An ongoing immigration surge could reduce the nation’s deficits by almost $1 trillion over the next 10 years, the Congressional Budget Office (CBO) said Tuesday in its latest projections.
Its new analysis found that a continued surge in net immigration from 2021-26 could help lower the nation’s deficits by $900 billion and revenues could increase by $1.2 trillion, the CBO said, while pointing to its potential impact on individual income and payroll taxes.
“CBO’s estimate of those tax revenues is based on its assessment that those immigrants will initially have lower-than-average income but that their earnings will increase as they remain in the United States,” the agency said.
“CBO’s estimate is also based on its assessment that about half of immigrants in the surge will be authorized for work and will be as likely to pay taxes on their income as the rest of the population,” it continued. “Immigrants who work without authorization will pay some taxes but are considered less likely to do so than the rest of the population.”
The nonpartisan budget scorekeeper also said it expects the surge would help boost economic activity, and “income from labor and capital, as well as tax revenues from all sources.”
At the same time, the office projects federal spending on mandatory programs and net interest costs to grow by about $278 billion over the next 10 years due to the surge, estimating outlays for mandatory programs to “rise by an estimated $194 billion over that period, mainly because of spending on benefits for immigrants and their children.”
The CBO looks at people entering the country in its category of “other foreign nationals,” which covers those who have entered illegally and “have not obtained a permanent legal status”; those who were “allowed to enter the country lawfully through the use of parole authority and who may be awaiting proceedings in immigration court, and people who previously resided in the United States legally in a temporary status but who remained in the country after that legal status expired.”
While the CBO notes there is still uncertainty around its projections on the matter, it estimates net immigration of people in the category will be “8.7 million greater over the 2021-2026 period than it would have been if net immigration had remained at its otherwise expected level.”