governments during FY 1989–1990. To construct our estimates of fiscal impacts we adopt a micro-analytic perspective and examine each of the 145,000 households on the New Jersey PUMS file for 1990. We make four calculations for each household based on its demographic and socioeconomic makeup: (1) taxes paid to state government, (2) taxes paid to county and municipal governments, (2) benefits received from state government, and (4) benefits received from county and municipal governments. Each of these calculations is further disaggregated to reflect the composition of taxes paid and benefits received. These estimates are then appended to each household's record.

New Jersey's state budget for FY 1990 totaled $12.15 billion. Current expenditures made up $11.47 billion of this total. We exclude from consideration capital construction costs and the value of state bond redemptions because it is impossible to identify unambiguously the set of beneficiary households. Moreover, approximately $1.1 billion from current state expenditures was spent on goods and services that were not directly consumed by households. Roughly half of these costs are attributable to corrections and incarceration, whereas the remaining amounts were spent on the institutionalized disabled and handicapped population. We also exclude these expenditures on behalf of institutionalized populations, because we focus the analysis on the household sector. We are left with $10.38 billion in state expenditures to allocate to households.

We make simplifying assumptions about tax incidence that reflect the general consensus in the literature (Pechman, 1985; Rothman and Espenshade, 1992; Metcalf, 1993). We assume, for example, that the personal income tax is borne by the household paying the tax and that the sales and use tax is borne by consumers in proportion to their expected total expenditures. Purchasers of goods on which excise taxes are levied are presumed to bear the tax, and owners of personal business property and homeowners bear the burden of taxes assessed on these properties. Owners of residential rental properties, however, are assumed to pass local property taxes on to tenants. Equivalent assumptions are made about the incidence of public benefits; the proximate beneficiary is assumed to be the ultimate one. So, for example, we postulate that the benefits of public school expenditures lodge in households with school-age children who are enrolled in public schools and that there are no spillovers to the general population. Likewise, we neglect the possibility that government transfer payments or public expenditures on goods and services generate jobs and additional tax revenues when injected back into the economy. These multiplier effects could be accounted for in a general equilibrium model, but we do not consider them here.

Our study adopts a cross-sectional approach as a first step and implicitly ignores life-cycle costs and benefits of immigrants and natives. To our knowledge no fiscal impact analysis has been conducted with an explicit time dimension. Single-period accounting frameworks, although providing a useful guide to annual balance sheet impacts of immigrant and native households, cannot distinguish between cohort and aging effects. They cannot furnish evidence on how



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