User’s Guide to NAS Report, 3: Short-Run Fiscal Impact

The NAS panel calculated the short-run fiscal impact by comparing the cost of providing public services to immigrants with the taxes that those immigrants pay in a particular year. Both Chapter 8 and Chapter 9 give estimates of the short-run fiscal impact.  Chapter 8 includes federal expenditures and taxes when calculating the impact in 2013, while Chapter 9 focuses on the impact at the state and local level for the years 2011-2013.

Continue reading “User’s Guide to NAS Report, 3: Short-Run Fiscal Impact”

User’s Guide to NAS Report, 4: Long-Run Fiscal Impact

By looking only at expenditures and taxes during a given year, the calculation of the short-run fiscal impact ignores that some of those expenditures actually yield a return. The cost of sending the children of immigrants to school today leads to higher earnings for those children in the future. Plus the aging of the native-born population is creating severe fiscal problems, as there is not enough money to fund the liabilities in Social Security and Medicare unless we drastically raise taxes or cut benefits. Immigration brings in new taxpayers who can fund some of those liabilities in the future.

Chapter 8 of the NAS report presents the calculation of the long-run fiscal impact. To see how this is done, imagine the following sequence of events. An immigrant arrives today, paying taxes and receiving public services. That immigrant has children. Those children may be costly, but they eventually grow up and pay taxes. The children have children, and the process goes on. The panel did this calculation by “tracking” the immigrant and all descendants over the 75-year period after arrival and adding up all the taxes paid and expenditures incurred. The difference between total taxes and total expenditures is the long-run fiscal impact.

Continue reading “User’s Guide to NAS Report, 4: Long-Run Fiscal Impact”