‘Immigrants are providing subsidies to the U.S. government’: how the undocumented actually reduced the deficit by $14.5 trillion over 30 years

Thousands of people are protesting the White House’s immigration crackdown, and the debate over President Donald Trump’s aggressive immigration policy has reached a new peak. Identifying and deporting undocumented, the so – called “illegal” immigrants, has been a key part of both of Trump’s terms in office (as it was for his predecessors, and Barack Obama was given a certain label by critics). Trump has argued for years that this would safeguard jobs for American workers and increase domestic wages, ultimately protecting the U.S. economy, despite a large amount of economic research indicating that immigration is actually a net positive.

Amid the renewed tensions due to the increased presence of Immigration and Customs Enforcement (ICE) in U.S. cities, new data presents remarkable counter – evidence to the administration’s claim that U.S. immigrants are draining resources from the economy.

A report published on Tuesday by the Cato Institute, a libertarian think tank, discovered that over the past three decades from 1994 to 2023, immigrants (both documented and undocumented) have paid more in taxes than they have received in local, state, or federal benefits. The fiscal surplus from immigrants totaled $14.5 trillion over this 30 – year period. Moreover, according to the report, without the economic contributions of immigrants, public debt would be over 200%, or double the size, of the U.S. GDP. That’s a threshold that…

The data was not fully broken down by undocumented or documented immigration status, but the report estimated that undocumented immigrants reduced the national deficit by $1.7 trillion over the measured time period, contributing more than 11% of the total fiscal gains of immigrants to the U.S.

The rapidly growing national debt, which recently exceeded $38 trillion, has become an increasing concern for economists. They worry that the U.S. is in a situation that would cause inflation and interest rates to spike, and also make the U.S. vulnerable to emergencies and national security threats.

“For years, nativists in Congress and the administration have wrongly claimed that immigrants are responsible for the growth of debt and that the U.S. immigration system allows foreigners to take advantage of Americans’ generosity,” David Bier, co – author of the report and director of immigration studies at the Cato Institute, wrote in a [something] about the paper. “Our data completely refutes this view. Immigrants are subsidizing the U.S. government.”

How immigration boosts the U.S. economy

The Cato Institute’s calculations regarding the relationship between immigrants and the U.S. economy are based on the idea that the U.S. operates with large deficits, mainly due to military spending and interest payments on past accumulated debt. These factors do not change with population growth and are sunk costs that exist regardless of whether immigration increases.

Therefore, Bier told [something], a new person entering the country is unlikely to have a significant negative impact on U.S. debt because the majority of the country’s deficit exists independently of them.

“That’s the core way to think about what happens when a new person arrives,” Bier said. “As long as they pay an average amount of taxes and receive an average amount of benefits, they will reduce the deficit.”

Based on models from the National Academies of Sciences, Engineering, and Medicine (NASEM) and data from the US Census Bureau’s Current Population Survey for March 1994–2023, immigrants are indeed paying taxes and require less spending on education and social services than native – born Americans. For example, in 2023, immigrants made up 14.7% of the U.S. population, but 17.3% of the tax share and 17.4% of the U.S. income share. Although immigrants often have lower – wage jobs, they work at a high rate (accounting for more than 18% of the U.S. workforce in 2023), which means they have higher per capita incomes and pay more in taxes than their share of the population.

Since immigrants hold fewer government jobs than native – born Americans, they also need fewer old – age benefits such as pensions. Many temporary or undocumented immigrants are not eligible for Social Security. Compared to U.S. – born individuals who cost nearly $200,000 per capita in old – age benefits, immigrants cost about $126,000 per capita.

Similarly, most U.S. immigrants enter the country in their 20s, which means they have already completed most of their education and need less schooling than their U.S. – born counterparts. While U.S. – born individuals cost about $105,000 per capita for education, immigrants cost less than $50,000 per capita. According to the report, there is a similar pattern where immigrants cost the government less than native – born Americans for needs – based services like welfare, as well as for prisons and felonies.

Debate over the economic impact of immigration

Experts have questioned how Trump’s policies, including those related to immigration, could affect the rising debt. The Congressional Budget Office (CBO) predicted that if the temporary tax provisions (such as no tax on tips) in Trump’s One Big Beautiful Bill were extended for the full 10 years, it [would do something] to the national debt.

In a Cato Institute [report] from June 2025, Bier calculated that the spending on immigration enforcement outlined in the bill could also increase the country’s deficit by about $900 billion. Citing CBO data, he suggested that the cost of removing 8.7 undocumented immigrants, asylum seekers, and parolees would be around $900 billion, considering the cost of federal law enforcement, deportation costs, and reconciliation amounts.

Trump’s spending bill allocated nearly $170 billion to immigration enforcement, including tripling ICE’s annual budget with a $75 billion increase. In September, the CBO predicted that the immigration crackdown would [do something] from the country between 2026 and 2029, and said the crackdown would shrink the U.S. labor force. Economists have noted that negative net migration, which Trump has advocated for, would [do something] by 0.4%.

Some immigration experts have argued differently. In a 2024 [testimony] to the Immigration Integrity, Security, and Enforcement Subcommittee of the House Judiciary Committee, Steven Camarota, director of research for the Center for Immigration Studies, said undocumented immigrants have a “net fiscal drain.”

“The fundamental reason that illegal immigrants are a net drain is that they have a low average education level, which leads to low average earnings and tax payments,” Camarota wrote. “It also means a large proportion are eligible for welfare programs, often receiving benefits on behalf of their U.S. – born children.”

But even when immigrants are using social services, those individuals are still likely to be working, paying taxes, and spending money, Bier noted. This shows that the U.S. has a better chance of paying back its debts with these immigrants in the country than without them.

“Immigrants, just by being here, are reducing the debt – to – GDP [ratio], and that’s good for the country,” he said.