July 10, 2013

Crain’s Chicago Business: Why immigration reform is a tax boon for Illinois

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(Original Post)

By Paul Merrion July 10, 2013
Immigration reform eventually would increase state and local tax collections in Illinois by almost $150 million a year, a new study has found.
Undocumented immigrants in Illinois paid about $563 million in state and local income, property and sales taxes in 2010, according to the Institute on Taxation and Economic Policy, a nonprofit tax think tank in Washington.
That would increase to about $711.7 million if legalization brought more undocumented workers into the tax system and gave them leverage to get paid more, even after paying an additional $14.1 million to low-wage, undocumented workers who would become eligible for earned income tax credits.
Nationwide, allowing undocumented immigrants to work legally would add about $2 billion to state and local coffers, the study found.
Similarly, a recent analysis of the Senate-passed immigration reform bill, conducted by the nonpartisan Congressional Budget Office, found that higher federal tax collections, offset by increased spending on benefit programs and enforcement, would result in a net savings to the U.S. government of about $135 billion between 2014 and 2023.
“We know that undocumented immigrants already pay 6 or 7 percent of their income in state and local taxes, simply because they buy things and they rent or own homes, and sales and property taxes are paid automatically,” Matthew Gardner, ITEP’s executive director, said in a statement. “With legalization, both wages and tax compliance will go up, resulting in substantial new revenues for states, especially from the income tax.”
The ITEP study used estimates by the Census Bureau and the Pew Foundation’s Pew Hispanic Center that Illinois has about 525,000 undocumented immigrants living in 229,260 households, with annual income of $36,700 per household.
Critics of immigration reform maintain that longer-term costs, beyond the scope of the CBO’s 10-year study, would increase greatly as currently undocumented workers become eligible for Social Security and other benefits.

By Paul Merrion July 10, 2013

Immigration reform eventually would increase state and local tax collections in Illinois by almost $150 million a year, a new study has found.

Undocumented immigrants in Illinois paid about $563 million in state and local income, property and sales taxes in 2010, according to the Institute on Taxation and Economic Policy, a nonprofit tax think tank in Washington.

That would increase to about $711.7 million if legalization brought more undocumented workers into the tax system and gave them leverage to get paid more, even after paying an additional $14.1 million to low-wage, undocumented workers who would become eligible for earned income tax credits.

Nationwide, allowing undocumented immigrants to work legally would add about $2 billion to state and local coffers, the study found.

Similarly, a recent analysis of the Senate-passed immigration reform bill, conducted by the nonpartisan Congressional Budget Office, found that higher federal tax collections, offset by increased spending on benefit programs and enforcement, would result in a net savings to the U.S. government of about $135 billion between 2014 and 2023.

“We know that undocumented immigrants already pay 6 or 7 percent of their income in state and local taxes, simply because they buy things and they rent or own homes, and sales and property taxes are paid automatically,” Matthew Gardner, ITEP’s executive director, said in a statement. “With legalization, both wages and tax compliance will go up, resulting in substantial new revenues for states, especially from the income tax.”

The ITEP study used estimates by the Census Bureau and the Pew Foundation’s Pew Hispanic Center that Illinois has about 525,000 undocumented immigrants living in 229,260 households, with annual income of $36,700 per household.

Critics of immigration reform maintain that longer-term costs, beyond the scope of the CBO’s 10-year study, would increase greatly as currently undocumented workers become eligible for Social Security and other benefits.

 

 

 


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