The research was supported by grants from the New York Community Trust, the Emma Lazarus Fund, the Robert Sterling Clark Foundation, and the Heron Foundation. Additional support was provided by the Urban Institute's Program for Research on Immigration Policy, funded by The Ford Foundation and the Immigrant Policy Program funded by the Andrew W. Mellon Foundation.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors, and should not be attributed to The Urban Institute, its trustees, or its funders.
Outline of Report
I. Executive Summary
Introduction
This report provides essential demographic and economic information on legal
immigrants residing in New York State and addresses significant shortcomings in the existing
data for immigrants and in analyses of fiscal impacts of legal immigrants. It focuses on four
major issues: the size of the legal immigrant populations; the characteristics of legal status
groups, including both legal and undocumented populations; the incomes and taxes paid by
immigrant populations and natives; and the economic adaptation of immigrants and their
descendants.
The report is the first to provide population estimates of immigrants by legal status. It
gives separate estimates of the number of naturalized citizens, legal permanent resident aliens
("green card" holders), refugees, legal nonimmigrants (such as diplomats, foreign students, and
international business transfers), and undocumented aliens residing in New York.
It also offers the first detailed estimates of the incomes and taxes paid by each of the five
immigrant groups, as well as by natives residing in New York State. Finally, the report provides
information on immigrants' adaptation to the United States— tracking how their income and tax
contributions change as their time in the United States increases, and showing how the incomes
and tax contributions of the U.S.-born adult offspring of immigrants ("second-generation
Americans") differ from those of adult offspring of natives ("third-and-higher-generation
Americans").
Policy and Research Context
While New York traditionally has been a gateway for immigrants, the state faces new
issues surrounding immigration and immigrant policy as a result of passage in 1996 of the
Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) and the Illegal
Immigration Reform and Immigrant Responsibility Act (IIRIRA). These new laws make the
attainment of citizenship, rather than being a legal immigrant, a principal criterion for eligibility
for public benefits. The welfare law, PRWORA, also shifts to the states new decisionmaking and
fiscal responsibility for providing public benefits to immigrants.
The new laws tighten restrictions on recent immigrants' eligibility for most major federal
government benefits, severely limiting access to most public assistance during their early years in
the United States. New immigrants are barred from Temporary Assistance for Needy Families
(TANF) and Medicaid for their first five years and from Supplemental Security Income (SSI) and
federal food stamps until they become citizens. These and other developments have heightened
concern and public debate about the appropriate levels of immigration and immigrant eligibility
for government programs.
The findings from this study inform that debate in a number of ways, including:
Fill Information Gap: To assess the potential implications of these changes requires
information that until now has been missing. There are no official estimates of the total number
of legal immigrants living in the United States, for instance, or of the number in each of the
major subgroups of legal immigrants. Ironically, the only immigrant group for which official
estimates exists is undocumented aliens (Passel 1997, Warren 1997). This study provides
estimates of the size of these subpopulations.
- In 1995, just prior to the implementation of welfare reform, New York had a foreign-born population of 3.4 million, representing 17.7 percent of the state's population. On both of these measures, New York trails only California, where immigrants represent 25.1 percent of the state's population.
- The vast majority of New York's foreign-born population is legal— 84 percent. Undocumented aliens in New York constitute a smaller percentage of the state's immigrant population than in any other major immigrant state except New Jersey.(1)
Address Current Research and Policy Limitations: Fiscal impact studies and the policy
debates surrounding their findings have been limited in at least four ways:
One-Sided Focus:
Most research and public discussions have tended to focus on the costs of
immigrants and their implications, with considerably less attention to the fiscal
contributions of immigrants. For instance, in March of 1998, The Washington Times
ran a series of articles focusing on the costs to county governments of providing
services to immigrants and other negative impacts. None of the articles mentioned tax
contributions of immigrants or immigrant-owned businesses. The focus of this
report— the income and taxes paid by legal immigrants— helps to balance the
research and policy debate.
- Immigrants in New York account for $57.5 billion in aggregate personal income, 17.4 percent of the personal income of state residents. Legally present immigrants account for most of this income, approximately $51.8 billion.
- New York's legally present foreign-born population pays $18.2 billion in taxes, 15.5 percent of the state's total.
- As a group, legal immigrants— naturalized citizens, LPR aliens, refugees, and nonimmigrants— pay slightly lower taxes than natives on average, $6,300 versus $6,500. This small difference is attributable mainly to the slightly lower incomes of legal immigrants. Nonetheless, with the exception of refugees, legal immigrants pay roughly the same percentage of their income in taxes as natives do— about 30 percent.
Some recent research (Smith and Edmonston 1997) has used greatly improved methods to weigh the relative costs and revenues associated with immigrants. Yet even these efforts could be further improved by countering some of the inherent biases in the available data, which make it easier to measure use of services than tax payments. We address this issue by estimating total income and the following seven major taxes for individuals and households in New York State:
- Federal income tax,
- New York State income tax,
- New York City income tax,
- FICA (Social Security) tax,
- Residential property tax,
- State and local general sales tax, and
- Unemployment insurance payments.
We also provide separate estimates for residents of New York City and the rest of the State.
Lack of Critical Distinctions:
Types of Immigrants. Most analyses of immigrants' fiscal impacts have failed to
distinguish between undocumented and legal immigrants, and fewer still distinguish
among types of legal immigrants. Even among legal immigrants, these distinctions can
be critical because socioeconomic characteristics and eligibility for government
benefits vary significantly by specific legal status. Refugees are eligible for more types
of benefits than other aliens; green card holders face strict new eligibility restrictions
under welfare reform; nonimmigrants remain ineligible for most government benefits;
and undocumented aliens, already ineligible for most government benefits before
welfare reform, face further restrictions.
Despite these and other differences, analysts and policymakers often draw
conclusions regarding the impacts of regularly admitted legal immigrants based on the
characteristics of all noncitizens. These assessments underestimate the quality and
contributions of these aliens since they have, on average, higher incomes than refugees
or undocumented aliens.
- Average annual income for legal permanent resident aliens (LPRs) in New York is $18,700; for refugees, $8,300; and for undocumented aliens, $12,100.
A basic problem lies in using data sets that distinguish among natives, naturalized
citizens, and noncitizens (aliens), but make no other legal status distinctions. We
address this problem by developing a method that assigns exact legal status to all
foreign-born individuals in the March 1995 Current Population Survey (CPS). The
importance of this methodology is highlighted by the fact that two-thirds of New
York's noncitizens in the March 1995 CPS are LPR aliens; one-third are not.
Our methods allow, for the first time, detailed income and tax estimates for each of the
five major immigrant status groups— naturalized citizens, LPR aliens, refugees and
asylees, nonimmigrants, and undocumented aliens -- as well as natives. With our data and
methods, analysts can use existing data sets to produce estimates of educational attainment,
welfare use, and other characteristics essential for evaluating how welfare reform and other
policies will affect the different immigrant populations.
Distinguishing among legal status groups is crucial for assessing the fiscal and
economic impacts of immigrants:
- The tax contributions of legal immigrants differ substantially from those of
undocumented aliens, an average of $6,300 versus $2,400.
- Among the legal foreign-born, average tax payments are different among the various
legal status groups. Naturalized citizens make the largest average tax
contribution, $8,600, followed by legal nonimmigrants at $6,400, and LPR aliens at $5,000. Average tax contributions of refugees are substantially lower, $2,200.
Levels of Government. Recent studies of fiscal impacts have been virtually unanimous
in recognizing a fundamental asymmetry regarding the tax payments and service costs of
both natives and immigrants. A large majority of tax payments flow to the federal
government, while the most expensive services, especially public education, are paid for at
the local and state levels. Our study finds exactly this pattern of tax payments in New York:
- Of the $19.3 billion in taxes paid by immigrants in New York State, $13.3 billion or 69 percent goes to the federal government in the form of income tax, Social Security tax, and unemployment insurance. The remaining $6.0 billion goes to the state and local governments (Table C, page 8).
This imbalance is especially crucial under the new welfare reform regime. Welfare
reform, particularly the reduction in food stamps for immigrants, shifts costs from the
federal government to the state governments, because many states, including New
York, have provided replacement food stamps to some immigrants who lost federal
benefits. Nonetheless, immigrants continue to pay the bulk of their taxes to the federal
government.
In New York, distinctions between New York City and the rest of the state are also
important because the characteristics of immigrants in each area differ. Outside New York
City, the legally present foreign-born have higher incomes and pay more in taxes, on
average, than natives.
Inconsistent Attribution of Costs and Contributions:
The failure to distinguish between second-generation Americans and other U.S.-born
natives has led to serious inconsistencies in the research on fiscal impacts of aliens.
Many assessments of immigrants' fiscal impacts use households rather than individuals
as the unit of analysis (Smith and Edmonston 1997, Espenshade 1997), so the costs and
contributions of immigrants' U.S.-born children are attributed to immigrants. Since children
are expensive— having little or no income, paying little in taxes, but incurring large costs
for public education— this treatment increases the estimated net costs of immigrants.
