Author: Staff Reporter

Immigration remains a powerful driver of the American economy, fueling growth, innovation, and economic resilience across sectors. Immigrants not only create jobs and raise wages but also reduce inflation, increase productivity, and contribute significantly to government revenues. Their presence enhances nearly every segment of the U.S. economy, particularly in critical areas such as healthcare, agriculture, construction, and rapidly developing fields like artificial intelligence and semiconductors.

This article highlights findings from various studies, including original research by FWD.us, showing how immigration delivers substantial benefits to the United States. As the brief notes, “Immigration will contribute to a $7 trillion increase in GDP and $1 trillion in additional government revenue over the next decade.”

Immigration is one of the most effective means of expanding and strengthening the U.S. economy. As the number of people purchasing goods and services rises, so too does the country’s gross domestic product (GDP), a primary measure of economic vitality. With this rise in demand, new businesses emerge, leading to job creation. One study found that immigrants are responsible for 17% of the U.S. GDP, which equals a staggering $3.3 trillion.

Because many immigrants are of working age and often possess strong entrepreneurial qualities, increased immigration leads to a rise in per capita GDP—essentially improving the average income per person. This translates to a higher standard of living and broader prosperity for the country.

Immigrants also play a critical role in funding public services through taxes. Every year, they contribute nearly $525 billion in taxes across federal, state, and local levels. These figures include contributions from refugees, asylum seekers, and undocumented individuals, who collectively pay close to $50 billion annually in taxes, despite having limited access to public benefits. These tax contributions help sustain key programs such as Social Security and ensure continued investment in schools, infrastructure, and other essential services.

The Congressional Budget Office (CBO) further supports these findings. In a report released in February, the CBO director stated that recent immigration trends have reduced the federal deficit. Over the next ten years, immigration is expected to generate a $7 trillion boost in GDP and contribute an additional $1 trillion in government revenue.

By contrast, limiting immigration would lead to a smaller economy, fewer jobs, and a reduction in the availability of goods and services. It could also undermine the country’s global economic leadership. The article warns that restricting immigration would leave the U.S. “smaller, poorer, and weaker.”

Immigrants are crucial to addressing workforce shortages and curbing inflation. As of 2022, immigrants accounted for 18.1% of the American labor force—a figure that continues to rise. Given that immigrants are more likely to be of working age, they help fill key gaps in industries facing chronic labor shortages.

In healthcare alone, immigrants make up over 18% of the workforce. This includes 26% of all physicians, 16% of registered nurses, and a striking 40% of home healthcare aides. These workers help alleviate the severe staffing crises in healthcare, many of which worsened during the COVID-19 pandemic.

Moreover, newly arrived immigrants have been instrumental in resolving post-pandemic labor shortages and restoring disrupted supply chains. Many of these workers entered the U.S. through humanitarian parole and have played a pivotal role in stabilizing the economy.

Immigrants also have a strong presence in science, technology, engineering, and mathematics (STEM) occupations. Nearly 20% of all STEM workers are foreign-born. Additionally, international students make up about 40% of advanced STEM degree recipients in American universities. In areas like artificial intelligence and semiconductor manufacturing, their expertise is essential to keeping the U.S. at the forefront of innovation.

Research by FWD.us shows that immigration can ease inflation by closing labor market gaps that would otherwise drive consumer prices upward. In recent years, the increase in immigration has played a significant role in slowing inflationary trends and maintaining steady economic growth.

Immigrants are not only workers but also job creators. They establish new businesses at twice the rate of native-born Americans. In fact, 45% of Fortune 500 companies in 2023 were founded by immigrants or their children. Immigrants also founded 55% of U.S. startups that have achieved valuations of $1 billion or more.

There’s no evidence that immigrant workers displace native-born workers. On the contrary, immigration is linked to higher employment levels among Americans born in the U.S. While fears that immigration depresses wages are common, data shows minimal impact—and in many fields, especially those requiring high skills, immigrants actually help increase productivity and wage growth. Attempts to limit immigration often lead to outsourcing and job relocation to other countries, rather than improving employment prospects domestically.

