S. House of Representatives, March 17, 2015, p. 10, https://oversight.house.gov/wp-content/uploads/2015/03/Mr.-Rector-Testimony-Bio-TNT.pdf.
 These bills were the Comprehensive Immigration Reform Act of 2006 (S. 2611), introduced in 2006; the Secure Borders, Economic Opportunity and Immigration Reform Act of 2007 (S. 1348), introduced in 2007; and the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S. 744, popularly known as the “Gang of Eight” bill), introduced in 2013.
 The federal government operates over 90 means-tested welfare programs. Benefits from these programs extend over the entire life span. Because the benefit system covers individuals from cradle to grave, postponing an immigrant’s access to welfare programs even for a decade has only a modest effect on life-time costs.
 Rector, “The Fiscal Consequences of Executive Amnesty.”
 It is sometimes argued that post-amnesty fiscal projections do not allow for the upward mobility of former illegal immigrants. However, the methods employed here assume that each former illegal immigrant will have wages and benefits after amnesty that are roughly equal to the wages and benefits of a current legal immigrant with the same age and level of education. Thus, the estimates allow for upward mobility of amnesty recipients. Because legal immigrants have more access to government benefits than do illegal immigrants, they tend to have greater fiscal costs per education level.
 Rector, “The Fiscal Consequences of Executive Amnesty.”
 The per-immigrant net present value figures in Table 2 are taken from National Academies of Sciences, Engineering, and Medicine, The Economic and Fiscal Consequences of Immigration, p. 341, Table 8-12, using the data for all immigrants with no budget adjustments. The figures are 75-year projections for immigrants and their descendants. For the education levels of adult illegal immigrants, see Table 1.
 Using data from the U.S. Census Bureau’s Current Population Survey, 2016 Annual Social and Economic (ASEC) Supplement, there are 81.4 million households with a positive aggregate federal income tax liability after receipt of credits out of a total of 119.4 million households.
 This estimate uses the NAS discount rate of 3 percent and assumes that the constant-dollar fiscal costs are allocated equally over time.
 Some portion of future fiscal costs following amnesty would have occurred even without amnesty. The NAS data do not permit those costs to be separated from the extra costs that would be induced by amnesty per se. However, the bulk of the post-amnesty costs are generated by granting former illegal immigrants access to Social Security, Medicare, Obamacare, and means-tested welfare.
 Baker and Rytina, “Estimates of the Unauthorized Immigrant Population,” p. 1.
 Ibid, p. 4.
 Steven A. Camarota, “Amnesty Under Hagel–Martinez: An Estimate of How Many Will Legalize If S. 2611 Becomes Law,” Center for Immigration Studies Backgrounder, June 2006, p. 3, Table 1.
 National Academies of Sciences, Engineering, and Medicine, The Economic and Fiscal Consequences of Immigration, p. 338. Of the 29 percent emigration rate, 22 percent occurs in the first 10 years after the immigrant’s arrival; only 7 percent occurs after 10 years. Granting an illegal immigrant amnesty would create a strong incentive for him to remain in the country.
 Approximately three-quarters of illegal immigrants have been in the U.S. more than 10 years. See Baker and Rytina, “Estimates of the Unauthorized Immigrant Population,” p. 3.
 This estimate is based on the average difference between legal and illegal immigrant fiscal costs per education group, multiplied by the percentage of immigrants in each education group who are illegal.
 Data provided by Steven Camarota of the Center for Immigration Studies.
 Migration Policy Institute, “Profile of the Unauthorized Population: United States,” http://www.migrationpolicy.org/data/unauthorized-immigrant-population/state/US (accessed December 2, 2016).
 George J. Borjas, “The Labor Supply of Undocumented Immigrants,” National Bureau of Economic Research Working Paper No. 22102, March 2016, http://www.nber.org/papers/w22102.pdf (accessed December 2, 2016).
 The NAS study also includes several analyses that assign public goods costs to immigrants; this notably increases the fiscal cost of immigration. These analyses have not been used in the calculations presented in this paper.
 Peter B. Dixon and Maureen T. Rimmer, “Restriction or Legalization? Measuring the Economic Benefits of Immigration Reform,” Cato Institute Trade Policy Analysis No. 40, August 13, 2009, http://www.cato.org/publications/trade-policy-analysis/restriction-or-legalization-measuring-economic-benefits-immigration-reform (accessed December 2, 2016).