However, in such analyses, when these U.S.-born children of immigrants become adults,
establish their own households, and begin working and paying taxes, they are counted as
natives.
To be consistent, if second-generation Americans are counted as immigrants when
they are young and expensive, then they should also be counted as immigrants when
they are taxpaying adults. We provide the data needed to consistently assess the fiscal
impacts of the children of immigrants by producing separate income and tax estimates
for second-generation Americans and third-and-higher-generation Americans.
Failure to Take the Long View:
In general, the economic situation of immigrants appears to improve over time,
whether measured over an individual immigrant's lifetime or over generations from the
immigrants themselves to their U.S.-born children. In periods such as these, when a
substantial portion of immigrants have arrived recently, failure to distinguish between
short- and long-term immigrants paints a distorted picture of the probable long-term
impacts of immigrants. Our study provides measures of adaptation by producing
income and tax estimates for: (a) short- and long-term legal immigrants and (b) two
groups of natives— the adult offspring of immigrants (second-generation Americans)
and the descendants of U.S. natives (third-and-higher-generation Americans).(2)
These measures allow assessments of the economic circumstances of recent
immigrants, who under welfare reform face new restrictions on their eligibility for
government programs. They also allow us to compare these circumstances with those
of legal immigrants (again, by legal status) who have been here a longer period of time.
From both perspectives, we find that immigrants in New York are adapting to the
United States:
- As immigrants' time in the United States increases, their incomes and, consequently their tax payments increase. Among legal immigrants in New York, those who have been in the country for at least 15 years have higher average incomes than natives.
- Among adults of working age (1864 years), the average incomes of second-generation Americans ($26,800) are virtually identical to those of third-and-higher-generation Americans ($26,900).
Data Sources
Official data from the Immigration and Naturalization Service (INS), the Office of Refugee
Resettlement (ORR), and the U.S. Bureau of the Census are used to estimate the total number of
legal immigrants residing in New York and the size of each of the four legal immigrant
categories. Estimates of the number of undocumented aliens are from the INS (Warren 1997).
The principal data sources for the income and tax estimates are the March 1995 Current
Population Survey as modified with the Urban Institute's TRIM2 computer simulation, the
1996 New York City Housing and Vacancy Survey, and a variety of administrative data sources.
The separate population, income, and tax estimates that are given for New York City and the rest
of the state arise from the survey data rather than independent demographic estimates.
Overview of Results
Population
- Our estimates show that New York has a foreign-born population of 3.4 million, second only to California, which has 8.0 million. Immigrants in New York represent 17.7 percent of the state's population, again trailing only California, where immigrants represent 25.1 percent of the state's population.
- New York has more than 1 million legal permanent resident aliens and more than 1 million naturalized citizens. Together, these two groups
represent 77 percent of New York's immigrants and 15 percent of the state
population (Table A).
- The percentage of immigrants who are naturalized is greater in New York than for the country as a whole because New York's immigrants tend
to come from countries where immigrants have a greater propensity
to naturalize and New York has a higher percentage of long-term immigrants, who are also more likely to have been naturalized.
- New York's 200,000 refugees represent a smaller share of the state's foreign-born population
(5.9 percent) than refugees do in the United States as a whole (10.7 percent). (See Table A.)
Unlike the rest of the country, where Southeast Asians dominate the refugee population,
most refugees in New York are from the former Soviet Union.
- New York's undocumented population of 540,000 represents 16 percent of the state's
immigrants— a lower percentage than in any of the other five large immigrant states except
New Jersey. Nationally, undocumented immigrants represent 20 percent of the total
immigrant population. Thus, legally present immigrants make up a greater percentage of
New York's immigrants than in California, Florida, Texas, Illinois, and the United States as
a whole.
- Households headed by immigrants contain a significant number of U.S.-born natives.
Almost half of households headed by legal immigrants (46.5 percent) and more than
one-third of those headed by undocumented immigrants (37.3 percent) include one or more
natives.
- For households headed by LPR aliens and undocumented aliens, almost one of every three
includes U.S.-born children. In households headed by LPR aliens, 27.5 percent of the
household members are natives. In households headed by undocumented aliens,
18.5 percent of the household members are U.S. natives; most of these are children.
Income
- Immigrants account for $57.5 billion of the $330.2 billion aggregate personal income in
New York State, equal to 17.4 percent of the personal income of state residents (Table C,
page 8). Legally present immigrants account for
$51.8 billion in aggregate personal income,
15.7 percent of the personal income in New
York State.
- How the income of the legally present
foreign-born compares with the income of
natives depends on the measure used:
- The per capita income of the legally present
foreign-born is approximately equal to that
of natives— $18,000 versus $18,100
(Table B).
- For adults aged 18 and older, per capita
income of the legally present foreign-born
is less than that of natives— $19,900
versus $25,000.
- The average income for households
headed by legally present foreign-born
individuals is lower than that for
households headed by natives— $38,700
versus $49,300 (Table B).
Although adult legal immigrants have
lower average incomes than adult natives,
when all legal immigrants -- regardless of
age -- are compared with all natives,
immigrants and natives have close to
identical incomes. This pattern occurs
because more natives are children
(30 percent) than legal immigrants
(10 percent), and children usually have
little or no income. When children are
excluded from income calculations, average income for legal immigrants rises only
slightly (from $18,000 to $19,900), but average income for natives increases
substantially (from $18,100 to $25,500).
- Among legally present immigrants in New York, incomes differ substantially by status.
Naturalized citizens have the highest per capita income, $23,900, which surpasses that of
natives, $18,100 (Table B). Refugees have the lowest average income, $8,300.
- 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.
- Among all three groups of legal immigrants -- naturalized citizens, LPR aliens, and
refugees— incomes (and average tax payments) go up as their time in the United States
increases.
- Undocumented aliens have substantially lower incomes than legally present immigrants.
Per capita income for undocumented aliens is $12,100; for legally present immigrants, it is
$18,000 (Table B).
- Among U.S.-born natives of working age (1864 years), incomes of second-generation
Americans and third-and-higher-generation Americans are close to identical, $26,800 and
$26,900.
Taxes
- In New York State, foreign-born individuals contribute more than $19.3 billion in taxes. Of
this, $13.3 billion or 69 percent goes to the
federal government in the form of income
tax, Social Security tax, and unemployment
insurance. The remaining $6.0 billion goes
to the state and local governments
(Table C).
- The legally present foreign-born pay
$18.2 billion in taxes, 15.5 percent of the
state's total.
- Differences across groups are primarily
attributable to income differences.
- Legally present immigrants pay slightly less
in total taxes, on average, than natives—
$6,300 per person versus $6,500. Total tax
payments of naturalized citizens ($8,600)
are higher than those of natives on average,
while contributions of refugees ($2,200) are
substantially lower (Table B, page 7).
Among adults, natives pay more, on
average, in taxes than the legal foreign-born
($9,200 versus $7,000).
- Outside New York City, the legally present
foreign-born in the state pay more in taxes,
on average, than natives— $8,400 versus $6,800. Incomes and tax payments of naturalized
citizens are particularly high.
- All groups other than refugees and undocumented immigrants pay between 28 and
31 percent of their income in taxes (Table B, page 7). The percentage is lower for refugees
(21 percent) because their low incomes place them in lower tax brackets and because a
substantial share of their income comes from welfare, which is not taxed. Undocumented
immigrants pay a relatively small share of their income in taxes (15 percent) because their
low incomes also place them in lower tax brackets and because we assume, for several
taxes, that they have lower compliance rates than other New York residents.
- The legal foreign-born pay substantially more in total taxes, on average, than undocumented
aliens— $6,300 versus $2,400. Nonetheless, undocumented aliens contribute more than
$1 billion in total taxes.
- For LPR aliens, naturalized citizens, and refugees, average tax contributions go up as time
in the United States increases, largely because of increases in income.
- One reason that average tax payments for natives surpass tax payments for the legal
foreign-born is that natives are more likely to head households with extremely high
incomes. Average incomes and tax payments overall are heavily influenced by the highest
income group. Households with adjusted gross incomes greater than $200,000 account for
1.2 percent of households, but they have 12.4 percent of personal income and pay
17.7 percent of taxes. This group pays an even higher fraction (30.4 percent) of federal
income tax, the most progressive tax. Although natives and the legal foreign-born are about
equally likely to head households with income greater than $200,000 (1.3 percent versus
1.2 percent), within this income category, native-headed households have substantially
higher average incomes ($512,000 versus $280,000).
- The progressive or regressive nature of each tax affects the percentage of the tax paid by
immigrants. The more regressive the tax, the higher the percentage paid by immigrants.
Thus, immigrants pay the highest percentage of payroll taxes, Social Security, and
unemployment insurance, but the lowest percentage of income taxes.
- Second-generation adults pay as much in taxes as third-and-higher-generation adults.
Among working-age individuals (ages 1864), average incomes and tax contributions of
second- and third-and-higher-generation Americans are identical. Among those natives of
retirement age (ages 65 and older), average incomes and tax contributions of
second-generation Americans are slightly greater than those of third-and-higher-generation
Americans.
