Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area

Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area
Civic Contributions:
Taxes Paid by Immigrants
in the Washington, DC,
Metropolitan Area
May 2006

Randy Capps, Everett Henderson
The Urban Institute

Jeffrey S. Passel
Pew Hispanic Center

Michael Fix
Migration Policy Institute
Acknowledgements                                                                            Page 4

Executive Summary                                                                           Page 5

Foreword                                                                                    Page 8

Approach                                                                                    Page 9

Demographics of the National Capital Region’s Foreign-Born Population                       Page 10

        Trends in the Size of the Region’s Foreign-Born Population…………………………. .Page 12
        Origins of the Region’s Immigrants…………………………………………………………….. Page 12
        Citizenship and Legal Status of the Region’s Immigrants……………………………. Page 13
        Distribution of Immigrants across the Region………………………………………………Page 14
        Immigrant Household Size and Income………………………………………………………. Page 15

Taxes Paid by Immigrants in the National Capital Region                                     Page 17

        Immigrant Contributions to the Federal, State, and Local Tax
        Bases across Jurisdictions in the National Capital Region…………………………… Page 19
        Variation in Tax Payments by Household Citizenship and Legal Status………… Page 23
        Variation in Tax Payments by Immigrants’ Country and Region of Origin…….. Page 25
        Variation in Tax Payments by Educational Attainment
        and English Proficiency……………………………………………………………………………….Page 25

Conclusions                                                                                 Page 28

Methodology                                                                                 Page 30

        Data Obtained from the 2000 Census…………………………………………………………Page 30
        Assignment of Legal Status to Non-citizens in the Data………………………………..Page 31
        Assignment of Household Nativity, Citizenship, and Legal Status………………….Page 32
        Assignment of Region and Place of Birth to Immigrant Households……………. Page 32
        Identification of Geographic Areas……………………………………………………………….Page 33
        Estimation of Income Taxes…………………………………………………………………………Page 34
        Estimation of Payroll Taxes………………………………………………………………………….Page 37
        Estimation of Property Taxes……………………………………………………………………….Page 37
        Estimation of State and Local Consumption Taxes……………………………………….Page 37

References                                                                                  Page 40

Appendix Tables                                                                             Page 42

Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area
List of Figures

      Page 11…Figure 1: Definitions of Citizenship and Legal Status Categories Used in the Report
      Page 12…Figure 2: Region of Origin for Washington, DC, Metropolitan Area Immigrants, 2000
      Page 13…Figure 3: Citizenship and Legal Status of Washington, DC, Metropolitan Area
                       Immigrants, 2000
      Page 14…Figure 4: Foreign-Born Share of Total Population by Jurisdiction, Washington, DC,
                       Metropolitan Area, 2000
      Page 16…Figure 5: Mean Household Income by Household Nativity, Citizenship, and Legal
                       Status, Washington, DC, Metropolitan Area, 1999
      Page 17…Figure 6: Mean Household Income by Household Place of Birth, Washington, DC,
                       Metropolitan Area, 1999
      Page 19…Figure 7: Federal, State, and Local Shares of Taxes Collected from Immigrant
                       Households in the Washington DC, Metropolitan Area, circa 1999-2000
      Page 20…Figure 8: Share of Taxes Paid by Immigrant Households in the Washington, DC,
                       Metropolitan Area by Type of Tax, circa 1999-2000
      Page 20…Figure 9: Distribution of Taxes Paid by Immigrant Households across Jurisdictions in
                       the Washington, DC, Metropolitan Area, circa 1999-2000
      Page 21…Figure 10: Mean Household Income for Immigrant and Native Households in the
                      Washington, DC, Metropolitan Area, by Jurisdiction, circa 1999-2000
      Page 22…Figure 11: Share of Taxes Paid by Immigrant Households in the Washington, DC,
                      Metropolitan Area, by Jurisdiction, circa 1999-2000
      Page 23…Figure 12: Taxes Paid by Households in the Washington, DC, Metropolitan Area, by
                      Household Nativity, Citizenship, and Legal Status, circa 1999-2000
      Page 24…Figure 13: Taxes Paid by Households in the Washington, DC, Metropolitan Area, by
                      Household Place of Birth, circa 1999-2000
      Page 25…Figure 14: Mean Household Income by Nativity and Educational Attainment of
                      Household Head in the Washington, DC, Metropolitan Area, 1999
      Page 26…Figure 15: Average Tax Payment for Households in the Washington, DC, Metropolitan
                      Area, by Nativity and Educational Attainment of Household Head, circa 1999-
      Page 27…Figure 16: Mean Income for Immigrant Households in the Washington, DC,
                      Metropolitan Area, by English Proficiency of Household Head, 1999
      Page 27…Figure 17: Average Taxes Paid for Immigrant Households in the Washington, DC,
                      Metropolitan Area, by English Proficiency of Household Head, circa 1999-

Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area
List of Tables

      Page 18…Table 1: Total Taxes Paid by Immigrant Households in the Washington, DC,
                       Metropolitan Area, by Type of Tax, circa 1999-2000
      Page 43…Appendix Table 1: Detailed Country of Origin for Washington, DC, Metropolitan Area,
      Page 45…Appendix Table 2: Citizenship and Legal Status by Jurisdiction for Washington, DC,
                      Metropolitan Area Immigrants, 2000
      Page 47…Appendix Table 3: Household Type and Composition for Foreign-Born Households in
                     the Washington, DC, Metropolitan Area, by Household Legal Status and
                     Country of Birth, 2000
      Page 48…Appendix Table 4: Household Type and Composition for Foreign-Born Households in
                     the Washington, DC, Metropolitan Area, by Household Country and Region of
                     Birth, 2000
      Page 49…Appendix Table 5: Total Household Income and Taxes Paid in the Washington, DC,
                     Metropolitan Area, by Household Nativity, Legal Status, and Place of Birth,
                     circa 1999-2000
      Page 50…Appendix Table 6: Mean Household Income and Taxes Paid in the Washington, DC,
                      Metropolitan Area, by Household Nativity, Legal Status, and Place of Birth,
                      circa 1999-2000
      Page 51…Appendix Table 7: Total Household Income and Taxes Paid for Immigrant Households
                      in the Washington, DC, Metropolitan Area, by Jurisdiction, circa 1999-2000
      Page 52…Appendix Table 8: Taxes Collected in the Washington, DC, Metropolitan Area, by Type
                     of Tax and Jurisdiction, circa 1999-2000
      Page 56…Appendix Table 9: Mean Household Income and Taxes Paid in the Washington, DC,
                      Metropolitan Area, by Nativity, Educational Attainment, and English
                      Proficiency of Household Head, circa 1999-2000

Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area

Support for this report was provided through The Washington Area Partnership for Immigrants, a
funding collaborative of The Community Foundation for the National Capital Region supported by
the Morris and Gwendolyn Cafritz Foundation, the World Bank, the Public Welfare Foundation, the
Eugene and Agnes E. Meyer Foundation, the England Family Foundation, the Montgomery County
Community Foundation, the Marpat Foundation, the Consumer Health Foundation, the Herb Block
Foundation, the Naomi and Nehemiah Cohen Foundation, and the Starr Foundation. Additional
funding for this report was provided by the Carnegie Corporation of New York.

The authors would like to thank Tom Kam of The Community Foundation for the National Capital
Region for his guidance and direction in setting up the project and putting together the report.
Benton Murphy with The Community Foundation provided design, layout, and edits of the final

Jason Ost at the Urban Institute helped provide initial data work on income tax calculations and
other central elements of the study. Fiona Blackshaw ably edited this document under tight

Copyright © 2006. The Urban Institute. All Rights Reserved. Except for short quotes, no part of this report may be reproduced or used in any form or
by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without written permission
form the Urban Institute.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance
problems facing the nation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its
Executive Summary

The Washington, DC, metropolitan        demographics, household                 however, our research suggests
area is home to over 1 million          composition, income, and                that immigrants pay taxes roughly
immigrants, who composed one-           dispersal across jurisdictions in the   in proportion to their share of the
fifth of the area’s total population    region. The findings in this report     overall population.
in 2004. The metropolitan area is       are based mostly on analysis of
relatively affluent and boasts a        2000 U.S. Census data, because
strong economy that attracts large      the census provides the most
numbers of immigrants for jobs at       recent comprehensive data that
both the high- and low-skilled ends     allow disaggregation by country of
of the labor market. Immigrants in
the Washington area come from
                                        origin groups and by many of the
                                        region’s local jurisdictions. The
                                                                                Immigrant households in
more diverse countries of origin        demographic data in the report are         the Washington, DC,
than is the case nationally, and a      updated through 2004 using the
relatively high share come from         U.S. Current Population Survey. We      metropolitan region had a
origins with above average              calculate taxes at both the               total income of $29.5
incomes. Whether higher or lower        individual level (e.g., income and
skilled, immigrants contribute          payroll taxes) and the household          billion in 1999–2000,
strongly to the region’s economy,
purchasing power, and tax base.
                                        level (e.g., property taxes), but
                                        aggregate them up to the
                                                                                and they paid $9.8 billion
                                        household level. Throughout the         in taxes. This represents
Immigrant households in the             report we refer to households
Washington, D.C., metropolitan          headed by immigrants (whether           19 percent of the region’s
area had a total income of $29.5        citizens, legal immigrants, or           total household income
billion in 1999–2000, and they          unauthorized migrants) as
paid $9.8 billion in taxes. This        “immigrant households” and                 and 18 percent of all
represents 19 percent of the
region’s total household income
                                        compare their incomes and tax
                                        payments to households headed
                                                                                         taxes paid.
and 18 percent of all taxes paid.       by native-born U.S. citizens.
Our estimate of the amount of           Following are highlights of key
taxes paid by immigrants is an          findings from the report:
underestimate, because it is based
on 1999–2000 data, and the
                                                                                The federal government
                                        Immigrant households in the             collects nearly three-quarters
number of immigrants in the
region has grown from 850,000 to
                                        metropolitan area paid                  of taxes paid by both
at least 1.2 million since that time.   almost $10 billion in taxes in          immigrants and natives. In
                                        1999–2000, and they paid                1999–2000, $7 billion, or 72
Although immigrant households           taxes at nearly the same                percent of all taxes paid by
on average have lower incomes           rate as native households.              immigrant households, were
than native-born Washington, D.C.,      For the taxes we calculated at all      federal: income, Social Security,
area households, they pay nearly        levels of government, immigrant         and Medicare. Another $1.6 billion
the same share of their incomes in      households paid $9.8 billion, or        (17 percent) were state taxes—
taxes. Some groups of                   17.7 percent of total taxes paid by     income, sales, automobile,
immigrants—the most educated            metropolitan-area residents in          cigarettes, and alcohol—and the
and highest earners—actually pay        1999–2000 ($55.2 billion).              remaining $1.1 billion (12 percent)
more in taxes than natives, on          Immigrants’ share of taxes was          were local taxes: property, income,
average. On the other hand, less-       virtually the same as their share of    sales, automobile, telephone, and
educated immigrants and those           the total population (17.4 percent),    utility. The distribution of taxes
without permanent legal status          but below their share of total          across federal, state, and local
have considerably lower incomes         income (19 percent) and of all          governments was similar for
and pay a lower share of their          households (21 percent).                natives. 1
incomes in taxes than natives.          Immigrant households paid a
                                        slightly lower share of their           1 Counties collect income taxes in Maryland,
This report estimates the taxes         incomes in taxes (28 percent) than      but the Virginia jurisdictions do not collect
paid by immigrants in the               native households (31 percent), in      income taxes; all income taxes collected in
Washington, D.C., area in 1999–         part because they had lower             the District of Columbia were categorized as
2000 and documents their                                                        state taxes. Virginia (but not Maryland)
                                        average incomes. Overall,               counties collect sales and automobile taxes.