Immigrants also significantly enhance American innovation. Despite making up only 16% of inventors in the U.S., they account for nearly a quarter of the country’s innovation output. Their contributions drive technological progress not only in the U.S. but globally.

Many of these innovators began their American journey as international students. During the 2022–2023 academic year alone, international students added $40.1 billion to the U.S. economy and supported more than 368,000 jobs.

Beyond the economy, immigration is also a demographic necessity. The U.S. population grew at its slowest rate between 2010 and 2020 since the 1930s, and the birth rate has continued to decline. Immigration helps counteract these trends by expanding the working-age population and encouraging family growth within the U.S. Immigrants also play vital roles in sectors that serve an aging population, particularly healthcare.

To maintain population stability and economic growth, the U.S. must raise immigration levels. FWD.us research indicates that increasing immigration by 50% annually would raise the working-age population by about 13% by 2040, providing a solid foundation to meet labor demands and support economic expansion.

This is especially crucial in rural America. Between 2000 and today, 77% of rural U.S. counties have seen a decline in working-age residents, which threatens local economies and reduces access to essential services. The study suggests that welcoming just 200 immigrants annually in these counties could reverse population decline in 71% of them by 2040.

Looking ahead, it is clear that immigration is not just beneficial but essential to America’s economic future. The data overwhelmingly supports the argument that immigrants help make the U.S. stronger and more prosperous. As the report concludes, “It is vital that U.S. policymakers should work to preserve and enhance the benefits of immigration by building new legal avenues and increasing opportunities for newcomers to support themselves, participate in their local communities, and contribute to the United States’ success and prosperity.”

Ajay, an Indian American engineer, has lived in the United States for over 35 years. His elderly mother, aged 90, continues to reside in Mumbai, India, where she is looked after by a nurse and domestic help. Though she used to visit Ajay, declining health and the need for constant care led her to stay in India permanently. For Ajay, this has brought emotional strain as well as logistical and financial burdens, as he juggles the responsibilities of long-distance caregiving.

Like many others in the Indian diaspora, Ajay sends money monthly to support his mother’s needs, including salaries for her caregivers. He uses platforms like Remitly for these transactions. However, a newly proposed remittance tax in the U.S. may complicate this simple act. The looming legislation could soon impact how immigrants like Ajay manage cross-border financial responsibilities.

Hidden within the sweeping legislative proposal titled the “One Big Beautiful” bill is a provision that threatens to reshape the landscape for foreign remittances. It calls for a 3.5% tax on money sent abroad by foreign workers, including those holding green cards and temporary work visas such as the H-1B. For a country like India—which leads the world in remittance receipts—this could trigger serious financial and social repercussions.

Though U.S. citizens such as Ajay are officially exempt from the proposed tax, there’s a caveat. They will still be required to verify their citizenship status every time they send money, a new bureaucratic hurdle in what has traditionally been a routine transaction. More worryingly, this added requirement may open the door to privacy breaches and fraudulent schemes.

During a June 6 briefing hosted by American Community Media titled Taxing Remittances—A New Front in War on Immigrants, experts expressed concern about the tax’s wide-ranging effects. They emphasized that in many lower-income nations, remittances account for up to 30% of GDP. Advocates highlighted the regressive nature of this tax, calling it a form of double taxation. “Millions of undocumented immigrants already pay income taxes,” they noted. Imposing another layer of taxation may prompt people to explore risky, informal channels for sending money home.

India’s economy relies heavily on remittance flows. According to the Migration Policy Institute, many of the 2.9 million Indian immigrants living in the U.S. regularly transfer money to support families, fund businesses, or repay student loans. The Reserve Bank of India reports that India’s remittances rose from $55.6 billion in 2010-11 to $118.7 billion in 2023-24, helping to offset half the country’s goods trade deficit and even exceeding foreign direct investment levels.

India has topped the global remittance chart since 2008. The World Bank places India’s share at 14% of worldwide remittance inflows in 2024, up from 11% in 2001. Projections from the Reserve Bank of India suggest that remittances may reach $160 billion by 2029. Historically, these inflows have made up about 3% of India’s GDP. A BBC report further states that remittances in India serve multiple roles: from covering basic household expenses to investing in property, gold, or small businesses, according to the Centre for WTO Studies in Delhi.