Policy and Research Implications
Immigrants in New York, particularly legal immigrants, pay a significant proportion of
taxes collected from New York residents. Our research points out some important distinctions
that are often overlooked in discussions of immigrants and policies affecting them. Specifically,
the differences among the legal status groups for immigrants are greater than differences between
immigrants and natives. Further, the groups doing the worst economically (refugees and
undocumented aliens) are generally not the groups affected by legal immigration policies being
widely discussed. The results of our research and analysis prompt several observations.
More Sophisticated Use of Data Needed: The findings underscore the need for a more
sophisticated approach to the use of data for determining the fiscal impact of immigrants.
At a minimum, separate assessments should be done for legal and illegal immigrants and,
if possible, for each group of legal immigrants. When such distinctions are made, vast
differences emerge in the various groups' economic situation, use of services, and, potentially,
economic prospects. Analyses that fail to distinguish among the significantly different subgroups
of immigrants miss these critical differences and may mislead policymakers who are developing
new admission, settlement, and assistance policies. These concerns are particularly relevant
where refugees and LPRs are concerned.
Refugees. Among legal immigrants, refugees pay the least in taxes in absolute terms and
as a percentage of their income. Unlike other immigrants, however, refugees are admitted for
humanitarian reasons, without regard to their potential costs to the United States. Refugees often
find it particularly difficult to work in the United States because of persecution in their home
countries; stays in refugee camps; abrupt, unplanned departures from their homes; and any
resulting physical and mental disabilities. Not surprisingly, as a group, they are substantially
more reliant on government assistance than other immigrants, with about 20 percent of their
income coming from welfare.
Since the early 1980s, federal resettlement assistance for refugees has been cut from three
years to eight months. Under welfare reform, refugees' eligibility for public benefits has been
limited to their first five years for TANF and food stamps and first seven years for SSI and
Medicaid. We find that refugees' incomes improve somewhat as their time in the United States
increases. However, the improvement is relatively small and their incomes remain substantially
lower than those of other legal immigrants (and even those of undocumented aliens). Many
refugees, especially the elderly, may have difficulty finding other sources of support after their
eligibility for government benefits expires, as mandated under the new laws.
Legal Permanent Resident Admissions. Immigrants admitted as legal permanent
residents are the focus of most debates about legal immigration policy because they represent the
largest group of new entrants. However, most data sets used to describe immigrants do not
distinguish immigrants admitted as legal permanent residents from other immigrants, although
these other immigrants have substantially different characteristics. Analyses of fiscal and other
impacts of legal immigration policy will be distorted unless researchers compensate for the
presence of refugees and undocumented aliens, who have lower average annual incomes than
immigrants admitted as legal permanent residents -- $8,300 for refugees and $12,100 for
undocumented aliens -- versus $18,700 for immigrants admitted as legal permanent residents
(which includes current LPR aliens and LPR aliens who have naturalized). (See Detailed Table
3).(3)
Greater Analytic Consistency and Longer Time Perspective Needed: The findings in
this report confirm that there is a need for greater analytical consistency in fiscal impact studies
that compare natives to legal immigrants. In most analyses, the costs of native-born children of
immigrants— principally public education and welfare costs— are attributed to their immigrant
parents, but the tax payments of native-born adults whose parents were immigrants are attributed
to natives. To be consistent, the fiscal impacts of second-generation Americans, whether they are
children or adults, should be attributed to the same group— to immigrants or 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.
Our findings clearly show that as immigrants' time in the United States increases, their
incomes and, consequently, their tax payments also increase. Recent welfare laws severely limit
most immigrants' access to government benefits during their early years in the United States,
when their incomes are lowest. While recent immigrants' access to most major federal
government benefits was already restricted, the new welfare laws are more restrictive, barring
new immigrants from TANF and Medicaid for their first five years and from food stamps and
SSI until they become citizens. It is unknown whether the new bars on government assistance
during immigrants' early years will push them to economic success faster or will slow their
economic ascent.
Federal-State Balance of Burdens and Responsibilities Needed: Finally, underlying
much of the concern about the fiscal impact of legal immigrants is the historical relationship
between the federal government and the states in sharing the costs and benefits of citizens. As
noted earlier, the bulk of tax contributions from immigrants goes to the federal government,
while large costs, especially those associated with public primary and secondary education, have
fallen to the states and localities. Recent welfare laws have exacerbated the situation by shifting
the burden of caring for new immigrants to the states. Until this imbalance is rectified, there will
be continuing debate over whether to offer and how to pay for services used by legal immigrants.
Ultimately, citizens will have to decide whether to raise state and local taxes, to petition for
federal relief, or to curtail these services.
Legal immigration policy and border control procedures raise even larger issues of
intergovernmental equity. Constitutionally, the federal government has total authority to
determine the total number of legal immigrants entering the country. Further, the characteristics
of the entering immigrants are determined by federal policies on the mix of various categories of
admission, including the level of humanitarian admissions. The control of undocumented
immigration is also a uniquely federal responsibility, yet this group of immigrants poses special
challenges to localities because of their low incomes, their impacts on school systems, and their
concerns about interactions with government agencies and officials.
Policy responses to immigration have largely failed to address these intergovernmental
issues in any significant way. Yet, their fundamental nature underlies many of the ongoing
debates about immigration and immigrant policy.
II. Introduction
The Immigrant Population of New York
Population Size. Throughout much of the country's history, New York State, especially
New York City, has been the principal gateway for immigrants entering the United States. In
recent years California has surpassed New York, although the State remains the second largest
entryway to the country.
At 3.4 million,(4) New York has the second largest immigrant population among the states, trailing only California, which has a foreign-born population that is more than twice as large,
8.1 million. (See Table 1.) New York has a significantly larger foreign-born population than
Florida (2.2 million) or Texas (2.1 million), the states with the third and fourth largest immigrant
populations. The foreign-born constitute 17.7 percent of the New York State population, the
second highest concentration in the country, but well below the percentage in California,
25.1 percent. On this measure, New York ranks slightly higher than Hawaii (16.6 percent, not
shown in Table 1), Florida (15.2 percent), and New Jersey (14.6 percent).
With such a long-standing dominant role in the country's immigration, peaks and declines
in New York's foreign-born population parallel trends for the nation as a whole. The
foreign-born population of New York fell from a peak of almost 3.2 million in 1930 to just over
2.1 million in 1970 (Figure 1, page 20). With the new wave of post-1965 immigration, New
York's foreign-born population climbed steadily to more than 3.2 million in 1996, reaching or
even slightly surpassing the previous peak.(5) Since early in this century, the percentage of New York's population that is foreign-born has been almost exactly twice the national value. In 1996,
17.7 percent of New York's population consisted of immigrants, or slightly more than one person
in six; nationally, about 9.3 percent of the population is foreign-born. A higher percentage of the
New York population was foreign-born in 1996 than 1970, but the percentage remains well
below the level in 1920, when 26.8 percent of New Yorkers were foreign-born (versus
13.2 percent nationally).
Immigrant Origins and Legal Status. New York has a very diverse immigrant
population, possibly the most diverse of any large immigrant state. Immigrants come from all
parts of the world, and no region or country dominates. The Caribbean accounts for 915,000 of
New York's 3.4 million immigrants (Table 2), or 27 percent; Europe has sent another 864,000 or
25 percent; and South and East Asia, 665,000 or 20 percent. The largest single country of birth
for immigrants is the Dominican Republic, with 395,000 or 12 percent of all foreign-born. The
next largest are: China(6) (229,000 or 7 percent), Jamaica (195,000 or 6 percent), and the countries of the former Soviet Union (182,000 or 5 percent). Among the other states with large immigrant
populations, only New Jersey has a similarly diverse immigrant population (Espenshade 1997).
In Illinois and Texas, the Mexican-born population predominates; Florida's immigrant flows are
dominated by Latin American immigrants; and California has a dominant Mexican population,
with extremely large secondary concentrations of Central Americans and Asians.
Eighty-six percent of New York State's immigrants, 2.9 million, are legally present in the
United States. (See Table 2.) Of legal residents, almost 1.2 million or 40 percent are naturalized
citizens. This high percentage reflects the origins of New York's immigrants; large shares are
from European countries or are long-term residents— both of which are associated with a high
propensity to naturalize (INS 1997).
Nonetheless, New York has the third largest number of undocumented aliens in the
United States. The official INS estimate of 540,000 for New York places it third behind
California (2,000,000) and Texas (700,000). (See Table 3(7) and Warren 1997.) About 3.0 percent of New York's population consists of undocumented immigrants (Table 1). This percentage is
relatively high, as the only other states with more than 2 percent of their population
undocumented are: California (6.2 percent), Texas (3.7 percent), Illinois (2.5 percent), and
Florida (2.4 percent).
The great diversity of origins among New York's immigrants is even more apparent in its
undocumented population. The largest source country, the Dominican Republic at 36,000,
accounts for less than 7 percent of the undocumented population; the country with the next
largest share, Haiti, constitutes only 4.8 percent. The largest source region, the Caribbean,
accounts for less than 30 percent of the total. In contrast, Mexican undocumented immigrants
alone account for 69 percent of California's undocumented population, 77 percent of Texas',
65 percent of Illinois', and 90 percent of Arizona's. In Florida, 83 percent of the undocumented
population is Latin American, versus 55 percent in New York.
