actually make an average net fiscal contribution. These differences arise because households of Latin American immigrants tend to have lower incomes and to include more school-age children than do other immigrant households.
Looking forward, any fiscal burden from new immigration will be shared by the households of current immigrant residents as well as native households. For example, if the United States added 916,000 new immigrants per year—an increase of about 10 percent in current immigration—and with those households located the way current immigrants are, they would increase the annual net fiscal burden on New Jersey households by about $20 per household, and they would increase the burden for California households by about $90 per household. For all U.S. native households, the net fiscal burden would be about $15 to $20 per household.
These estimates of the current year fiscal impact of immigrant households do not provide an estimate of the long-term effect of immigration on public finances, for three reasons. First, new immigrants who are a net cost to the public-sector in the current year's accounting (for example, those with children in school) may ultimately offer a net contribution, as their children finish school and become workers and taxpayers. And new immigrants who are helping to solve the nation's funding problem in the near term for Social Security and Medicare through increased payroll taxes are likely to become recipients of Social Security and Medicare benefits later in life, and so could turn out to represent a fiscal burden over their lifetimes.
Second, the fiscal benefit or burden from additions to the U.S. population depend crucially on the future paths of government spending and tax rates. Burdens today can be shifted onto future residents, both native and immigrant, through government borrowing. Only a long-term fiscal accounting can reveal these redistributions across generations, and hence offer an accurate picture of the long-run consequences of new immigration.
Third, the economic characteristics of the different generations of current foreign-born residents differ substantially. The annual measures for the current year combine the taxes and government expenditures associated with older immigrants who have been in the United States for many years with the taxes and spending associated with younger, recent arrivals.
Only a forward-looking projection of taxes and government spending can offer an accurate picture of the long-run fiscal consequences of admitting new immigrants. The methodology used by the panel for these long-run measures is an extension of the methodology of the annual calculations. Initially, tax payments and benefit receipts are estimated for individuals by immigrant status, age, education, and time in the United States; those estimates are then used to determine how adding an individual with particular characteristics would change