A reduction in remittance flows could result in less saving and reduced investment activity. Families might be forced to scale down future-oriented spending and prioritize essentials like healthcare, food, and education instead.

The “One Big Beautiful Bill,” introduced by Republicans, is a wide-ranging legislative proposal that tackles tax reforms, spending limits, and border security. Nestled within its more than 1,000 pages is the 3.5% remittance tax clause.

Ariel Ruiz Soto, Senior Policy Analyst at the Migration Policy Institute, explained during the ACom briefing, “One is trying to use this as a method of collecting money to subsidize or to cover the deficit for the bill that they’re advancing.” But he raised a more pressing concern: “The mandate on non-US citizens means that the administration will be able to collect citizenship data, or legal status information of those immigrants.” Soto added, “Remittance agencies like Xoom or Remitly, or Western Union are going to carry the burden of trying to ask who is an immigrant, or what their immigration status will be.”

This administrative overhaul carries significant risks. Money transfer firms, including banks, cryptocurrency platforms, and non-banking financial institutions, will have to register with the U.S. Treasury and build systems capable of verifying both citizenship and tax status. Dr. Manuel Orozco, a senior advisor for the International Fund for Agricultural Development, issued a stern warning: “There is not a single private entity that is authorized to collect information about your citizenship status.”

Dr. Orozco further noted that cybercriminals could exploit this new system to obtain sensitive information like citizenship and tax identification. “No one carries that stuff around,” he said, referring to documents like passports and naturalization certificates. “How will a bank confirm a money transfer is performed by a U.S. citizen?”

The prospect of rising costs and increased surveillance could also drive some immigrants toward illegal or informal money transfer systems. Ajay commented, “Hawala is an illegal way to transfer money that gives rise to unnecessary fraud.” The Hawala network operates on informal trust-based systems and is especially popular in South Asia. While it does not involve actual cross-border money movement, its reliance on off-the-books ledgers makes it illegal in the United States under anti-money laundering regulations.

India Currents also contacted the Financial Technology Association (FTA), which joined six other trade groups in a letter to Senators Mike Crapo and Ron Wyden, urging them to exclude the remittance tax and verification requirement from the reconciliation bill. The FTA warned of a “significant invasion of privacy” that would negatively affect everyday Americans, including military families and students abroad.

Penny Lee, President and CEO of the FTA, emphasized, “We should not be asking everyday Americans to hand over their sensitive personal information or pay a tax to send money to families serving overseas or studying abroad.” She added, “This proposal not only infringes on Americans’ civil liberties, but also makes it harder to combat transnational crime by pushing cross-border payments into unregulated channels.”

As of now, the bill remains in reconciliation, its fate undecided.

Helen Dempster of the Center for Global Development warned the new tax could result in a 5.6% decrease in remittance flows. While Mexico would suffer the highest absolute losses—more than $2.6 billion annually—countries like India, China, and Vietnam would also be hit hard. This would lead to diminished household income and a weakened demand environment in countries where remittances are a major part of the Gross National Income.

Dempster also noted that reductions in U.S. foreign aid could force migrants to increase remittances, further straining their finances. “For many low- and middle-income countries who rely on both aid and remittances, these two cuts coming from the administration are going to deal a double blow to the world’s poorest people,” she said.

In the U.S., the Latino community is also expressing deep concerns. Ana Valdez, President and CEO of The Latino Donor Collaborative, said, “Taxing the remittances won’t stop the money from leaving.” She cited testimonials such as, “my mom is gonna get her $1,000 every month, whatever it takes,” and “if I have to stop going to the movie theater, if I have to stop buying clothes, if I have to reduce my expenses in terms of other outings or hobbies, I will.”

Valdez highlighted that the Latino community wields a purchasing power of nearly $4 trillion. She warned that taxing their remittances would ripple through the broader economy. “People are sending money that has already been taxed,” she concluded. “This is a penalty on the American dream, because immigrants are the American dream.”