Distinguishing among Types of Immigrants
Immigrants coming to live in the United States enter in one of three broad classes — legal
permanent residents, refugees, and illegal immigrants.(8) These groups differ substantially from
each other: they are admitted under different laws, are regulated by different agencies, have
different socioeconomic characteristics, and qualify for different government benefits. As a
result, their fiscal impacts differ as well. In addition, recent legislation draws new distinctions
for program eligibility among immigrants on the basis of citizenship. Unfortunately, researchers,
policy analysts, and politicians have consistently failed to distinguish among groups of
immigrants on the basis of legal status. For example, undocumented immigrants are thought to
have substantially less education and lower incomes than immigrants entering as legal permanent
residents. Lower incomes translate into lower tax payments and higher public service costs. As
a result, analyses that do not distinguish between legal and illegal immigrants will tend to
overstate the decline in "quality" of recent immigrants and overstate the costs that legal
immigrants impose on society.
A major problem is that the data used in most analyses— decennial censuses and the
CPS— do not distinguish immigrants in the United States with the nation's consent from those
here without consent. The inclusion of undocumented aliens in these data sets is usually
unrecognized by analysts. The 1980 Census included 14 million immigrants, about 2 million of
whom were undocumented aliens (Warren and Passel 1987); likewise, the 1990 Census included
about 20 million immigrants, over about 2.3 million of whom were undocumented immigrants
(Passel and Kahn 1998). Our recent analyses suggest that, out of almost 25 million foreign-born
individuals in the CPS in the mid-1990s, between 4 and 5 million were undocumented
immigrants (Passel et al. 1997). It is therefore essential that analysts and policymakers recognize
that the foreign-born population from the census and CPS cannot be used to represent
characteristics of legal immigrants. For example, we estimate that 13 percent of immigrants in
the CPS in New York are undocumented.(9)
Unfortunately, even sophisticated analysts are not clear about this issue. The new
National Research Council's report (Smith and Edmonston 1997) compares recent immigrants
from Mexico (entering in the five years before the census) taken from the 1990 Census with
those recent entrants enumerated in the 1970 Census. The report reiterates the oft-repeated
finding that the data clearly showed a relative decline in the "quality" of immigrants (measured
principally by education). From a policy perspective, the report, however, does not compare
equivalent groups. While very few undocumented aliens appeared in the 1970 Census, roughly
two-thirds of Mexican immigrants in the 1990 Census were either undocumented aliens or
former undocumented aliens who had legalized under the Immigration Reform and Control Act
of 1986 (IRCA).(10) The comparison tells us little about the consequences of current legal
immigration policy, nor if it should be changed, because the analysis compares legal with illegal
aliens.
The major data sets used to assess the impacts of immigration, such as the decennial
censuses and the CPS, include no questions on whether an individual is legally present in the
United States. Thus, to account for legal status in using census or CPS data, analysts have found
it necessary to resort to aggregate or proxy approximations to some legal status groups (for
example, Fix and Passel 1994, Clark et al. 1994). Such methods generally treat characteristics of
country-of-birth and period-of-entry categories as approximating the characteristics of legal
status groups when, in reality, country-of-birth and period-of-entry groups include both legal and
illegal aliens. The analysis presented here attempts to resolve this analytic dilemma by assigning
legal status to individual CPS respondents.
Legislation and regulations relating to immigrants' legal status and citizenship often seem
to be based on the assumption that all persons in a family or household have the same legal
status. However, many immigrant households contain people with different legal statuses. In
fact, almost half (47 percent) of households headed by legally present foreign-born include one or
more natives; even 37 percent of households headed by undocumented aliens include at least one
native (see Table E, page 22). Put another way, about 30 percent of persons in households
headed by legally present foreign-born are natives. These mixed households complicate policy
options regarding eligibility for public benefits, particularly since many of the natives involved
are children.
Immigrant Costs versus Taxes
In the last five years, there has been a resurgence of interest in studies of the fiscal
impacts of immigrants. The bulk of analytic attention has focused on assessing the costs of
providing services to immigrants, with less effort devoted to measuring the taxes paid by
immigrants. (See Rothman and Espenshade 1992 for a review of earlier studies and Smith and
Edmonston 1997 for more recent work.) When taxes were estimated, they were often based on
extremely simplistic models (for example, Huddle 1993 and Internal Services Division 1992).
More recent work such as Garvey and Espenshade (1997) and Smith and Edmonston (1997) has
begun to use sophisticated methods to estimate both government program costs and tax receipts
attributable to immigrants.
Despite these advances, there are two major problems with this type of analysis. First,
particularly in popular accounts, there seems to be an undue focus on the cost side of cost/benefit
analyses of immigrants. For instance, in early March of 1998, The Washington Times ran a series
of articles on the impacts of immigrants that focused on the costs to county governments of
providing services to immigrants and other negative impacts. None of the articles mentioned tax
contributions of immigrants or immigrant-owned businesses.
Second, even sophisticated research often does not distinguish between legal immigrants,
who are in the United States with knowledge and permission of the government, and
undocumented aliens, who are in this country in violation of U.S. law. Furthermore, even among
legal immigrants, research does not distinguish between regularly admitted legal immigrants and
humanitarian admissions. Immigrants admitted for economic purposes and for family
reunification are presumably expected to "pull their own weight" from a fiscal perspective, at
least after a short adjustment period. Refugees and asylees, on the other hand, are admitted for
humanitarian reasons, without regard to their potential costs to the United States.
As noted above, the data sets used in these analyses, the decennial census and the Current
Population Survey, contain large numbers of undocumented aliens. They also contain significant
numbers of refugees and asylees. Since these groups have lower incomes, and therefore lower
tax contributions, than regularly admitted legal aliens, using all noncitizens to represent the
impact of regularly admitted legal aliens will seriously underestimate tax contributions for
regularly admitted immigrants and will lead to misestimation of aggregate costs, and possibly
average costs as well.
The Importance of Generation: How Do We Count the Children of Immigrants?
Researchers investigating the impacts of immigrants must deal with the U.S.-born
children of immigrants. Although they themselves are natives, it can be persuasively argued that
their presence in the United States, and therefore any associated costs (or benefits), should be
attributed to immigrants. For analysis of fiscal impacts, there has been widespread agreement
that the appropriate level of analysis is the household; with this approach, the costs of U.S.-born
children of immigrants (that is, the second generation) who are still living at home are ascribed to
their immigrant parents. Because public education is a major fiscal impact, perhaps the largest,
the costs of these children, and therefore the households they live in, are high (Garvey and
Espenshade 1997; also Clark et al. 1994).
When these "expensive" native-born children grow up and leave their immigrant parents'
households, they tend to become net contributors to the public sector. That is, they leave the
public education system behind and enter the labor force. At this point and for a number of years
until they leave the labor force, they pay taxes and use little in the way of services. Because of
the methods used for estimation, adults of the second generation get counted as natives. Thus,
the second generation is on the immigrant side of the ledger when they generate costs and the
native side when they generate taxes. This basic imbalance biases fiscal impact studies toward
finding net costs of immigrants.
New work by Lee and Miller (1998) as reported in the National Research Council's
assessment (Smith and Edmonston 1997) takes a different approach. Lee and Miller focus on the
lifetime costs and taxes of immigrants. In a novel twist, they also attribute to immigrants the
future costs and benefits of the immigrants' descendants.(11) With this approach, they find that the younger an adult immigrant is, the greater the net contribution, because younger immigrants have
a longer working life to contribute tax payments. For immigrant children, lifetime contributions
are positive, but the younger the child, the lower the net contribution because the public must pay
the costs of education in the United States. Their other major finding is that the more highly
educated the immigrant, the greater the net lifetime contribution. Lifetime contributions are
positive for college-educated immigrants entering at ages younger than approximately 50 and
negative for older immigrants. For immigrants with a high school education, the cross-over is
about age 35; for less than high school, it is about age 20. With the current mix of immigrants,
the average lifetime contribution of each immigrant and his/her descendants is about $80,000. It
should be noted, in addition, that this figure is based on characteristics of immigrants in the CPS
and thus includes legal immigrants, undocumented immigrants, and nonimmigrants.
Consequently, it understates the value of each legal immigrant.
Our report is concerned only with incomes and taxes, not with the costs of providing
public services or net contributions. Nonetheless, because much of our analysis is
household-based, in which we count incomes and tax contributions of native-born children with
their immigrant parents, we also distinguish between two types of natives: second-generation
Americans— those who have one or two immigrant parents; and third-and-higher-generation
Americans— those with two U.S.-born parents.
Overview of Methods
Our research on immigrants in New York has three principal analytical tasks: (1) the
development of population estimates to measure accurately the different immigrant populations
and to weight the March 1995 CPS; (2) assignment of legal status to individual immigrants in the
March 1995 CPS; and (3) estimation of the income and amount of each tax paid by individuals in
the March 1995 CPS. The remainder of this section gives an overview of these methodological
aspects of the work. Details of our methods can be found in Section IV, "Population Estimates"
and Section V, "Tax Estimates."
