The Hidden Tax Crisis: How Deportation Silently Drains Local Economies

Deportation Economic Impact

Deportation’s Economic Ripple Effect: What Most People Miss

Immigration debates often spark heated discussions about borders, crime, and identity. But there’s an equally pressing issue lurking in the shadows—the financial toll deportations take on local economies.

As someone who has led at every level—former mayor of a border city in Arizona, Director of the Arizona Department of Commerce, and Chief of Staff at U.S. Customs and Border Protection—I’ve seen the effects of immigration policy from both a civic and national lens. Today, I help top firms navigate these issues as CEO of Intermestic Partners, an international advisory firm I founded in 2011 that specializes in cross-border trade and development.

Immigrants Fuel Local Economies

Immigrants contribute to our economy in major ways:

• Higher workforce participation than native-born Americans

• Robust consumer spending in local markets

• Significant tax contributions, even undocumented immigrants pay $11.6B annually in state and local taxes (ITEP)

When they spend, they stimulate demand—buying groceries, appliances, cars—injecting vitality into local businesses and bolstering city and state revenue.

Deportation’s Financial Backlash

What happens when those consumers are removed?

A 2017 study found that the 10 communities with the highest deportation rates between 2007–2011 lost $6.9 billion in local spending power.

That’s not political theory—it’s economic fact.

Deportation doesn’t just remove individuals—it removes spending power:

• Sales tax revenue drops, slashing city budgets

• Small businesses suffer, losing a steady stream of customers

• Fewer customers = fewer jobs = fewer investments

A Hidden Tax Crisis for Local Governments

Cities rely heavily on sales tax to fund public services. Deportation undermines that foundation. By deporting immigrants, we’re not just enforcing immigration laws—we’re also creating fiscal crises for the very communities those laws are meant to protect.

The Smarter Path: Integration, Not Expulsion

Policymakers should consider:

1. Immigrant integration programs to boost participation in local economies

2. Legal pathways that preserve tax bases while ensuring accountability

3. Targeted support for immigrant-owned businesses, which often revitalize neighborhoods

These strategies promote not just fairness, but fiscal sustainability.

The Call for Smarter Policy

At Intermestic Partners, we help clients understand the economic implications of immigration policies across borders. The evidence is clear: deportation disrupts local economies, erodes public revenue, and weakens small business ecosystems.

It’s time to see immigration policy for what it truly is—a cornerstone of local economic development.

Want to better understand the intersection of immigration and economic growth? Connect with Intermestic Partners to explore strategic, people-centered solutions that strengthen communities and markets.