Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area
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Civic Contributions: Taxes Paid by Immigrants in the Washington, DC, Metropolitan Area May 2006 By Randy Capps, Everett Henderson The Urban Institute Jeffrey S. Passel Pew Hispanic Center Michael Fix Migration Policy Institute
Contents 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- 2000 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- 2000 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, 2000 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
Acknowledgments 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 draft. 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 timelines. 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 funders.
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. 5
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 7 jurisdiction).
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. 9
Demographics of the National Capital Region’s Foreign-Born Population 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, 2004. 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. Census.
Figure 1: Definitions of Citizenship and Legal Status Categories Used in the Report Non-citizens • 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. 11
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% 90.000 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 Immigrants 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 60,000 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% 280,000 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. 13
Figure 4: Foreign-born Share of Total Population by Jurisdiction, Washington, DC, Metropolitan Area, 2000 31% 29% 28% 25 % Average for 21% Washington DC Area 17% 16 % 16 % 14% National Average 12% 7% 7% 5% 5% 5% District of Columbia Montgomery Prince Georges Frederick Calvert Charles Arlington Alexandria Fairfax Loudoun Fredericksburg Stafford 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. 15
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 $79 Residents Legal Temporary $6 7 Migrants 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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