Population Estimates and Weighting. The CPS, which contains more than
4,000 households in the New York State sample, develops population numbers through a process
of weighting individual respondents to be representative of each state's population. The
weighting process is not designed, however, to give accurate estimates of immigrant populations.
In this project, we remedy this deficiency by adjusting the CPS weights for immigrants in New
York so that the weighted population figures more accurately reflect the number and
characteristics of naturalized citizens, refugees, undocumented aliens, and legal permanent
resident aliens.
The weighting process relies on independent estimates of the number of immigrants in
New York State in the various legal statuses, subdivided by countries and regions of birth. For
all the populations except undocumented aliens, we develop population estimates for New York
State using demographic techniques. For these groups (refugees, legal aliens, and naturalized
citizens), we use data from the INS on the number of persons entering the country or the number
naturalizing in each year. We then estimate mortality, out-migration, and migration between
states for the period from the year of entry to 1995. The result is an estimate of the number of
persons of each status residing in New York State. For undocumented immigrants, we use the
official estimate of this group developed by the INS (Warren 1997).
Immigrant Status. For this research,
we assign legal status (naturalized citizen,
refugee, nonimmigrant, undocumented
immigrant, legal permanent resident alien) to
each immigrant in the CPS. (See Table D for
definitions.) The procedures differ for each
status and vary greatly in complexity. For
naturalized citizens, we use CPS responses to
a direct question on citizenship in most cases.
Some recently arrived immigrants report
being naturalized citizens even though,
according to the laws governing
naturalization, they appear to be ineligible.
We recode these individuals to be aliens
unless they are married to a U.S. citizen or are
the child of a U.S. citizen. We assign
individuals as refugees if they are from
refugee-sending countries and they arrived in
a year when most of the arrivals from their
country of birth came to the United States as
refugees.
For both nonimmigrant and
undocumented status, our procedures are
more complex and involve information on the
immigrant's age, occupation, and relationship
to other household members. For
nonimmigrants, we match the characteristics
of recently arrived immigrants in the CPS
with the requirements for specific types of
nonimmigrant visas. For example, J visas are
given to scholars teaching or doing research
on a temporary basis at U.S. universities.
Thus, we assign a CPS respondent to be a nonimmigrant if the CPS respondent (a) had arrived in
the United States within the last two years; (b) had an advanced degree; (c) was employed at a
university; and (d) had a spouse who was neither a U.S. citizen nor employed full-time.
To assign CPS respondents as undocumented immigrants, we employ a more
complicated, probabilistic model. We first estimate the probability that a person of a given sex
with a particular occupation is undocumented. This estimation uses a survey of formerly
undocumented aliens at the time they acquired legal status under the Immigration Reform and
Control Act of 1986 and survey data on the entire foreign-born population in 1995. For example,
food service and household workers have a very high probability of being undocumented while
judges cannot be undocumented. We then assign individuals to legal or undocumented status
using these estimated probabilities. Finally, we employed a series of consistency checks and
edits to screen out individuals who could not be undocumented.
Aliens not assigned to any of the other statuses are assumed to be legal permanent
resident aliens.
Tax Estimates. The initial estimates of taxes paid and income for each household in the
CPS were done with a microsimulation program developed by the Urban Institute called TRIM2
(for TRansfer Income Model Version 2). Essentially, this program fills out federal and state tax forms for a CPS household using the information collected in the CPS; the program estimates
dependents, exemptions, and various deductions. TRIM2 also estimates the amount of Social
Security tax (also referred to as the Federal Insurance Contribution Act tax or FICA) and
unemployment insurance paid by household members and on their behalf by employers. TRIM2
tends to underestimate income and taxes for very high income households so that much of our
work with the TRIM2 results involves adjustments for missed income at the upper end of the
income distribution. We use the TRIM2 estimates of New York State income tax to estimate
New York City income tax since, for most people, the two are directly related.
To estimate residential property tax for New York City residents, we use the New York
City Housing and Vacancy Survey, which collects detailed information on housing costs and
characteristics, including nativity of the householder. With these results, we estimate property
taxes paid by natives and immigrants and develop models to relate property tax payments to
household characteristics. We then apply these models to allocate the property tax estimates to
CPS households. Residential property tax estimates for residents of the rest of the state are based
on New York State administrative data and CPS data. The final tax we estimate, state and local
general sales tax, is estimated as a percentage of estimated household expenses on taxable items.
We model household spending with a simple consumption model that makes allowances for
housing costs, food costs, and immigrant remittances to their home countries. Finally, estimates
of taxes paid by each household are allocated to individuals within the household based on their
labor force status and personal income.
III. Major Findings
Do the Legal Foreign-Born Pay Their "Fair Share" in Taxes?
At the individual level, the legal foreign-born pay their fair share in taxes. (See Table B,
page 7.) Average total tax contributions of the legal foreign-born overall ($6,300) are only
slightly lower than those of natives ($6,500). Average tax contributions of naturalized citizens
($8,600) actually surpass those of natives, while average tax contributions of nonimmigrants
($6,400) are about equal to natives. Average individual taxes paid by LPR aliens ($5,000) and
refugees ($2,200) are lower, especially for the latter group. (See Figure 2, page 28.)
The average individual tax contributions of the legal foreign-born reflect their average
individual incomes. Overall, their per capita incomes equal natives', about $18,000 for both
groups. Per capita income is highest for naturalized citizens ($23,900) and nonimmigrants
($18,700), and is lower for LPR aliens ($14,500) and refugees ($8,300).
Another approach to this question is to ask what percentage of income each group pays in
taxes. Natives pay 30.7 percent of their income in taxes. For legally present immigrants, the
percentage is only slightly lower at 29.1 percent (Table B). Refugees are much lower,
20.9 percent, and undocumented aliens lower still at 15.4 percent. The differences between legal
status groups and natives are principally attributable to the progressive nature of income taxes,
which result in higher income individuals paying a higher percentage of income in taxes. Since
there are proportionately more natives at the highest income levels than legal immigrants, natives
pay a slightly higher percentage in taxes, but both groups are paying roughly the same "share."
At the household level, however, a somewhat different picture emerges. The average
total tax contribution of households headed by the legal foreign-born ($13,300) is substantially
lower than that of households headed by natives ($17,800). No legal foreign-born group,
including naturalized citizens ($15,600) and nonimmigrants ($15,900), equals the average tax
payments of native households (Figure 3, page 29).
These somewhat lower household tax contributions reflect household income. Average
household income for households headed by natives is $49,300, compared with $38,700 for the
legal foreign-born overall. As is true for average household tax contributions, no legal
foreign-born group, including naturalized citizens ($44,100) and nonimmigrants ($47,200), has
average household incomes matching those of natives.
In terms of percentage of income, natives and legal immigrants again pay roughly the
same amount even at the household level. Native-headed households pay 30.7 percent of income
in taxes; naturalized citizens, 30.8 percent; and LPR aliens, 28.4 percent. Refugee-headed
households are again much lower at 20.9 percent because of the progressive effect of the income
tax and the prevalence of nontaxable welfare income in these households.
Why Do the Individual-Based and Household-Based Measures Differ?
Differences between the individual- and household-based measures are largely due to the
facts that a higher percentage of natives than legal foreign-born are children and that children
have low incomes and tax contributions. Among natives, 29 percent are under 18 years of age.
Among the legal foreign-born, only 10 percent fall in this age group.
In the individual-level estimates, the relatively high proportion of children lowers the
estimates for natives relative to the legal foreign-born. In the household-based estimates, the low
income and tax contributions of U.S.-born children of immigrants are attributed to the
foreign-born— their parents— rather than to natives. Altogether, 15 percent of households
headed by the legal foreign-born and 13 percent of households headed by undocumented aliens
contain native children.
Finally, the incomes of adults in households headed by the foreign-born, especially
undocumented aliens, are lower than the earnings for adults in households headed by natives
($18,400 for the legal foreign-born, $13,800 for undocumented aliens, and $26,000 for natives).
The fact that adults in households headed by the foreign-born have relatively low incomes
outweighs the fact that households headed by the legal foreign-born and undocumented aliens, on
average, contain more adults aged 18 and over than households headed by natives (2.00 for the
legal foreign-born, 2.12 for undocumented aliens, and 1.84 for natives).
The difference in age composition between the native and immigrant populations can be
dealt with by restricting the range of comparison of the populations or with age-standardization.
The average incomes for individuals aged 18 and over show almost exactly the same patterns
across immigrant status groups as do the household measures. Thus, adult immigrants have
somewhat lower incomes than adult natives, but both legally present immigrants and natives pay
roughly the same proportions of their incomes in taxes (Detailed Tables 1a-3a).
Who Lives in Immigrant-Headed Households?
