In recent years, a lot of people have crossed the border illegally. This has caused a lot of debate about U.S. immigration policy. However, official estimates show that the rise in migration across the U.S.-Mexico border has been great for the federal budget.
The Congressional Budget Office said on Tuesday that the rise in immigration since 2021 and its expectation that it will continue until 2026 will bring in $1.2 trillion in federal tax revenue over the next few years while only costing $300 billion.
The CBO said that most of the extra money comes from immigrants paying payroll taxes on the money they make.
The news comes on the same day that the Biden administration announced a new program that they hope will help 500,000 spouses of U.S. citizens become legal permanent residents. This could allow many of those residents to legally work.
In the past few years, most of the new immigrants have been adults of working age who crossed the border to seek asylum. While they wait for their cases to be heard in immigration court, these people are usually allowed to work.
At the same time, these workers can’t get most federal benefits for low-income Americans, like Medicaid, until they have lived in the U.S. for five years or more.
This month, President Joe Biden announced an executive order that will make it impossible for migrants to ask for asylum when there are a lot of encounters at the border.
The CBO thinks that by 2026, 8.7 million more workers will have come into the country than were expected before the surge.
It says that half of those 8.7 million people will be able to work, which means they will be taxed on their incomes just like everyone else, since payroll taxes are taken out of paychecks by employers.
“These direct effects on taxes paid by people in the surge are added to the larger economic changes that resulted from the surge,” the CBO report said. “A lot of new immigrants mean more business activity, which means more income and tax money from all sources.”
This math only works for the federal government, though.
The unexpected rise in the number of immigrants is making it hard for many state and local governments to handle. This is because more people need schools and health care, which, according to the CBO, “are two of the largest categories of spending in those governments’ budgets.”
In the past few weeks, yields on U.S. Treasury bonds BX:TMUBMUSD10Y have gone down because people think the Federal Reserve will lower interest rates at some point this year. This is happening even though more bonds are being issued to cover rising budget deficits.