Immigrant households in                         total income and of all                      with family members—had slightly
Fairfax and Montgomery                          households.                                  lower average incomes ($79,000)
                                                                                             and paid lower average taxes
counties—the two largest                                                                     ($27,000). Households headed by
jurisdictions—paid 60                           Immigrant households in
                                                                                             unauthorized immigrants (i.e.,
percent of all taxes paid by                    Northern Virginia and                        those who entered the country
the metropolitan area’s                         suburban Maryland pay a                      illegally or overstayed valid visas)
immigrant households.                           significant share of taxes                   or by immigrants with Temporary
In 1999—2000, immigrant                         collected by the states of                   Protected Status (those granted
households in Fairfax County paid               Virginia and Maryland.                       temporary work authorization
$3.2 billion in taxes, or 32 percent            In 1999—2000, immigrant                      based on war or natural disaster in
of the regional total. Immigrant                households in the Northern                   their home countries, mostly El
households in Montgomery County                 Virginia jurisdictions paid 8                Salvador) had the lowest average
paid $2.8 billion—28 percent of                 percent of all state taxes paid by           incomes ($53,000) and paid the
the total. Immigrants in the                    all households across the state of           lowest average taxes ($13,000).
District of Columbia and Prince                 Virginia: $810 million out of $9             Because many unauthorized
George’s County each paid about                 billion. Immigrant households in             immigrants are paid in cash and
$1 billion in taxes (10 percent of              suburban Maryland also paid 8                therefore do not pay Medicare,
the regional total in each                      percent of all taxes paid by                 Social Security, or federal, state, or
jurisdiction). Total tax payments               households across the state: $560            local income taxes, any change in
were much lower in other                        million out of $6.2 billion. 2 Thus,         immigration policy that would
jurisdictions because they had far              the taxes paid by immigrants in              grant them legal work
fewer immigrants. This pattern                  Northern Virginia and suburban               authorization would significantly
may change in the future,                       Maryland not only support local              raise their tax contributions. 3
however, as the population of                   government services but also
immigrants is growing most                      strongly support state services              Households headed by
rapidly in outer-ring suburban                  across both Virginia and Maryland.           immigrants from most
jurisdictions such as Loudoun                                                                regions of the world pay
County.                                         Households headed by                         taxes similar to those paid
                                                immigrants who are                           by native households.
Immigrants accounted for                        naturalized citizens pay                     In 1999, average incomes were
nearly one-quarter of all                       roughly the same taxes as                    higher for households headed by
taxes paid by households in                     households headed by                         immigrants from India
Fairfax and Montgomery                          native-born citizens, while
                                                                                             ($112,000), Europe ($100,000),
counties. In 1999—2000,                                                                      and the Middle East ($95,000)
                                                households headed by non-                    than for households headed by
immigrant households paid 24
percent of all taxes paid by
                                                citizens pay lower taxes. In                 native-born citizens. Households
households in Montgomery County                 1999, households headed by                   headed by immigrants from these
and 22 percent in Fairfax County.               naturalized citizens—immigrants              regions also paid higher taxes than
These two jurisdictions also had                who in most cases have been in               native households. Moreover,
the highest shares of immigrants                the United States at least five              households headed by immigrants
in their populations. Immigrant                 years and passed the citizenship             from South America and from
households paid 19 percent of                   exam—had an average income of                China, Vietnam, and other parts of
taxes in Arlington, 16 percent in               $91,000, above that for                      Asia had only slightly lower
the District of Columbia, 15                    households headed by native-born             incomes and paid only slightly
percent in Prince George’s County,              citizens ($88,000). Naturalized              lower taxes than native
and 13 percent in Alexandria and                citizen households paid roughly              households. The households with
Prince William County. In all                   the same amount in taxes as                  the lowest incomes were those
jurisdictions, the share of taxes               native households ($31,000).
paid by immigrant households was                Households headed by legal                   3 Our tax models assume that just over one-
only slightly below their share of              permanent residents—“green card”             half (55 percent) of unauthorized
                                                holders admitted as refugees, for            immigrants paid income, Social Security,
                                                employment, or to be reunified               and Medicare taxes, as many worked under
                                                                                             the table. We assume, however, that all
                                                                                             unauthorized immigrants paid the other
Some counties but not others in both states     2 When households in jurisdictions outside   forms of taxes not directly related to work
collect taxes on telephones and utilities, as   the Washington metropolitan area were        authorization. We also assume 100 percent
does the District of Columbia. For a full       included, the share of state taxes paid by   tax compliance for immigrants with
listing of taxes calculated at the federal,     immigrant households was 11 percent in       Temporary Protected Status, because they
state, and local levels, see table 1.           Virginia and 12 percent in Maryland.         had legal work authorization.
headed by immigrants from El           among native households this             that immigrants from English-
Salvador ($51,000), other Central      ratio was about four times lower         speaking countries and those who
American countries ($55,000),          ($11,000 versus $45,000). Thus,          learn English well contribute as
and sub-Saharan African countries      investments in adult education—          strongly to the tax base as native-
($56,000); these were also the         for both natives and immigrants—         born residents of the Washington
households with the lowest             will likely pay off in terms of higher   region. For those immigrants who
average tax payments. Despite          tax revenues in the future.              do not speak English well,
this variation by origin, all groups                                            investment in English language
of immigrants made significant tax     English-speaking immigrant               instruction will likely raise their
contributions in 1999–2000.                                                     future income and tax
                                       households pay higher taxes              contributions.
                                       than native households, but
Better-educated households
                                       households headed by                     Taken together, these findings
pay more in taxes,
                                       immigrants who speak little              show the importance of
regardless of whether they                                                      immigrants to the regional
                                       or no English pay much
are immigrant or native                                                         economy and tax base. As the
                                       lower taxes. In 1999—2000, the
households. The 1999 average           average income of English-
                                                                                share of immigrants in the region’s
income for households headed by                                                 population increases—from 18 to
                                       speaking immigrant households            20 percent between 2000 and
immigrants without a high school       was higher than that for native
degree was only $47,000—or less                                                 2004—their contributions to the
                                       households ($97,000 versus               tax base will continue to increase.
than one-half the income of            $88,000), and English-speaking
households headed by immigrants                                                 All immigrants pay substantial
                                       immigrant households paid higher         shares of their incomes in taxes,
with a four-year college degree        taxes on average ($34,000 versus
($103,000). The average income                                                  and in most cases these shares
                                       $31,000). Immigrant households           are close to those paid by natives.
for households headed by natives       where English was not the primary
without a high school degree                                                    The best-educated immigrants—
                                       language but the household head          those from India, Europe, and the
($39,000) was even lower, and          spoke English very well had
was only about one-third of that for                                            Middle East—actually earn more
                                       average income and tax payments          income and pay higher taxes than
households headed by natives with      nearly as high as those for native
college degrees ($122,000).                                                     natives. Continued flows of these
                                       households. On the other hand,           highly skilled immigrants into the
Average 1999–2000 taxes were           immigrant households where the
three times lower for households                                                region represent an economic and
                                       head did not speak English at all        fiscal bonus to the area’s state
headed by immigrant high school        had much lower average income
dropouts than households headed                                                 and local governments.
                                       ($41,000) and tax payments
by college-educated immigrants         ($11,000). These findings suggest
($12,000 versus $36,000), while

