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Immigrants’ net direct fiscal contribution: How does it change over their lifetime?

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  • Haozhen Zhang
  • Jianwei Zhong
  • Cédric de Chardon

Abstract

Life‐cycle direct public fiscal contributions and transfers are studied using longitudinal income tax data from 1982 to 2016 and administrative files for immigrants landed in Canada from 1980 to 2016. Relative to a comparison group comprising the Canadian‐born and immigrants landed before 1980, immigrants since 1980 have a lower average net direct fiscal contribution (NDFC) during their working years due to their lower taxes and social security contributions but a higher average NDFC after 65 years of age because of reduced public pension eligibility and entitlement. Immigrants who landed at younger than 19 years old have much higher direct fiscal contributions than other age‐at‐arrival groups and reach their peak of contributions around 10 years earlier in life than other age‐at‐arrival groups. Immigrants whose age at arrival is above 65 have a less negative average NDFC than other age‐at‐arrival groups over the above‐65 life cycle. These life‐cycle age𠄁at‐arrival trajectories are stable for immigrants in different landing cohorts. We apply the life‐cycle estimates to project the present discounted value of lifetime NDFCs for immigrants who landed in 2016. For each landing age group, refugees and family class immigrants have negative or zero average present values of life‐cycle NDFCs, much below that of economic immigrants. Contribution fiscale directe nette des immigrés: comment évolue‐t𠄁elle au cours de leur vie? Les contributions et transferts fiscaux publics directs sur le cycle de vie sont étudiés à l’aide des données longitudinales de l’impôt sur le revenu de 1982 à 2016 et des fichiers administratifs des immigrants rec¸us au Canada de 1980 à 2016. Par rapport à un groupe de comparaison comprenant les personnes nées au Canada ainsi que les immigrants rec¸us avant 1980, les immigrants arrivés depuis 1980 ont une contribution fiscale directe nette (CFDN, ou NDFC en anglais) moyenne plus faible pendant leurs années de travail en raison de leurs impôts et cotisations de sécurité sociale moins élevés. En revanche, les immigrants arrivés depuis 1980 ont une CFDN moyenne plus élevée après 65 ans en raison d’une éligibilité et d’un droit d’accès réduits aux systèmes de retraites publics. Les immigrants arrivés avant l’âge de 19 ans au Canada ont des contributions fiscales directes beaucoup plus élevées que les autres groupes d’âge d’arrivée et atteignent leur niveau maximal de contributions environ dix ans plus tôt dans la vie que les autres groupes d’âge à l’arrivée. Les immigrants dont l’âge à l’arrivée au Canada était supérieur à 65 ans ont une CFDN moyenne moins négative que les autres groupes d’âge à l’arrivée après 65 ans au cours d’un cycle de vie. Ces trajectoires de cycle de vie selon l’âge à l’arrivée sont stables pour les immigrants en tenant compte des différentes cohortes étudiées. Nous avons appliqué les estimations du cycle de vie pour projeter la valeur actualisée présente des CFDN à vie pour les immigrants admis en 2016. Pour chaque groupe d’âge à l’admission, les réfugiés et les immigrants de la catégorie du regroupement familial ont des valeurs présentes moyennes des CFDN du cycle de vie négatives ou nulles, et donc bien inférieures à celles des immigrants économiques.

Suggested Citation

  • Haozhen Zhang & Jianwei Zhong & Cédric de Chardon, 2020. "Immigrants’ net direct fiscal contribution: How does it change over their lifetime?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1642-1662, November.
    • Handle: RePEc:wly:canjec:v:53:y:2020:i:4:p:1642-1662
    DOI: 10.1111/caje.12477
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