Donald Trump has been vocal about his belief that immigrants in the US are taking away jobs from Americans. His increasing restrictions on even legal immigration channels are proof enough! Just recently the highly popular visa category – H-1B – saw the US government increasing the fee to a whopping $100,000!But do immigrants – especially legal – really burden the US economy? A new research by Manhattan Institute’s Daniel Di Martino examines immigration’s financial impact through tax revenues and public expenditure, moving beyond the politically charged debates in Trump-era America.
Interestingly, the study finds that India leads the list of countries whose migrants actually contribute more to the US economy, than the benefits they draw from it!The analysis stresses that educational qualifications, age at the time of arrival in the US and immigration status are decisive factors in determining whether immigrants provide net fiscal benefits to the American economy or not.Over decades-long timeframes of 10 and 30 years, the study calculates the balance between tax contributions and welfare receipts.University graduates arriving before age 40 generate substantial revenue surpluses for the US government, whilst those with only high-school education often receive more in benefits than their tax payments, particularly when their descendants are taken into account.
How much do Indian immigrants contribute to US economy?
The study says that immigrants from India mostly contribute more to the US economy than they take from it, making them net positive on an average.“The positive fiscal impact of immigrants from both Asia and Europe is driven specifically by South Asians—predominantly Indian immigrants—and Western Europeans, rather than East Asian and Eastern European immigrants,” the research says.The study notes that Indian immigrants earn well, contributing handsomely to tax revenue whilst utilising minimal welfare services. In contrast, immigrant groups with lower educational background demonstrate negative fiscal impacts on the US economy over extended periods.Looking at specific national origin fiscal impact estimates, the study notes it is clear that among large immigrant groups, Indian immigrants are the “most economically beneficial immigrant group” in the US.
India leads countries whose migrants contribute more than they draw
An average Indian immigrant actually reduces the US national debt by over $1.6 million over 30 years and increases GDP more than immigrants from any other country! Behind Indian immigrants are the Chinese, who reduce the debt by over $800,000 over 30 years.Importantly, immigration status significantly impacts fiscal outcomes, the study says. Those holding employment and skilled-worker visas contribute most positively to the American economy.In contrast, undocumented immigrants and parents of US citizens generate less favourable fiscal results. The national debt increases with unauthorised immigration, whilst legal skilled immigration helps reduce it.
Countries whose migrants contribute little or make negative contribution
The implications for India are clear: whilst Indian migrants demonstrate how educational qualifications lead to strong fiscal contributions overseas, the data also emphasises the necessity to prevent immigration through ‘dunki’ channels.Other important observations from the study:
- Higher education is a distinguishing characteristic among sponsored immigrants, including those with permanent EB visas and temporary work permits such as H-1B, O-1, L-1, and J-1. Being in their early professional years, these individuals have substantial time ahead to contribute to the tax system before accessing retirement benefits.
- The primary distinction in fiscal contributions between skilled and unskilled immigrants lies in tax payments, with university graduates contributing 3.3 times more in taxes compared to those without secondary education. Additionally, individuals lacking secondary education receive 2.3 times more governmental assistance than their university-educated counterparts.
Tax Revenue generated by 30-year old immigrant with college degree vs no high school diploma over 10 years
- The financial implications vary significantly based on education levels. An uneducated 30-year-old immigrant creates a federal deficit of $20,000 over a decade and $130,000 over three decades. In contrast, a 30-year-old immigrant holding advanced qualifications generates federal savings of $300,000 in ten years and $3.1 million across thirty years.
- H-1B visa holders are projected to provide greater economic benefits compared to EB-1 and EB-2 immigrants. The reason being that most EB-1 and EB-2 immigrants previously held H-1B visas and are now at an advanced age, resulting in anticipated net contributions of approximately $1.9 million and $2.1 million, respectively, over three decades.
Benefits received by a 30-year old immigrant with college degree vs no high school diploma over 10 years
- Other immigration categories show significantly lower benefits. Diversity visa lottery recipients, who possess notable educational qualifications and are relatively young, contribute about $900,000 more in taxes than they receive in federal benefits over 30 years.
- The less-skilled EB-3 immigrant visa holders generate $630,000 in net contributions over 30 years, whilst refugees contribute $420,000 during the same period. DACA recipients, despite initial costs in the first decade, are anticipated to provide $100,000 in net contributions over 30 years.
Educated, legal migrants contribute most to GDP
- In terms of economic growth, EB-1 immigrants with extraordinary abilities demonstrate the highest impact, contributing $500,000 to GDP by year 30, followed by H-1B visa holders at £460,000.
- STEM PhDs and master’s degree holders contribute $410,000, whilst EB-2 visa holders and diversity visa recipients boost GDP by $370,000 and $350,000, respectively, over a 30-year period.
Similar pattern holds true for fiscal impact
What direction should Trump’s immigration policy take?
The research indicates that implementing comprehensive reforms for high-skilled immigration could boost US GDP by 4.6%. These reforms include prioritising degree holders, wage-based H-1B selection, and utilising previously unused employment-based green cards. Such measures could potentially reduce federal debt by nearly $20 trillion across three decades, the study says. It recommends:
- Removing country-specific limits would benefit Indian applicants awaiting green cards, though this could extend waiting periods for other nationalities.
- Enable work authorisation for H-1B visa holders’ spouses who face extended green card processing delays.
- Grant employment permissions to dependents across multiple skilled visa categories, including H-4, O-3, and TD status holders.
- Expand work authorisation to include both visa dependents and international students (F-1/F-2), allowing on-campus and off-campus employment to increase workforce participation.
- Implement competitive bidding for EB-5 investor visas to generate additional government revenue.
- Allocate H-1B visas based on salary offerings rather than lottery selection to attract higher-paid professionals.
- Revise visa reallocation rules to transfer unused family-category visas to employment-based categories.
- Redirect Diversity Lottery visa allocations to enhance EB-1 and EB-2 skilled immigration quotas.
- Transfer EB-3 visa allocations to EB-1 and EB-2 categories, prioritising exceptional talent and advanced qualification holders.
- Discontinue EB-3 “Other Worker” classification, redirecting these positions to EB-1 priority workers.
- Eliminate sibling-based green card category, reallocating these positions to skilled immigration programmes.
- Restructure family-based immigration using points-based assessment focusing on skills and qualifications.
- Distribute EB-2 and EB-3 green cards according to salary levels, prioritising higher-paid applicants.
Bottom line:An increasingly strick crackdown on immigration, irrespective of the educational qualifications and other economic benefits immigrants may bring, would be counterproductive for the US economy. The study notes that family-based immigration reforms that establish higher educational standards and English language proficiency requirements, whilst maintaining provisions for refugees and skilled professionals, would enhance the educational profile of legal immigrants.Such policies, including mandatory secondary education completion and English competency, along with discontinuing green card issuance to US citizens’ parents, would yield substantial economic benefits, reducing national debt and fostering economic expansion.However, implementing extensive limitations, including terminating extended family immigration, diversity visa programmes, or particularly suspending H-1B visas or all legal immigration, would have adverse economic consequences. These measures would lead to economic contraction, decreased tax collections, and an elevated debt-to-GDP ratio. A complete cessation of immigration would inflict the most significant damage to the nation’s economic and fiscal health.For example, the study says that discontinuing the H-1B visa programme would have severe economic implications for the United States. The national debt would increase by $185 billion in the first decade and by $4 trillion over three decades. Additionally, the economy would contract by $26 billion in ten years and $55 billion in thirty years. Is Trump listening?