Households headed by natives, for the most part, are composed entirely of natives; only
3 percent contain foreign-born individuals. The same is not true for the foreign-born. Among
households headed by legally present immigrants, almost
half (47 percent) include one or more natives; more than
half (51 percent) of households headed by naturalized
citizens have native members (Table E). Even in
households headed by undocumented aliens, more than
one-third (37 percent) have native residents.
A large share of households headed by immigrants
include native-born children. For both households headed
by legally present immigrants and those headed by
undocumented aliens, about 34 percent have native-born
children. Of the legally present foreign-born, LPR aliens
are the most likely to have native children in their
households (42 percent), followed by naturalized citizens
(30 percent). Few refugees have native children (5 percent)
and, in our sample, no nonimmigrants do. Refugees and
nonimmigrants are far less likely than the others to have
U.S.-born children because they have, on average, been in
the United States for fewer years. Although naturalized
citizens have been in the United States for longer, on
average, than LPR aliens, they are on average older, and therefore less likely to still have minor
children in their homes.
Households headed by the legal foreign-born are substantially more likely than
households headed by undocumented aliens to contain U.S.-born adults. According to our
estimates, about 20 percent of legal foreign-born households contain an adult native, compared
with only 6 percent of undocumented alien households.
Are the Incomes and Tax Contributions of the Legal Foreign-Born Outside New York City
Similar to Those of the Legal Foreign-Born in New York City?
Seventy-four percent of the legal foreign-born live in New York City, so the
characteristics of the immigrants in New York City dominate statewide averages. In fact, outside
New York City, where incomes of both natives and immigrants are higher than in the city, the
average incomes and tax contributions of the legal foreign-born equal or surpass those of natives,
no matter how they are measured. (See Table F.)
Outside New York City, at the
individual level, the legal foreign-born, on average,
contribute $8,400 in total taxes, compared with
$6,800 for natives. Tax contributions for
naturalized citizens ($10,700) are particularly
high. The tax contributions reflect income
differences. The average total individual
income of the legal foreign-born ($23,900)
surpasses that of natives ($19,100). Again, per
capita incomes for naturalized citizens
($30,000) are particularly high. (See Figure 4,
page 30.)
Unlike the state overall, outside New
York City, the average total tax contributions
of households headed by the legal foreign-born
equal— and for some groups surpass— those
of natives. For the legal foreign-born overall,
average household tax contributions are
$18,900, compared with $18,600 for natives.
Average tax contributions for households
headed by nonimmigrants ($22,300) and
naturalized citizens ($19,200) surpass those of
natives, while tax contributions of households
headed by LPR aliens ($18,900) are about
equal to those headed by natives. Tax
contributions of households headed by refugees ($9,700) are lower.
Tax payments of households reflect the general pattern of household incomes outside
New York City, just as in the state as a whole. The share of income paid in taxes also follows
the same patterns, but reflects the somewhat higher incomes outside New York City. Natives
pay 30 percent of their income in taxes; legally present immigrants pay the same percentage.
Naturalized citizens pay slightly more (31 percent) and refugees pay considerably less
(22 percent). (See Detailed Table 3.)
How Do the Legal Foreign-Born Compare with Undocumented Aliens?
Although individual tax contributions of illegal aliens are not trivial— totaling over
$1.1 billion— average tax contributions of undocumented aliens are substantially less than those
of the legal foreign-born. (See Table G.) On average, undocumented aliens paid $2,400 in total
taxes, less than half of the average individual tax contribution of the legal foreign-born.
Household-based estimates are similar: the
average household headed by an
undocumented alien contributes $6,600 in
total taxes, about half of the contribution of
the legal foreign-born, $13,300.
The relatively low tax contribution of
undocumented aliens is due to two factors.
First, their incomes are substantially lower.
Per capita income for undocumented aliens is
$12,100, compared with $18,000 for the legal
foreign-born. Second, according to our
assumptions, tax compliance for
undocumented aliens is lower than for the
legal foreign-born. Although compliance is essentially mandatory for taxes such as property and
sales tax, we assume that compliance with federal, state, and local income tax, Social Security,
and unemployment insurance is 60 percent for those
undocumented aliens included in the CPS. Since even our
reweighted CPS does not fully represent the undocumented
population, this level of compliance is roughly equivalent to
50 percent compliance and leads to substantially lower
estimates of tax payments by undocumented aliens. (See
Section V, "Tax Estimates," below for explanation of
assumptions.)
How Does the Amount of Time Spent in the United States Affect Income and Tax Contributions of the Legal Foreign-Born?
The longer immigrants have been in the United
States, the higher their incomes and tax contributions. (See
Table H and Figure 5, page 31.) We estimate income and
tax contributions by period of entry for three groups—
naturalized citizens, LPR aliens, and refugees— and for
each, earlier entry groups have substantially higher incomes
and, therefore, tax payments than later entry groups.
For all periods of entry, the average individual incomes and tax contributions of
naturalized citizens surpass those of natives. For LPR aliens, recent entrants (199095) have
lower average individual incomes and tax contributions than natives, but long-term LPR aliens
(entry before 1980) have average incomes that slightly surpass those of natives and equal tax
contributions. The data in Table H support the notion that immigrants are integrating into
American society. As a group, immigrants who have been in the country for 15 years or more
have average incomes that exceed those of natives.(12)
How Do Second-Generation Americans (Natives with One or Two Foreign-Born Parents)
Compare with Third-and-Higher-Generation Americans?
Incomes and tax contributions of second-generation Americans are remarkably similar to
those of third-and-higher-generation Americans. (See Table I and Figure 6, page 32.) Among
working-age adults (1864 years old), the average
second-generation American has a total income of
$26,800, compared with $26,900 for third-and-higher-
generation Americans. Average individual tax payments
are identical, $10,200. For older natives, those 65 and
older, average individual incomes and taxes are somewhat
higher for second-generation Americans than for
third-and-higher-generation Americans: $20,100 versus
$18,200 for incomes, and $4,900 versus $4,100 for taxes.
These findings suggest that, in cost-benefit
analyses of the impact of immigrants, if costs of providing
services to the U.S.-born children of immigrants are
attributed to immigrants, then the tax contributions of
adults whose parents were immigrants should be attributed to immigrants as well.
How Do Immigrants and Natives Compare on Different Taxes?
The two basic methods of comparing natives and immigrants on taxes paid are (1) the
proportion of taxes paid by the group relative to their proportion in the population; and (2) the
proportion of a group's income that is paid in a specific tax. Both measures are displayed for
every tax and each status in Table 10. Overall, natives represent 81.8 percent of the population
and receive 82.6 percent of personal income. The $98.2 billion that natives pay in taxes
represents 83.6 percent of the taxes paid— a higher percentage of taxes than their representation
in the population. Natives pay a proportionately higher share of tax for federal income tax, state
income tax, residential property tax, and sales tax. For Social Security tax, the proportion paid
by natives, 81.9 percent, is only 0.1 percent higher than their percentage in the population and
lower than their share of income. For unemployment insurance, natives pay a lower percentage,
80.6 percent.
The proportion of tax paid by natives is largely a function of the progressivity of the tax.
Natives have a disproportionately high percentage of very high incomes. The tax rate on income
is higher for high incomes than low incomes— that is, the income tax is progressive, with
federal income tax being more progressive than New York State's, which in turn is more
progressive than New York City's. Thus, natives pay a higher percentage of the income taxes
than of the other taxes. On the other hand, Social Security tax and unemployment insurance do
not tax income above a certain amount— that is, these taxes are regressive. On these two taxes,
natives pay a lower percentage than on the other taxes.
Overall, natives pay a slightly higher percentage of their income in taxes, 30.7 percent,
than do legally present immigrants, 29.4 percent; naturalized citizens pay 30.8 percent, a slightly
higher percentage than natives, however. Again, the progressive nature of the different taxes is
reflected in this measure. Legally present immigrants pay a higher percentage of their income
than natives in the more regressive taxes, Social Security and unemployment insurance; on the
more progressive income taxes, natives pay a higher percentage. Naturalized citizens pay a
higher proportion of their income in taxes than any of the groups, reflecting their relatively high
incomes and very high residential property tax payments.
Where Do Taxes Paid by the Legal Foreign-Born Go, to the Federal Government or to
State and Local Governments? How Does This Compare with Natives?
Legal immigrants pay $12.5 billion in taxes to the federal government, or 68.9 percent of
the total taxes they pay (Table J). Natives pay roughly the same percentage, 70.5 percent. The
lowest percentage is for naturalized citizens
(66.7 percent) because a disproportionate share of the
taxes they pay goes to residential property tax. LPR
aliens pay a very slightly higher percentage,
71.5 percent, of their taxes to the federal government
than do natives. This higher percentage is somewhat
ironic in that the federal government has limited access
to public benefits for legal aliens, whereas many states,
including New York, are filling some of the gaps left
by the federal limitations. Refugees and
nonimmigrants also pay a slightly higher percentage to
the federal government than do natives.
The percentage of taxes paid to the federal
government is related to the progressive nature of
federal taxes compared with state and local taxes.
Two federal taxes are regressive (Social Security and
unemployment insurance), while one (federal income
tax) is quite progressive. In general, natives pay
proportionately more of progressive taxes while
immigrants pay more of the regressive taxes. The
regressive and progressive taxes roughly balance each other out, so, across the status groups, the
percentage of taxes paid to the federal government differs little.