                       In 1999—2000, immigrant households in
                     Fairfax County paid $3.2 billion in taxes, or
                     32 percent of the regional total. Immigrant
                   households in Montgomery County paid $2.8
                   billion—28 percent of the total. Immigrants in
                    the District of Columbia and Prince George’s
                      County each paid about $1 billion in taxes
                        (10 percent of the regional total in each
Foreword                                       area do pay their fair share of        age and—with the exception of
                                               taxes, at least in comparison to       some unauthorized immigrants—
                                               natives. In fact, we find no           pay the same income and payroll
Few issues in the current debate               substantial differences in the         taxes as native-born citizens. Very
over comprehensive immigration                 average tax payments or share of       few are yet retired or collect
reform are as controversial and                income paid in taxes between           pensions, Social Security, or other
contested as the fiscal impacts of             natives and immigrants, with one       retirement benefits. Additionally,
illegal immigrants on the                      important exception: the               since the area is home to so many
communities within which they live             unauthorized population.               relatively well-paid immigrants,
and the United States as a whole.                                                     they in most cases pay income
The costs and benefits of                      Our analysis focuses on the            and payroll taxes at nearly the
immigrants have become a hot                   Washington metropolitan region, a      same rates as citizens.
political topic recently, owing in             region that emerged during the
part to the rapid rise in                      1990s as an important new              Immigrants pay several other
immigration—both legal and                     immigrant gateway and                  types of taxes as well, and these
illegal—over the past couple of                settlement area. Between 1990          other taxes tend to be more
decades. Costs such as public                  and 2000, the foreign-born in          important sources of revenue at
education, health care, and social             Washington grew by almost 70           the state and local level. Many
services are frequent topics of                percent, with much of that growth      immigrants own homes and pay
concern and debate when it comes               coming in the large, comparatively     state and local property taxes;
to recent immigrants (Camarota                 wealthy and close-in suburbs—          others—like all renters—pay
2004); however, the sizeable                   especially Fairfax and Montgomery      property taxes indirectly through
contributions of immigrants to the             counties (Price et al. 2005). This     their rent payments. Immigrants
economy and tax base are often                 rapid growth and suburbanization       consume the same goods and
underestimated or overlooked                   reflect nationwide patterns in         services as everyone else, and
(Kasarda and Johnson 2005). This               immigrant settlement and give          therefore also pay state and local
report does not offer estimates of             this report a salience beyond the      sales taxes. Many immigrants own
the overall economic impact of                 Washington area (Singer 2004).         cars and pay automobile taxes in
immigration on the Washington,                                                        the jurisdictions that collect them.
D.C., area; instead, it focuses on             Moreover, the report is being          In this report we sum up all taxes
one element of immigrants’                     released at a time of intense          paid by immigrants and natives in
impact that is very important for              political ferment as Congress is       the national capital area, including
local officials and policymakers:              debating reforms that could            income, Medicare, and Social
their tax contributions. Because               increase the number of both            Security taxes paid to the federal
immigrants have become such a                  temporary and permanent                government as well as income,
large population, their tax                    immigrants entering the country,       property, sales, automobile,
payments have become a                         place a significant share of the       tobacco, alcohol, and utility taxes
significant part of state and local            unauthorized population on a path      paid to the District of Columbia,
budgets as well as federal tax                 to legal status, and stiffen federal   Maryland, Virginia, and most major
revenues generated in the area.                and state enforcement of the           suburban jurisdictions. While not
                                               nation’s immigration laws. One         exhaustive of all taxes and fees,
A recent survey from the Pew                   question underlying the debate is      our methodology captures the vast
Hispanic Research and Hispanic                 whether immigrants pay their own       majority of taxes paid by
Center (Kohut and Suro 2006)                   way—and the degree to which            individuals in the metropolitan
finds 56 percent of respondents                native taxpayers are subsidizing       area. 5
nationwide believe that                        their presence. Again, our analysis
immigrants do not pay their fair               suggests that immigrants in the
share of taxes. Only one-third of                                                     Several general points that
                                               Washington metropolitan area are       emerge from this study bear
respondents believe that                       paying their own way and are not
immigrants do so. 4 But our                                                           emphasizing:
                                               heavily subsidized by the native-
analysis in this report suggests               born population.
that immigrants in the                                                                • All immigrant groups, regardless
Washington, D.C., metropolitan                                                          of legal status, pay substantial
                                               The central purpose of this report
                                               is to estimate the amount of taxes
                                               paid by immigrants living in the
4 The survey also had a subsample in the                                              5 Where possible, we adjust our tax
Washington, D.C., metropolitan area, where
                                               metropolitan area. In the              estimates to match reported total individual
46 percent of respondents said that            Washington, D.C., area, as             tax contributions across jurisdictions. For a
immigrants do not pay their fair share in      nationally, immigrants are             full list of taxes included in our analysis and
taxes, but 41 percent said they believe that   predominantly of young working         how they are calculated, see the
immigrants do pay their fair share.                                                   methodology section of this report.
amounts of federal, state, and      Institute studies of taxes paid by     units) using estimates of taxable
  local taxes.                        immigrants in New York State and       income based principally on the
                                      Los Angeles (Passel and Clark          census but augmented to account
• Contrary to public perception       1998; Clark and Passel 1993). We       for income undercounted by the
  noted above, on average,            start with detailed data on            census. Property and consumption
  immigrant households paid           individual households drawn from       tax estimates are modeled at the
  roughly the same share of taxes     the Census 2000 5-Percent Public       household level based on income
  as they represent of the total      Use Microdata Sample—the largest       data from the census and
  regional population. Since there    public use data set with               consumption models developed
  are so many immigrants in           information on U.S. households         from the Consumer Expenditure
  suburban Maryland and               and their income and assets. We        Survey (CES). Consumption taxes
  Northern Virginia, immigrants       use techniques pioneered by the        we estimate at the state and local
  living in these areas provide       Urban Institute and Pew Hispanic       level—depending on the
  substantial support for services    Center to assign legal status to the   jurisdiction—include general sales,
  across the states of Maryland       immigrants in the data set, such       automobile, alcohol, and tobacco.
  and Virginia through their state    as naturalized citizens, legal         The tax estimates for all three
  tax payments.                       permanent residents, refugees,         categories are aggregated to
• Tax payments are correlated         legal temporary migrants,              households and reported at this
  with citizenship, legal status,     unauthorized migrants, and             level.
  education levels, and English-      immigrants with Temporary
  speaking ability. Hence,            Protected Status.                      Income and tax estimates are
  immigrants who are                                                         reported for geographic areas
  unauthorized, who have less         We estimate the tax contributions      identifiable in the census data that
  than a high school education,       for each household based on the        correspond to political jurisdictions
  and who are limited English         household’s income, demographic        within the Washington, D.C.,
  proficient pay lower taxes on       composition, and other                 metropolitan area. The District of
  average than other immigrant        characteristics, including home        Columbia is covered as a single
  populations. Offering a path to     ownership, rent/mortgage               area in the study. We report taxes
  legalization and increasing         payments, other housing                for the following Virginia
  educational attainment and          expenses, and automobile               jurisdictions: Alexandria City,
  English skills would probably       ownership. We adjust the initial       Arlington County, Fairfax County
  increase these groups’ fiscal       estimates to account for               (including the cities of Fairfax and
  contributions.                      deficiencies in census data (such      Falls Church), Fredericksburg City
                                      as underreporting of income and        (including Spotsylvania and
• While the national capital region   under-sampling of immigrants)          Culpeper counties), Loudoun
  is in many ways representative      and to ensure that the total tax       County (including Fauquier, Clarke,
  of the nation as a whole, it is     contributions we estimate for each     and Warren counties), Stafford
  also distinct in some ways.         jurisdiction agree with the reported   County (including King George
  Unlike many metropolitan areas,     amounts of taxes collected. Using      County), and Prince William
  no single national origin group     this method, we are able to            County (including Manassas and
  dominates the immigrant             develop estimates of several           Manassas Park cities). The
  population (as Mexicans do in       different taxes paid by immigrants     Maryland areas reported are
  California and Texas, for           for each major jurisdiction in the     Prince George’s County,
  example). Many members of the       national capital region.               Montgomery County, Frederick
  region’s largest group—                                                    County, Charles County, and
  Salvadorans—have been granted       We estimate three broad                Calvert County (including St.
  what is known as Temporary          categories of tax payments, and        Mary’s County).
  Protected Status, which             our estimates are developed for
  contemplates their eventual         individuals, families, and             The main goal of the study is to
  return to their home country but    households depending on the            estimate all types of taxes in all
  also authorizes them for work       appropriate unit for each tax.         jurisdictions for households
  and enhances their tax              Payroll taxes (Social Security and     headed by immigrants, and to
  contributions.                      Medicare) are estimated on an          compare their tax payments with
                                      individual basis from information      payments of households headed
Approach                              on wage and salary income as well      by natives. We also calculate tax
                                      as self-employment income.             payments separately for
                                      Income taxes (federal, state, and      immigrant households according
This study adapts analytic            local) are estimated for “filing       to their citizenship and legalstatus,
methods used in previous Urban        units” (essentially nuclear family     and country or region of birth.

