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New York's Legal Immigrants Pay $18.2 Billion in Taxes - Urban Institute Study First to Fully Document Their Population Size, Incomes, and Taxes

Document date: April 30, 1998
Released online: April 30, 1998
Contact: Susan Brown (202) 261-5702
  Renu Shukla (202) 261-5278

WASHINGTON, D.C.—In a ground-breaking study released today, Urban Institute demographers find that the vast majority of New York State's foreign-born population is legal—84 percent—and that they pay $18.2 billion in taxes, 15.5 percent of the state's total. Average tax payments are close to, but somewhat lower than, those of natives—$6,300 versus $6,500, reflecting the somewhat lower incomes of legal immigrants.

The Urban Institute study "Immigrants in New York: Their Legal Status, Incomes, and Taxes," by Jeffrey S. Passel and Rebecca L. Clark, confirms that New York state legal immigrants are adapting well over time. The longer they have been here, the higher their incomes and average tax payments, the study finds.

"Legal immigrants who have been here for 15 years or more," notes co-author Clark, "have, on average, higher incomes than natives." Children of immigrants also do well—in New York, adults who have at least one immigrant parent have virtually the same average income and tax payments as adults whose parents were both born in the United States.

In both focus and methodology, the Urban Institute study corrects for the significant limitations of previous fiscal impact studies of immigrants. Many of these analyses have focused primarily on the cost side of the equation; have failed to make distinctions among different groups of immigrants; or have inconsistently attributed costs and contributions when comparing immigrants with the native-born population. This has left policymakers without the information they need to address policy concerns such as the appropriate levels of immigration and immigrant eligibility for government programs.

"Immigrants in New York" is the first study to estimate the number of legal immigrants in New York State and to distinguish among them according to their legal status. The study also calculates incomes and taxes for the separate groups and compares them to the contributions of the native-born. The researchers show there are significant differences between legal immigrants who often thrive in the United States—naturalized citizens, regularly admitted "green card" immigrants, and resident foreign nationals such as diplomats and students—and refugees, the legal immigrants who have the most trouble adjusting.

"Such distinctions are critical," says Passel, "because eligibility for government benefits and socioeconomic characteristics vary significantly by specific legal status."

Average Taxes and Income for Individuals and Households, by Nativity/Immigrant Status, New York: 1995
Status Average Pct. Tax*
of Income
Income Tax**
Individuals  
Natives $18,100 $6,500 30.7
Legal Foreign-born
    LPR aliens
    Naturalized citizens
    Refugees
    Nonimmigrants

$18,000

14,500
23,900
8,300
18,700


$63,000

5,000
8,600
2,200
6,400


29.1

28.4
30.8
20.9
28.5


Undocumented Aliens $12,100 $2,400 15.4
Households  
Natives $49,300 $17,800 30.7
Legal Foreign-born
    LPR aliens
    Naturalized citizens
    Refugees
    Nonimmigrants
$38,700

32,400
44,100
23,300
47,200

$13,300

11,600
15,600
5,900
15,900

29.3

28.4
30.8
20.9
28.5

Undocumented Aliens $32,400 $6,600 15.4
** Includes employer-paid Social Security and unemployment.
* Excludes employer-paid Social Security and unemployment.
Source: "Immigrants in New York," Urban Institute, 1998

Key Findings

The demographers used data from the Immigration and Naturalization Service, the Office of Refugee Resettlement, and the U.S. Bureau of the Census for their population estimates. They used the March 1995 Current Population Survey as modified by the Urban Institute's TRIM2 computer simulation, the 1996 New York City Housing and Vacancy Survey, and a variety of administrative data sources for their income and tax estimates. Among their key findings:

Population Size

  • New York contains 3.4 million immigrants, the second largest foreign-born population in the country, trailing only California. Undocumented aliens constitute a smaller share of New York's immigrant population than any other major immigrant state except New Jersey. (The other major immigrant states are Florida, Texas, and Illinois.)
  • New York has approximately 1.4 million legal permanent resident (LPR) aliens (green card holders other than refugees), 1.2 million naturalized citizens, 200,000 refugees, and 50,000 nonimmigrants (for example, students and diplomats).
  • A high percentage (42 percent) of New York's legal foreign-born population has naturalized, compared to the national average of 36 percent.
  • Compared with other major immigrant states, New York contains a low percentage of refugees 5.9 percent of the state's foreign-born population compared with 10.7 percent nationally. The composition of New York's refugee population is principally of the former Soviet Union. Nationally, the largest source of refugees is Southeast Asia.