IV. Population Estimates
Developing population estimates for immigrant groups in New York State involves three
interrelated and overlapping procedures. The first step is to develop estimates of the number of
persons in each legal status group in New York State. The second is to assign immigration status
to foreign-born individuals in the March 1995 CPS data set. And the third is to assign weights to
the CPS individuals so that the estimates developed from the CPS agree with the independent
population estimates. For this project, we estimate the size of the following groups of
immigrants living in New York in 1995:
- Refugee Entrants.
Entered the United States, 199095
Entered 198089
- Naturalized Citizens
Entered 199095
Entered 198089
Entered before 1980
- Legal Permanent Resident Aliens
Entered 199095
Entered 198089
Entered before 1980
- Legal Nonimmigrants
- Undocumented immigrants
The sample size and coverage of the CPS limit our ability to produce statistically defensible and
meaningful estimates of income and taxes paid for all of the above groups in New York State.
Where the CPS includes insufficient numbers of cases for a group (usually a weighted estimate
of 50,000 persons or 25,000 households), we collapsed the period-of-entry groups into larger
aggregations. For example, because the number of naturalized citizens who entered the United
States between 1990 and 1995 is so small, this group is combined with the 1980-1989 entry
cohort in all tables.
Estimation of Population Size
Estimates for the various immigrant populations (legal permanent resident aliens,
naturalized citizens, refugees, and undocumented aliens) are produced for 35 separate countries
or areas of birth (Table K) by age, sex, and period of entry. The estimates use the basic logic of
demographic estimation; that is, for each immigrant entry cohort, the size of the group
diminishes each year as group members die or leave the United States. In addition, we produce
the estimates for the six states with the largest immigrant populations (California, New York,
Texas, Florida, Illinois, and New Jersey) and the balance of the United States. For individual
states, the size of each immigrant cohort is also affected by interstate migration.
Components of Change. The same basic rates of change for mortality, emigration, and
internal migration (modified where appropriate) are applied to each individual immigrant status
group. For emigration and mortality, the rates are specific for race, sex, and age. For internal
migration, sample sizes in the census were too small to estimate separate rates by age and sex, so
the same rates are applied to entire country of origin groups.
Mortality. The incoming immigrants and refugees, initial populations, and persons
naturalizing are survived forward (by age and sex) to 1995 using as the base year the immigrants'
year of admission (not the year of arrival) or year of naturalization, points at which the
immigrants are known to be alive. The survival rates are calculated from the life tables (by sex
and race/ethnicity) used in the Census Bureau's 1995 population projections(13) for race/ethnic
populations (white, black, Asian/Pacific Islander, American Indian, Hispanic). For each country
of origin, we used the race and ethnicity of the majority of immigrants to select a life table.
Emigration. Measuring emigration among immigrants remains a difficult issue. The
basic set of rates used in this study comes from Ahmed and Robinson (1994), who calculated sex
and country-of-birth specific rates using 1980 and 1990 census data. The rates estimated by
Ahmed and Robinson are for a ten-year period for five-year age groups.
Our estimation process requires both longer and shorter exposure periods, different age
groups for each year, and sex-specific rates. Iterative fitting is used to provide rates by single
years of age for single years of time that are consistent with Ahmed and Robinson's ten-year rates
for five-year age groups. For example, applying our single-year emigration rates to a cohort five
times results in the same number of people leaving the United States as applying their five-year
rate once. Ahmed and Robinson calculate both full and half exposure rates for the 1980s.
Consistent with their estimates and observations, we use lower emigration rates for immigrants
from Hispanic countries. The lower emigration rates are also used for naturalized citizens and
refugees, groups with greater attachment to the United States and weaker ties to their home
countries. The smoothed emigration rates (by age and sex) are applied to the surviving
immigrant populations.
Interstate migration. Country-specific rates of interstate migration for a five-year period
are derived from 1990 Census data on residence in 1985 for immigrants who entered the United
States before 1985. These rates provide a full matrix of flows to and from each of the seven
areas. These five-year rates are applied three times to 1980 populations, twice to
198084 immigrants, and once to 198589 immigrants for the surviving and nonemigrating
immigrants.
Refugee Population. Refugees are admitted to the United States for humanitarian
reasons; for example, they are fleeing persecution because of their religion, race, ethnicity, or
political beliefs. Asylees are persons already in the United States who are granted legal status for
the same types of humanitarian reasons. Refugees and asylees generally do not remain in
refugee/asylee status for more than one to two years. They generally "adjust their status" and
become legal permanent residents.
Refugees and asylees differ from most other legal admissions because they are not
admitted for their skills or because of their relationship to someone already in the United States.
Since they are often "in flight" and ill-prepared and unequipped for life in the United States, they
are the only large groups of legally admitted aliens eligible for welfare and other social services
upon admission to the United States. They generally retain their eligibility for public benefits for
several years even if they become legal permanent residents or naturalized citizens.
For this study, we define refugees as persons admitted as refugees and asylees after 1980,
regardless of their current status.(14) The detailed initial population is derived principally from
tabulations of INS public-use microdata files on legal permanent residents. From these files of
individual records for fiscal years 198095, we tabulate persons (and their dependents) who were
adjusting from refugee or asylee status to legal permanent resident status; the tabulations are
done by age, sex, country of birth, and state of residence. The INS files include no information on
refugees and asylees who do not change their status to legal permanent resident.
Almost all refugees and asylees eventually adjust their immigration status to legal
permanent resident; most do so within one or two years of entry. However, some never adjust,
and recent entry cohorts have not had a chance to fully adjust. Therefore, to take into account
refugees and asylees who had not yet adjusted status, we compare our tabulations of the number
of persons adjusting status by year of entry and country of birth with the total number of refugee
and asylee arrivals derived from INS Statistical Yearbooks (various years) and annual reports
from the Office of Refugee Resettlement (various years). The differences, representing
unadjusted refugees and asylees, are added to the total counts of refugees and distributed by age
and sex. In the final step of the estimation process, the refugees are survived to 1995 with the
survival rates described above, and emigration and internal migration rates are applied.
For 1995,(15) we estimate that there were 1,845,000 persons living in the United States who entered the country since 1980 as refugees or asylees (Table 4). New York contains 198,000
refugees, 10 percent of the national total.
Unlike the United States as a whole, New York's refugee population is dominated by
refugees from the former Soviet Union, who account for almost two-thirds (125,000) of the
state's refugee population. Nationally, no country of origin group constitutes such a large share
of the refugee population, and refugees from the former Soviet Union make up only 20 percent of
the total. The largest source of refugees for the nation as a whole is Southeast Asia, 46 percent of
the total, most of whom are from Vietnam, 28 percent of the total. In New York, Southeast
Asians constitute a relatively small share of the refugee population, 11 percent, although,
congruent with the nation as a whole, most are from Vietnam.
Legal Permanent Residents. Our estimate of the legally resident foreign-born
population (other than refugees) in 1995 is built from three major immigrant flows: (1) legal
permanent residents entering in fiscal 1980 through 1995; (2) persons acquiring legal status
through two legalization programs of the Immigration Reform and Control Act of 1986
(IRCA)— for pre-1982 entrants and for farmworkers; and (3) legal foreign-born residents in
1980. Each of these populations, by age, sex, country of birth, and state of residence, is
subjected to mortality rates, survival rates, and internal migration rates as described above. The
resulting surviving populations are summed to give the total number of legal foreign-born
residents (other than refugee entrants and nonimmigrants) in 1995; we refer to this population as
legal permanent resident (or LPR) admissions to distinguish it from legally admitted
nonimmigrants, the refugee/asylee entrants, and undocumented aliens. The LPR admissions are
further subdivided into naturalized citizens and legal permanent resident aliens using methods
described below.
The numbers of legal permanent residents entering in fiscal 1980 through 1995 are
obtained by tabulating public-use microdata files from the Immigration and Naturalization
Service. Immigrants adjusting status from refugee and asylee status are excluded from this
tabulation because they are included in the refugee tabulations (described above). The
tabulations are done by age, sex, country of birth, and intended state of residence. Immigrants
with unknown state of residence are distributed according to the distribution of known state of
residence for each country of birth. For fiscal years 1980 and 1981, the data on intended state of
residence are missing for most individuals. For these years, for each country of birth, the
immigrants are distributed using the average distribution of surrounding years.
The estimation procedures for aliens legalizing under IRCA are similar to the procedures
used to estimate legal permanent residents. The initial populations come from tabulations of INS
public-use microdata files for persons legalizing as Special Agricultural Workers (SAWs) and
those legalizing as pre-1982 entrants (known as LAWs). Both INS files provide information on
date of most recent entry to the United States, which we treat as the date of entry for tabulation
purposes, and information on age, sex, country of birth, and state of residence.