Demographics of the
National Capital
Region’s Foreign-Born

The Washington, D.C.,
metropolitan area is home to over
1 million immigrants, who
composed one-fifth of the area’s
total population in 2004. The
metropolitan area is relatively
affluent and boasts a strong
economy that attracts large                              Between 2000 and 2004, the area’s
numbers of immigrants for jobs at
both the high- and low-skilled ends
of the labor market. As we will                        total population grew by 21 percent or
show in this report, immigrants in
the Washington area come from
more diverse countries of origin
                                                               about 1 million—from 4.8 to 5.8
than is the case nationally, and a
relatively high share of the region’s                              million—but the foreign-born
immigrants come from origins
with above average incomes.
                                                          population grew much faster—by 36
While we provide more recent data
on the demographics of
immigrants, we use the 2000 U.S.                                percent, from 850,000 to 1.16
Census to calculate taxes for
several reasons. First, the census
provides the most recent data with
                                                          million. Immigrants represented 18
comprehensive coverage and large
samples of immigrant                                    percent of all the metropolitan area’s
populations. 6 Second, the census
includes geographic detail that
permits us to examine the District                       residents in 2000 and 20 percent in
of Columbia and most major
suburban jurisdictions in Maryland
and Virginia separately. Third,
using the census, we can
disaggregate income and taxes
paid for several different country
and region-of-origin groups within
the area’s jurisdictions. Fourth, the
census offers detail on income,
housing characteristics, and
automobile ownership—all                   immigrants according to their
important inputs for our tax               status, such as naturalized
estimation models. Finally, we             citizens, temporary legal residents,
have assigned legal status to non-         legal permanent residents,
citizen immigrants in the census           unauthorized migrants, and
data, allowing us to estimate taxes        refugees (for definitions of these
paid by different groups of                groups, see figure 1). 7

6 Nonetheless, our estimates build in an
                                           7For a full description of our legal status
assumed undercount of up to 10 percent     assignment methodology, see the
for certain immigrant groups in the 2000   methodology section of the report.
Figure 1: Definitions of Citizenship and Legal Status Categories Used in the Report

