immigrant households in California receive considerably more in government services than they pay in taxes. That difference is made up by native-born households paying more in taxes than they obtain in benefits. This "fiscal burden" is particularly high among older immigrant households and among Hispanics is particularly high.

There is much confusion about what annual fiscal impact studies such as those in New Jersey and California actually measure. For immigrant-headed households, these studies measure the difference between the costs of all government services received minus the value of all taxes paid during a particular year. In the case of both New Jersey and California, immigrant-headed households receive more in government benefits than they pay in taxes. Because state and local government budgets must balance on an annual basis, this deficit among immigrant-headed households requires that there is a corresponding surplus among native-born households. That is, native-born households must be paying more in taxes than they are receiving in government benefits. The best way of thinking about these annual fiscal impact studies is that they measure the annual net transfer at that unit of government from native-born households to immigrant households so as to balance the books. For reasons explained below, they do not directly measure the net fiscal impact of adding another immigrant.

Table 1-2 provides comparable summary measures of these annual fiscal impact studies for these two states. In both states, immigrant-headed households receive on average net transfers from the government sector. These transfers are considerably smaller in New Jersey, largely because immigrant households there are economically better off and have fewer children (and thus less need for schools). These net transfers to immigrant households must be paid by native-born households in those states.

This "fiscal burden" is $229 per native-born New Jersey household and $1,174 per native-born California household. The much larger tax burden in California stems from the larger net transfer to immigrant households in that state as well as the larger fraction of households that are headed by an immigrant.

Ronald D. Lee and Timothy W. Miller's chapter, "The Current Fiscal Impact of Immigrants and Their Descendants: Beyond the Immigrant Household," continues their innovative work on estimating the fiscal impacts of immigrants. It begins by defining a number of conceptual ways in which immigrant fiscal impacts can be calculated. In contrast to annual budget estimates, the first method,