Incomes and Taxes

  • Among legal immigrants, incomes and tax payments differ substantially by exact legal status. Naturalized citizens have the highest average incomes, $23,900, which surpasses that of natives, $18,100. Refugees have lower average incomes, $8,300. But, unlike the other immigrant groups, refugees are admitted for humanitarian reasons, without regard to their economic impact on the United States.
  • Undocumented aliens pay substantially less in taxes than legal immigrants $2,400 versus $6,300 but tax payments by undocumented aliens are not insubstantial: they total more than $1 billion.
  • Among New York State residents who live outside New York City, the legal foreign-born have higher incomes than natives regardless of the measure used. For instance, per capita income for legal immigrants is $23,900; for natives, it is $19,100.

Policy and Research Implications

Passel and Clark suggest that the following steps be taken to improve the information and public dialogue on immigrants and the policies affecting them.

More Sophisticated Use of Data

At a minimum, separate fiscal impact assessments should be done for legal and illegal immigrants and for each group of legal immigrants. This is particularly relevant where refugees and LPRs are concerned:

    Refugees: Unlike other immigrants, refugees are admitted for humanitarian reasons without regard to their potential costs to the United States. As a group, they are substantially more reliant on government assistance than other immigrants, with about 20 percent of their income coming from welfare.
    LPRs: Legal permanent residents are by far the largest group of legal immigrants and the focus of most debates over immigration policy. But most analyses of the impacts of immigrants are based on Census Bureau data sets that do not distinguish these "green card" immigrants from others such as refugees and undocumented aliens who have substantially different characteristics.

Greater Analytic Consistency and Longer-Term Perspective

Adult second-generation Americans—the U.S.-born offspring of immigrants—have the same average incomes as the adult descendants of natives. Most analysts attribute the costs of second-generation American children to immigrants but attribute their contributions to natives. Counting second-generation Americans as immigrants when they are young and costly, but as natives when they start contributing taxes, biases analyses toward finding that immigrants are a fiscal burden.

Recent welfare laws severely limit most immigrants' access to government benefits during their early years in the United States, when their incomes are lowest. Welfare reform legislation bars new immigrants from TANF (Temporary Assistance for Needy Families) and Medicaid for their first five years and from Food Stamps and SSI (Supplemental Security Income) until they become citizens. Refugees face a seven-year wait for eligibility for public assistance. It is not yet clear whether these new restrictions will encourage economic success or make adjustment for immigrants more difficult.

Federal-State Balance of Burdens and Responsibilities

Underlying much of the concern about fiscal impacts of legal immigrants is the historic tension over cost-sharing between the federal government and the states.

The bulk of tax contributions from legal immigrants and natives goes to the federal government, while most of the costs remain with states and localities, which underwrite primary and secondary education. Recent welfare laws have exacerbated the situation by shifting the burden of caring for new immigrants to the states. This imbalance fuels continuing debate over the services available to legal immigrants and the responsibility for the cost of these services. Ultimately, citizens will have to decide whether to raise state and local taxes, to petition for federal relief, or to curtail these services.


The Urban Institute is a nonprofit, nonpartisan policy research organization established in Washington, D.C., in 1968. Its objectives are to sharpen thinking about society's problems and efforts to solve them, improve government decisions and their implementation, and increase citizens' awareness about important public choices.

To order "Immigrants in New York: Their Legal Status, Incomes, and Taxes," by Jeffrey S. Passel and Rebecca L. Clark, ($13.50) please call the Urban Institute Publications Office at (202) 261-5885.



Topics/Tags: | Economy/Taxes | Immigrants


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