•   Legal permanent residents (LPRs) are legally         •   Unauthorized migrants do not possess a valid
    admitted to live permanently in the United               visa or other immigration document, because
    States through qualifying for immigrant visas            they entered the United States illegally (usually
    abroad or adjustment to permanent resident               across the Mexican border), stayed longer than
    status in the United States. LPRs are issued             their temporary visas permitted, or otherwise
    documentation commonly referred to as “green             violated the terms under which they were
    cards,” although the cards have not been green           admitted. A small number eventually adjust
    for many years. Almost all LPRs are                      their status and attain legal residency after a
    “sponsored” (i.e., brought to the United States)         sponsorship petition has been filed by a
    by close family members or employers.                    relative, spouse, or employer.
•   Refugees and asylees are granted legal status        •   Temporary protected status (TPS) was granted
    due to persecution or a well-founded fear of             to several hundred thousand migrants who fled
    persecution in their home countries. Refugee             wars and natural disasters during the 1980s
    status is granted before entry to the United             and 1990s. Most TPS migrants entered the
    States. Refugee status may be granted to a               country illegally or overstayed valid visas—and
    group of persons, although each individual               thus were once part of the unauthorized
    must also qualify for the status. Asylees must           population—but later applied for and received
    meet the same criteria regarding fear of                 TPS. A large majority of TPS migrants are from
    persecution. Unlike refugees, asylees usually            El Salvador, although small numbers of
    arrive in the country without authorization (or          migrants from other Central American and
    overstay a valid visa), later claim asylum, and          African countries have also received TPS.
    are granted their legal status while in the
    United States. After one year, refugees and
    asylees are generally eligible for permanent
    residency, and then for naturalization five years    Citizens
    after that. Almost all “adjust” their status and     •   Naturalized citizens are former LPRs who have
    become LPRs, although they retain certain                become U.S. citizens through the naturalization
    rights—for instance, eligibility for major federal       process. Typically, LPRs must be in the United
    benefit programs—by virtue of their designation          States for five or more years to qualify for
    as refugees or asylees. In this report, we               naturalization, although immigrants who marry
    categorize all immigrants who enter as                   citizens can qualify in three years, and some
    refugees or are granted asylum as refugees,              small categories qualify even sooner. LPRs
    even after they become LPRs or citizens.                 must take a citizenship test—in English—and
•   Temporary legal residents have been admitted             pass background checks before qualifying to
    to the United States for a temporary or                  naturalize.
    indefinite period, but have not attained             •   Native-born citizens. All people born in the
    permanent residency. Most are people who                 United States (including the children of non-
    have entered for a temporary period, for work,           citizen parents) are granted birthright
    as students, or because of political disruption          citizenship, regardless of their parents’
    or natural disasters in their home countries.            birthplace or legal status. Native-born citizens
    Some seek to stay for a permanent or                     also include people born in Puerto Rico, U.S.
    indefinite period and have a “pending” status            Virgin Islands, other U.S. territories and
    that allows them to remain in the country and            possessions, and those born in foreign
    often to work but does not carry the same                countries to a U.S. citizen parent.
    rights as legal permanent residency.

As the foreign-born share of the                      for 13 percent. Immigrants from
Trends in the Size of the                      region’s population increases, so                     Africa and the Middle East made
                                               will their tax and other economic                     up 15 percent and those from
Region’s Foreign-Born                          contributions. Since we use 2000                      Europe and Canada the remaining
Population                                     data to develop our tax estimates,                    13 percent (for a detailed list of
                                               and the immigrant population has                      origins for the region’s immigrants,
                                               grown by more than one-third                          see appendix table 1). Nationally,
Over the past few years the                    since that time, our estimates                        about one-half of immigrants
Washington, D.C., area has                     likely underestimate substantially                    come from Latin American and
experienced rapid growth in its                immigrants’ current tax                               one-quarter from Asia, but shares
total population, and the share of             contributions.                                        from Africa and the Middle East
the population composed of                                                                           are much lower (under 5 percent).
immigrants has also risen.                                                                           One important contrast between
Between 2000 and 2004, the                     Origins of the Region’s
                                                                                                     the Washington, D.C., region and
area’s total population grew by 21             Immigrants                                            the nation is that Mexico is the
percent or about 1 million—from                                                                      most common sending country
4.8 to 5.8 million—but the foreign-                                                                  nationally (30 percent), while El
born population grew much                      The national capital area’s foreign-
                                               born population is somewhat more                      Salvador is the most common
faster—by 36 percent, from                                                                           country regionally. Another
850,000 to 1.16 million.                       diverse than the immigrant
                                               population nationally, and this                       important difference is the
Immigrants were 18 percent of all                                                                    relatively high shares of Asian,
the metropolitan area’s residents              diversity has important
                                               implications for immigrants’                          Middle Eastern, and African
in 2000 and 20 percent in 2004.                                                                      immigrants in the area. As we
The Washington, D.C., area also                family income and tax
                                               contributions. In the Washington,                     shall see later in the report, Asian
has a higher share of immigrants                                                                     and Middle Eastern immigrants
than the overall U.S. population               DC, area, the two largest source
                                               regions for immigrants were Latin                     earn relatively high incomes, and
(12 percent in 2004), but the                                                                        so their overrepresentation in the
region’s foreign-born share is lower           America (40 percent) and Asia (32
                                               percent) in 2000 (figure 2). Central                  Washington, D.C., area is part of
than in such major immigration                                                                       why the region’s immigrant
gateway cities such as New York,               America accounted for 24 percent
                                               of the region’s immigrants, and El                    population is relatively affluent
Los Angeles, and Miami.                                                                              and the tax base relatively strong.
                                               Salvador was the source country

                                Figure 2: Region of Origin for Washington, DC,
                                    Metropolitan Area Immigrants, 2000

Africa/Middle East 15%                                                                                 Latin America 40%
              128,000                                                                                  337,000

               Asia 32%                                                                                           El Salvador 13%
                277,000                                                                                           111,000

                                                                                                                  Other Central America 11%

   Europe/Canada 13%                                                                                              Other Latin America 16%
             114,000                                                                                              136,000

