A family walks by a store specializing in phone calls and travel to Latin America on August 29 in New York City. (Photo by Spencer Platt/Getty Images)

Local politicians who are skeptical of immigration often worry that newcomers will place a financial burden on city and state governments. These governments are responsible for major expenses related to immigrant families, especially education, and since immigrants tend to own less property and make less money, they also often pay less in taxes.

Figuring out just what immigrants mean for local governments' finances is a challenge, though. The fiscal consequences vary widely from place to place, depending on the region's economy, how taxes are collected, immigrants' earnings and the number of children they have in school.

On average, state governments spend about $3,300 more on each household headed by immigrants than those households pay in taxes a year, according to a comprehensive new report published last week by the nonpartisan National Academies of Science, Engineering and Medicine.

However, the report, which published last week, found that these families can yield benefits over the long term, as their children grow up, find well-paying jobs,and begin paying more taxes to their local governments.

"The main thing that is affecting the spending level, especially at the state and local level, is the number of school-age kids," said Kim Rueben, one of the authors of the report and an economist at the Urban Institute. "These things are being looked at as costs, but in some ways, they’re our investment into the future."

The cost of households headed by first-generation immigrants varies widely by state, however. In Minnesota, they cost the government about $10,000 on average, but in neighboring North Dakota, the state actually receives an average of nearly $5,000 more in taxes from first-generation households than it spends on them.


Meanwhile, households headed by the second generation -- the children of immigrants -- pay an average of $3,000 more in taxes to the governments of their states than those governments spend on them.

In Mississippi, the figure is $8,000, according to the report. By contrast, the state of Utah spends about $1,150 on the average second-generation household beyond what that household pays in taxes.


"There is really surprising and consistent intergenerational progress within almost all immigrant groups in the United States," said Michael Fix, the president of the nonpartisan Migration Policy Institute, who was not involved in writing the report. "We see substantial progress from the first to the second generation."

The figures are based on Census data from 2011 through 2013. During that period, there were far more first-generation households than second-generation households, and recent immigrants and their families were a net cost for state governments. 

The children in those first-generation households present substantial costs for state governments as they attend school, as do the children of parents born in the United States.

"Obviously, for all of us, kids are a substantial cost and are contributing nothing to society," said David Kallick, who directs immigration research at the nonpartisan Fiscal Policy Institute in New York. "And yet obviously, we invest in them -- partly because we love them and care about their future, but also because we think in the long run as a society, it’s going to be good for us all."

When they come of age, they will begin working and paying taxes. Often, researchers have found, second-generation immigrants are more successful economically than both their parents or other Americans whose families have been in the country much longer.

"They’re very motivated to realize their parents dreams for them," Kallick said. "They’re very motivated to do well, and they do do well, both in school and in the labor market."

That makes them especially valuable to state governments. Compared to the $3,000 in fiscal surplus generated by the average second-generation immigrant household, households headed by third and subsequent generations yield just $2,400 on average, according to the report.

The report's authors did not calculate whether the costs to states of immigration exceed the benefits over the long term, because of the unknown variables: the children's educational attainment, how much they earn, whether they move to other states, and how states tax their citizens in the future.

Taking a very broad view, all immigrants would impose fiscal costs over the long term. Federal and state governments combined spend more on the average American than the average American pays in taxes each year, and almost all Americans are descended from prior immigrants. Unless policies on taxation and public expenditures change, the descendants of today's immigrants can be expected to contribute to the national debt, just like the rest of the country.

"It’s not just the immigrants who are running up the tab," Fix said. "It’s everybody who’s running up the tab."

All the same, countries with expanding populations generally have sounder finances than those with declining populations -- even if the government is running a deficit at the moment. An increasing labor force has more capacity to earn money and pay taxes, giving a government more flexibility to respond to a financial crisis. A growing population can more easily pay off the debts incurred by the smaller generations of the past.