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Taxes & Spending Power

The contributions immigrants make as both taxpayers and consumers are indispensable to the U.S. economy. Nationally, immigrants earned $1.3 trillion in 2014 and contributed $105 billion in state and local taxes and almost $224 billion in federal taxes. This left them with nearly $927 billion in spending power, which they frequently used to purchase goods and services, stimulate local business activity, and create jobs in the broader U.S. economy.

Household Income of Immigrants

In 2014, more than 72 percent of foreign-born population in the United States was working-aged, compared to less than half of U.S.-born residents. This reality allowed immigrants to earn well over a trillion dollars of income in 2014—a greater amount than their portion of the U.S. population overall.

Key Stats
$1.3 trillion: Total Household Income of Foreign-Born, 2014.
14.2 percent: Foreign-Born Share of Total Household Income, 2014.
13.2 percent: Foreign-Born Share of the U.S. Population, 2014.

Tax Contributions

A notable portion of the income earned by immigrants each year funnels directly back to our government in the form of tax revenues. In some states, immigrants contribute more than one out of every four tax dollars paid by local residents each year—making them invaluable to the health and success of taxpayer-funded services like public schools and police departments.

Key Stats
$223.6 billion: Total Federal Tax Contributions of Foreign-Born, 2014.
$104.6 billion: Total State and Local Tax Contributions of Foreign-Born, 2014.
$328.2 billion: Tax Contributions of Immigrants Overall, 2014.
States Where Immigrants Contributed the Largest Share of Total Tax Revenues, 2014
State Total Tax Contributions of Foreign-Born Share of Total Tax Revenue Paid by Immigrants
California $82.9B 28.0%
New Jersey $19.6B 23.4%
New York $42.4B 22.6%
Florida $23.4B 19.3%
Nevada $2.9B 18.5%
Hawaii $1.8B 17.4%
Texas $29.1B 16.5%
Maryland $9.1B 16.3%
Massachusetts $9.5B 14.9%
Washington $8.1B 14.5%

Spending Power

Spending power is the disposable income left to households after deducting their annual tax contributions. The $9.3 billion in total spending power held by immigrant led households in 2014 allowed them to hold considerable power as consumers. By spending on goods and services, immigrants strengthen the U.S. economy and provide jobs to American workers as well as the businesses dependent upon paying customers.

Key Stats
$926.9 billion: Total Spending Power of Foreign-Born, 2014.
14.3 percent: Share of total U.S. Spending Power held by immigrant-led households.
Foreign-Born Population’s Amount and Share of Spending Power by State, 2014
States Total Spending Power, Foreign-Born Share of Spending Power, Foreign-Born
California $240.4B 29.2%
New York $103.3B 23.4%
Texas $89.6B 17.1%
Florida $73.1B 19.7%
New Jersey $54.6B 23.8%
Illinois $40.1B 14.7%
Nevada $10.3B 19.5%

Medicare and Social Security

Our Social Security and Medicare programs are already facing serious financial challenges—a pattern expected to worsen as large numbers of Baby Boomers retire and leave the workforce altogether. While the United States had roughly 16 workers paying into our entitlement programs for every one retiree in 1950, that number is projected to drop to just two workers for every retiree by 2035.1 Immigrants are already playing an important role supplementing our entitlement programs: One NAE study found that between 1996 and 2011 immigrants contributed $182.4 billion more to Medicare’s Hospital Insurance Trust Fund—the core trust fund in the program—than was expended on their care.

Sources:
1 “10 Truths About America’s Entitlement Programs, Address by R. Bruce Josten Executive Vice President of Government Affairs U.S. Chamber of Commerce,” U.S. Chamber of Commerce, accessed September 21, 2016. Available online.

Key Stats
$123.7 billion: Total Social Security Contributions of Foreign-Born, 2014.
$32.9 billion: Total Medicare Contributions of Foreign-Born, 2014.
$11.4 billion: Average size of the subsidy immigrants provided to Medicare’s core trust fund each year, 1996-2011.
-$68.7 billion: Cumulative deficit generated by the U.S.-born population in the Medicare Hospital Insurance Trust Fund, 1996-2011.

Bolstering the Housing Market

By purchasing homes in neighborhoods formerly in decline, immigrants in recent decades have had a positive impact on U.S. housing values overall. From 2000 to 2010, each of the 40 million immigrants in the United States added, on average, 11.6 cents to the value of a home in their local county. That seems small, but it adds up. In fact, it resulted in immigrants growing U.S. housing wealth by $3.7 trillion during that period.2 Immigrants are also expected to play a key role buying up homes as baby boomers downsize in the coming years: Almost 30 percent of American homeowners were older than age 65 in 2014.

Sources:
2 Jacob Vigdor, “Immigration and the Revival of American Cities,” New American Economy, 2013 Available online.

Key Stats
8.7 million: Number of Foreign-Born Homeowners, 2014.
15.7%: Share of U.S. housing wealth owned by immigrant-led households, 2014.
29.7%: Share of homeowners aged 65 or older, 2014.
15.7 million: Number of immigrants who have purchased new homes in the last four years.
County Estimated Amount Immigrants Added to the Value of Average Home, 2000-2010
Harris County, TX $26,702
Riverside County, CA $20,587
Clark County, NV $19,718
Maricopa County, AZ $17,970
Broward County, FL $14,491
San Bernardino County, CA $13,167
King County, WA $12,078
Miami-Dade County, FL $11,672
Gwinnett County, GA $11,448
Palm Beach County, FL $10,658

Immigrant Subgroups

Regardless of where the immigrants came from, they contribute a tremendous amount of money to the U.S. economy as taxpayers and consumers. In this section, we show the amount earned and contributed in taxes by different ethnic and national origin groups within the foreign-born population.

Taxes & Spending Power of Major Immigrant Subgroups
Subgroup Total Income Total Federal Tax Contributions Total State and Local Tax Contributions Total Spending Power
Hispanic Immigrants $389.9B $56.4B $33.5B $300.0B
Asian and Pacific Islander Immigrants $439.2B $86.3B $35.5B $317.5B
Middle Eastern & Northern African Immigrants $52.8B $10.5B $4.3B $38.5B
Sub-Saharan African Immigrants $47.8B $8.3B $4.0B $35.5B

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