                                    Total of 857,000 Foreign-Born in April 2000
                            Source: Urban Institute and Pew Hispanic Center analysis of U.S. Census data, 2000.
Citizenship and Legal
Status of the Region’s
                                              Figure 3: Citizenship and Legal Status of Washington, DC,
Washington, D.C.’s immigrant                             Metropolitan Area Immigrants, 2000
population includes a mix of legal
and unauthorized immigrants, as
well as those who have become
U.S. citizens (for definitions of the
citizenship and legal status groups
analyzed in this report, see figure
1). In 2000, 26 percent of the
region’s immigrants were
unauthorized immigrants and
immigrants from Central America
who had Temporary Protected
Status (figure 3). This share was
near the national average in 2000
(27 percent). Unauthorized
immigrants are those who enter
the United States illegally, overstay
valid temporary visas, or otherwise
violate immigration laws. The U.S.
Congress granted Temporary
Protected Status (TPS) to
immigrants from Central America                                                        Unauthorized Migrants 22%
who fled civil wars and natural                                                                          195,000
disasters, mostly during the
1980s. TPS was renewed for about
300,000 immigrants—mostly from                                                  Legal Permanent Residents 27%
El Salvador and Honduras—in early                                                                    235,000
2006 (U.S. Citizenship and
Immigration Services 2006). The
share of immigrants who have TPS                                        Temporary Protected Status 4%
is relatively high in Washington,                                       35,000
D.C., because the region has so
many immigrants from Central
                                                                        Temporary Legal Residents 5%
America. 8 Nonetheless, there is a
significant unauthorized
population—i.e., those lacking any
form of legal documentation—in                                          Refugees and Asylees 8%
the metropolitan area, and the                                          70,000
vast majority are immigrants from
Latin American countries.
                                                                        Naturalized Citizens 32%

                                                            Total of 870,000 Foreign-Born in April 2000

8 We estimated that 54 percent of all the
immigrants from El Salvador we assigned
“unauthorized” status actually had TPS.
Thus, out of the 65,000 “unauthorized”       Source: Urban Institute and Pew Hispanic Center tabulations from Census 2000 5-Percent Public
migrants from El Salvador in the             Use Microdata Sample with an adjustment for legal and unauthorized immigrants omitted from
Washington, D.C., metropolitan area in       the Census.
2000, we consider 35,000 to have TPS and
the remaining 30,000 to be truly             Note: The data displayed in this chart are adjusted for estimated undercount of immigrants in the
unauthorized. There were very small          census and therefore vary substantially from the official census data used elsewhere in this
numbers of unauthorized migrants from        report.
other countries, and so we did not develop
an estimate of the TPS population for any
other country.
Figure 4: Foreign-born Share of Total Population by Jurisdiction, Washington, DC, Metropolitan
                                         Area, 2000


                                                                                                                               25 %

                                                                                                                                                                                                                   Average for
                                                                                                                                                                                                                   Washington DC Area

                            16 %                                                                                                                                                            16 %

                                                                                                                                                                                                             14%   National Average

                                                                                   7%                                                                                              7%

                                                                                               5%         5%                                                        5%
                             District of Columbia


                                                                 Prince Georges










                                                                                                                                                                                            Prince William

Source: Urban Institute and Pew Hispanic Center tabulations from Census 2000 5-Percent Public Use Microdata Sample with an adjustment for legal and
unauthorized immigrants omitted from the Census.

Note: Counties are grouped according to 2000 Census Public Use Microdata Areas. Some groups of counties include counties outside the official
Washington, DC, metropolitan statistical area.

The share of immigrants who were                                                              fear of persecution—or temporary                                                              most affluent inner-ring suburbs,
legal permanent residents (LPRs)                                                              residents such as students and                                                                slightly less concentrated in the
in 2000 (27 percent) was nearly                                                               temporary workers (for a detailed                                                             District of Columbia and Prince
the same as the undocumented                                                                  description of the citizenship and                                                            George’s County, and least
share and again matched the                                                                   legal status of the population and                                                            concentrated in outer-ring suburbs.
national pattern. LPRs are “green                                                             households by jurisdiction, see                                                               In 2000, immigrants were slightly
card” holders or immigrants who                                                               appendix table 2). Many of the                                                                more likely than the native-born to
have been legally admitted to the                                                             region’s students and temporary                                                               live in suburban Virginia, but
country and can apply for                                                                     workers come from Asian                                                                       slightly less likely to live in the
citizenship after several years. A                                                            countries such as India and China.                                                            District of Columbia. About the
higher share of the region’s                                                                                                                                                                same share of immigrants and
immigrants (32 percent) were                                                                  Distribution of                                                                               natives (44 percent) lived in
naturalized immigrants—those                                                                                                                                                                suburban Maryland (appendix
LPRs who had already applied for                                                              Immigrants across the                                                                         table 2). The vast majority of
and received citizenship. Finally, in                                                         Region                                                                                        immigrants (70 percent) lived in
the national capital area as                                                                                                                                                                the three most populous suburban
nationally, very small shares of                                                                                                                                                            counties: Fairfax (29 percent),
immigrants were refugees—those                                                                The foreign-born are most highly                                                              Montgomery (27 percent), and
who have been admitted based on                                                               concentrated in Washington, DC’s                                                              Prince George’s (14 percent).
Fairfax and Montgomery County                 District of Columbia, Prince                  Immigrant households also had
each had more than 100,000                    George’s County, eastern                      more children on average than
households headed by                          Montgomery County, and parts of               native households: 0.8 versus
immigrants; Prince George’s                   Fairfax County. More affluent                 0.6. 11 Households headed by
County was home to 49,000                     immigrants, however, are                      unauthorized or TPS immigrants
immigrant households. The District            dispersed throughout the more                 were the largest, with an average
of Columbia also had a high                   expensive suburban areas, with                3.6 persons (2.5 adults and 1.1
number of immigrant households:               the largest numbers in Fairfax                children). But all other types of
39,000. The absolute number of                County, Montgomery County, and                immigrant households were also
immigrant households was much                 Arlington County. Immigrant                   larger on average than native
lower in most other jurisdictions.            populations are growing most                  households.
As we shall see later in the report,          rapidly, however, in counties
total taxes paid by immigrant                 farther out in the metropolitan               Larger household size means that
households follow a similar                   area, for instance Loudoun, Prince            immigrant households have more
pattern, with the vast majority of            William, and Howard. It is likely             earners than native households on
taxes generated in Fairfax,                   that the number of immigrants                 average and that their total
Montgomery, and Prince George’s               and their tax payments have                   incomes receive a substantial
counties as well as the District of           grown significantly everywhere                boost from the additional earners.
Columbia.                                     since 2000, the year on which our             In 1999, immigrant households in
                                              tax estimates are based. But the              the Washington metropolitan area
The share of households headed                number of immigrants has grown                had an average income of
by immigrants in 2000 was                     most rapidly in the outer-ring                $78,000, about 89 percent of the
highest and exceeded the                      counties, where tax payments of               average income for native
metropolitan-area average in                  immigrants have also likely grown             households ($88,000). 12 But
inner-ring suburban towns and                 the most since 2000. 10                       average income per person for
counties: Montgomery County (31                                                             immigrant households was just
percent), Fairfax County (29                  Immigrant Household                           $24,000, only 69 percent of the
percent), Arlington (28 percent),                                                           average for natives ($36,000).
and Alexandria (25 percent),                  Size and Income
Prince George’s County (17                                                                  There is substantial variation in
percent) and the District of                  The taxes paid by immigrant                   the average incomes of immigrant
Columbia (16 percent) and had                 households are determined in                  households by their citizenship
foreign-born household shares                 large part by their incomes, which            and legal status. Despite their
below the metropolitan average of             in turn are affected strongly by the          higher average size, households
21 percent (figure 4). All the outer-         number of wage earners in the                 headed by unauthorized
ring counties except Prince                   household. Immigrant households               immigrants had the lowest
William had foreign-born                      are generally larger than native              average income ($53,000), while
household shares below the                    households—in the Washington,                 income for households headed by
national average of 14 percent. 9             DC, area as nationally—and they               naturalized citizens ($91,000) was
                                              include more adults as well as                actually higher than that for native
Other studies have documented                 more children on average. The                 households (figure 5). Although
the slowing growth of foreign-born            average size of immigrant                     naturalized citizen households had
population inside the District of             households in the Washington                  a total income that was 104
Columbia and inner-ring suburbs               metropolitan region in 2000 was               percent of the average for native
such as Arlington and Alexandria,             3.2 persons, 29 percent higher                households, their average income
along with the rising share of                than the average size of native               per person ($31,000) was only 87
immigrants in the outer-ring                  households (2.5 persons). There               percent of the average for native
suburbs (Singer 2003). Due mostly             were an average of 2.3 adults per
to the cost of housing, less affluent         immigrant household, compared
immigrants tend to concentrate in             with 1.8 adults in native                     11 These averages include households