One issue we had to resolve was the number of legalizing aliens who actually were
granted permanent resident alien status. The data files had information on whether the
applications for legal status had been approved, denied, or were pending. In addition, the INS
Statistical Yearbooks for 1989 through 1996 provide information on the number of LAW and
SAW applicants who eventually became legal permanent residents. To get a detailed distribution
of the legalized population that ultimately acquired legal permanent resident status by age, sex,
period of entry, country of birth, and state of residence, we produced two tabulations from each
of the LAW and SAW files. One tabulation includes only those persons whose applications had
been approved by the date of the files (November 1991), and the other includes this group as well
as persons with applications still pending. We then interpolated between these two tables using
the INS information on the total number eventually approved and acquiring LPR status.(16) For
applying survival, emigration, and internal migration rates, all legalizing aliens are assumed to
have been in the country in 1988 (the average date of application for legalization). Thus, these
groups are exposed to seven years of mortality and emigration risk and one period of internal
migration risk.
Data on the legally resident foreign-born population in 1980 are drawn from Warren and
Passel (1987) and Passel and Woodrow (1984). Unpublished tabulations consistent with the
published material are used to provide the required information by age, sex, period of entry,
country of birth, and state of residence. For some countries, detailed information from the
1980 estimates is not available; for these countries, estimates for larger, more inclusive areas are
subdivided using 1980 and 1990 Census data.(17)
Nationally, the legal permanent resident population— the sum of surviving post-1980
LPR admissions, 1980 legal residents, LAWs, and SAWs— is estimated at 17.5 million for
1995. The estimated number of survivors of the pre-1980 legal entrants, at 7.51 million, is very
slightly larger than the estimated number of post-1980 legal permanent residents, 7.47 million.
The surviving LAW and SAW populations are much smaller, at 1.55 million and 1.01 million,
respectively (Table 4).
The estimates for New York State reflect the state's history as a major destination for
immigrants in the past (so that the 1980 legally resident population was older than the U.S.
average), as a destination for recent flows, and as not having an overly large number of SAW
legalizations. Thus, the estimated 1995 legal permanent resident population of 2.60 million has
more post-1980 LPRs (1.40 million) than pre-1980 legal entrants (1.07 million). LAW residents
(94,000) outnumber SAWs (32,000) by almost three-to-one. (See Table 4.)
Naturalized Citizens. Constructing estimates for the naturalized citizen population
follows procedures similar to those used for the legal permanent resident population. There are
three major "flows" of naturalized citizens: (1) persons naturalized by the INS for fiscal years
1980 through 1995; (2) the resident naturalized citizen population as of 1980; and (3) persons
deriving citizenship by naturalization of their parents or through marriage to a U.S. citizen for
fiscal years 1980 through 1995. Each of these populations, by age, sex, country of birth, and
state of residence, is subjected to mortality rates, survival rates, and internal migration rates as
described above. The resulting surviving populations are summed to give the total number of
naturalized citizens in 1995. (See Passel and Clark 1997 for more details of the estimation
procedure.)
The numbers of persons naturalized in fiscal years 1980 through 1992 are obtained by
tabulating public-use microdata files from the INS by age, sex, period of immigration, and
country of birth. For fiscal years 19931995, totals by country of birth and year of immigration
are derived from published and unpublished INS tabulations; the totals are distributed by age and
sex using the distributions from 19901992 by country of birth and year of immigration. For
each year, the totals are distributed across states using INS data on naturalizations by state and
country of birth.
Estimates of the naturalized citizen population in 1980 by state of residence, age, sex,
country of birth, and period of entry are from Warren and Passel (1987) and Passel and Woodrow
(1984). Unpublished tabulations are used because they provide more detail than the published
tables. Finally, because detailed information is unavailable for some countries, tabulations from
the 1980 census are used to subdivide estimates for larger areas.
Accounting for derivative citizenship is the most difficult part of the estimation process.
Almost all persons receiving derivative citizenship certification from the INS became citizens
upon the naturalization of their parents, but did not receive official certification of naturalization
at the time. They do not appear in INS records until they get this certification and, even then, are
not included in INS counts of naturalizations. For most years in the 1980s, the INS Statistical
Yearbooks provide information on the number of derivative citizenships, their countries of birth,
and the year the citizenship was derived. For these years, we assumed that the distribution by
age, sex, and period of entry for derivative citizens from each country is the same as the
distribution for children naturalized from that country in the year their citizenship was derived.
In some years in the 1980s and most in the 1990s, the INS did not publish detailed information
on derivative citizenship. For these years, we obtained unpublished information from the INS on
the number of derivative citizenships granted. We allocate the totals to countries of birth and
year their citizenship was derived by extrapolating from the years when detailed data were
available; the derivation of detailed age-sex-period of entry estimates then follows the same
procedures as before. For each year, the estimates are distributed to states using the distribution
of naturalizations in that year for each country.
Each of the three subpopulations of naturalized citizens are survived to 1995 and
subjected to risks of emigration and internal migration (as described above for the foreign-born
population). Risks of emigration are smaller than those for the entire foreign-born population
because of the greater attachment to the United States shown by the choice of naturalizing. The
three estimates are summed within age, sex, period of entry, country of birth, and state of
residence groups to yield the final estimates.
Nationally, we estimate there are 7.3 million naturalized citizens (Table 4), with the
largest numbers from the Philippines (590,000), Mexico (486,000), China(18) (486,000),
Cuba (375,000), and Vietnam (342,000). New York had the second largest state population of
naturalized citizens at 1.2 million; California with 1.8 million had the largest number. The
principal countries of birth for naturalized citizens in New York are China (95,000), Dominican
Republic (80,000), countries of the former Soviet Union (59,000),(19) and Jamaica (56,000). (See
Table 2.)
Undocumented Aliens. For our estimate of the number of undocumented aliens living in
New York, we draw on the latest official estimates of the Immigration and Naturalization Service
(Warren 1997). The INS provides national estimates by country of birth for October 1996 and
state level estimates for the total number of undocumented aliens; in addition, the INS estimates
provide measures of average annual change over the period October 1992October 1996. Unlike
previous INS estimates of the undocumented population (Warren 1994), the 1997 INS estimates
provide no state-specific information on the countries of origin of undocumented aliens. We use
the 1994 INS estimates as a basis for estimating state-specific estimates of the countries of origin
of undocumented aliens for later periods.
The INS estimates that 5.0 million undocumented aliens lived in the United States as of
October 1996. New York had the third largest number at 540,000 or 10.8 percent of the total,
behind only California (2.0 million or 40 percent) and Texas (700,000 or 14.1 percent) and ahead
of Florida (350,000 or 7.0 percent) and Illinois (290,000 or 5.8 percent). (See Table 3.) The
average annual increase was estimated at 275,000 for the United States and 33,000 for New York
State. Using these figures to interpolate, we estimate the undocumented population of New York
at 507,000 as of October 1995 and 488,000 in March 1995.
Using iterative proportional fitting, we develop estimates of undocumented aliens by state
and country of birth consistent with the INS estimates. The national estimates by country of birth
and the state estimates of total undocumented aliens, both from the 1997 INS estimates, are used
as marginal totals for a two-way table (Warren 1997). The initial estimates of the interior cells of
the table (that is, state of residence and country of birth cells) come from the INS' 1994 estimates
(Warren 1994). The distributions are alternately adjusted to national country-of-birth totals
across states (the seven largest undocumented populations and the balance of the country) and
then to state totals across countries. The process converged after six iterations.
The estimates of undocumented aliens by state for October 1995 are shown in Table 3.
New York State differs from the other major undocumented alien states in that no single country
of birth dominates as a source of undocumented aliens. The largest estimate for any single
country is Jamaica, estimated to have 33,000 undocumented aliens in New York, or 6.5 percent
of the state's total. In other states, the largest single source represents 3 to 14 times this
percentage.
Assignment of Legal Status
The foreign-born population— identified in the CPS through a series of questions on
country of birth and citizenship status— is defined as persons born outside the United States
who are naturalized citizens or not U.S. citizens (that is, aliens) and who were not born to U.S.
citizens. The only information collected on legal status is whether an individual has become a
naturalized citizen, and even this information is misreported by a significant portion of
respondents (Passel and Clark 1997). However, our research has shown that it is possible to
assign legal status with a series of editing and imputation procedures so that the numbers and
characteristics of the CPS populations agree with administrative data on the size of the various
populations. This section sets forth in brief the procedures used to assign legal status to the
1995 CPS cases for New York State.
Refugees and Asylees. In any given year,
refugees tend to come from only a relatively small
number of countries. In addition, countries that
send refugees usually do not send large numbers
of other legal immigrants in the same year. For
each two-year period(20) beginning with 198081,
we compile the number of refugees and asylees
arriving by country from INS Statistical
Yearbooks (various years). For the same
countries, we compile the number of legal
permanent residents admitted who are not
adjusting from refugee status.(21) For each
two-year period, we define "refugee countries" as
those where the refugees and asylees account for
more than 40 percent of the total admissions of
legal permanent residents, refugees, and asylees.(22)
The countries and periods identified are shown in
Table L.
This method produces a population that substantially overlaps with the actual refugee
population. Further, it is likely that persons erroneously included as refugees share many of the
socioeconomic characteristics of re
