Fiscal Analysis Reveals Immigrants Reduced U.S. Deficit by $14.5 Trillion
Washington, Thursday, 19 February 2026.
Contrary to political rhetoric, a new study finds immigrants generated 14% of tax revenue while consuming only 7% of spending, effectively reducing the national deficit by $14.5 trillion.
A Thirty-Year Fiscal Review
A comprehensive fiscal review conducted by the Cato Institute, released on Tuesday, February 17, 2026, offers a stark contrast to prevailing political narratives regarding immigration [1]. Covering a thirty-year period from 1994 through 2023, the data indicates that while working immigrants utilized only 7% of government spending, they were responsible for generating 14% of tax revenue [1]. This disparity resulted in a total reduction of the federal deficit by approximately $14.5 trillion over the three decades analyzed [1][6]. The report posits that without this influx of revenue and lower comparative spending, the United States public debt would currently exceed 200% of the Gross Domestic Product (GDP) [1].
Entitlement Spending and Demographics
The study delves into specific entitlement programs to illustrate where these savings originate, highlighting that immigrants are significantly subsidizing safety nets for the broader public. Spending on immigrants regarding Social Security was found to be 31% lower than the national average [1]. Furthermore, expenditures for both Medicaid and Medicare for this demographic were 20% below the average [1]. A key driver of this fiscal efficiency is the demographic profile of new arrivals; the report notes that the average age of an immigrant upon entering the United States is 25 [1]. Consequently, immigrants cost the American education system approximately half as much as the U.S.-born population, as they typically arrive ready to enter the workforce without having required years of public schooling funded by U.S. taxpayers [1].
Challenging Policy Narratives
The analysis also breaks down contributions by skill level and legal status, challenging the assumption that lower-income or undocumented workers are a net financial drain. Low-skilled immigrant workers were found to have reduced the deficit by $2.8 trillion, while undocumented workers specifically contributed a $1.7 trillion reduction over the 30-year window [1]. Despite suffering from poverty at above-average levels, these groups utilized only average levels of welfare and food assistance, with needs-based assistance for immigrants accounting for just 12% of the deficit [1]. This data serves as a direct rebuttal to President Donald Trump’s claim from July 3, 2025, that the “average illegal alien costs American taxpayers an estimated $70,000” [1]. While the Department of Homeland Security emphasized denying tax dollars to undocumented individuals in a statement on February 17, 2026, the Cato Institute’s findings suggest these populations are already “fiscally positive” contributors helping to avert financial crises [1][8].