less expensive housing within the                                                           without children, so the average for
                                              households (appendix table 3).                households with children would be
                                                                                            substantially higher.
                                                                                            12 In our analysis we calculated mean
9 The outer-ring suburban counties were       10 Unfortunately, there are no data           income instead of median income. Mean
grouped using 2000 Census Public Use          comparable to the 2000 Census that would      income is necessary in order to calculate
Microdata Areas (PUMAs), and in some          enable us to develop more recent tax          the average share of taxes paid by
cases these PUMAs include counties            estimates for all the jurisdictions in this   households (which is equivalent to mean
outside the official Washington, DC,          report. The Census Bureau has been            taxes paid divided by mean income). The
metropolitan statistical area. We drew our    conducting the American Community Survey      mean income is substantially higher than
boundaries based on PUMAs to be as            (ACS) every year since 2002, and the data     the median income for all households,
inclusive as possible. For a full list of     are directly comparable to the 2000           regardless of nativity, because the highest
counties and groups of counties included in   Census. County and city-level estimates       income households are weighted more
the report, see the methodology section of    from the ACS will not be available until      heavily when calculating the mean than the
this report.                                  2007 or 2008, however.                        median.
Figure 5: Mean Household Income by Household Nativity, Citizenship and Legal Status,
                Washington, DC, Metropolitan Area, 1999 (Thousands of Dollars)

              Native Born                                                                         $8 8

             Foreign Born                                                                 $7 8

    Naturalized Citizens                                                                             $91

       Legal Permanent
        Legal Temporary                                                           $6 7
 Unauthorized and TPS                                                  $53

Source: Urban Institute and Pew Hispanic Center tabulations from Census 2000 5-Percent Public Use Microdata Sample with an adjustment for legal and
unauthorized immigrants omitted from the Census.

Note: Income figures are reported for the year before the census was taken (1999) and are shown here rounded to the nearest thousand dollars.

households per person (appendix                      adults plus 1.4 children).                            that are higher than those of
table 3). For all types of immigrant                 Households headed by immigrants                       native households (figure 6). In
households, the ratio of total                       from other Central American                           1999, average incomes were
income to native households is                       countries—including Mexico—were                       higher than natives’ incomes for
higher than the ratio of personal                    the next largest (4.2 persons),                       households headed by immigrants
income to natives, meaning that                      followed by Vietnamese                                from India ($112,000), Europe and
the larger number of adult workers                   households (3.7 persons) and                          Canada ($100,000), and the
in immigrant households boosts                       South American households (3.3                        Middle East ($95,000). At the
their income regardless of                           persons). Latin American and                          other end of the spectrum, the
citizenship and legal status.                        Asian immigrant households were                       average income was only about
Nonetheless, unauthorized and                        the largest, followed by African,                     one-half as high for households
TPS households have by far the                       Middle Eastern, and, finally,                         headed by immigrants from El
lowest incomes—mostly because                        European and Canadian                                 Salvador ($51,000), other Central
unauthorized immigrants earn the                     households. European and                              American countries, ($55,000)
lowest wages (Capps et al. 2003).                    Canadian households were                              and sub-Saharan African
Legal temporary migrant                              actually slightly smaller than                        ($56,000). The tremendous
households also have relatively                      native households (2.4 versus 2.5                     variation in income will also be
low incomes, because about one-                      persons on average). Even                             reflected in the amount of taxes
half of the temporary residents are                  European and Canadian                                 paid by immigrants from different
students and only work part time,                    households had more adults on                         parts of the world, as we will see
often at relatively low-wage jobs.                   average than native households                        later in this report. For all
                                                     (1.9 versus 1.8); their lower total                   immigrants from all regions of the
Immigrants from all regions of the                   household size was due to fewer                       world, however, the ratio of
world except for Europe and                          children.                                             household income to natives’
Canada live in households that are                                                                         income is substantially higher than
larger than native households                        There is also substantial variation                   the ratio of per person income,
(appendix table 4). In 2000,                         in household income by region of                      due to higher average household
households headed by immigrants                      birth; in fact, some European and                     size.
from El Salvador were the largest,                   some Asian immigrant groups
with 4.4 persons on average (3                       have average household incomes
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