Study: Undocumented Immigrants Contribute Nearly $100 Billion in Taxes a Year

Contact: Jon Whiten ([email protected])

Immigration policies have taken center stage in public debates this year, but much of the conversation has been driven by emotion, not data. A new in-depth study from the Institute on Taxation and Economic Policy aims to help change that by quantifying how much undocumented immigrants pay in taxes – both nationally and in each state.

The study finds that undocumented immigrants contributed $96.7 billion in federal, state, and local taxes in 2022 – a number that would rise dramatically if these taxpayers were granted work authorization.

Other key findings:

• For every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue. On the flip side, for every 1 million undocumented immigrants who are deported, public services stand to lose $8.9 billion in tax revenue.
• Providing access to work authorization to all current undocumented immigrants would increase their tax contributions by $40.2 billion per year, to $136.9 billion.
• More than a third of the tax dollars paid by undocumented immigrants are toward payroll taxes dedicated to funding programs – like Social Security and Medicare – that these workers are barred from accessing.
• Similarly, income tax payments by undocumented immigrants are affected by laws that require them to pay more than otherwise similarly situated U.S. citizens; as one example, they are often barred from receiving meaningful tax credits like the Child Tax Credit or Earned Income Tax Credit.
• Six states – California, Texas, New York, Florida, Illinois, and New Jersey – raised more than $1 billion each in tax revenue from undocumented immigrants living within their borders.
• In a large majority of states (40), undocumented immigrants pay higher state and local tax rates than the top 1 percent of households living within their borders.

“This study is the most comprehensive look at how much undocumented immigrants pay in taxes. And what it shows is that they pay quite a lot, to the tune of nearly $100 billion a year,” said Marco Guzman, ITEP Senior Policy Analyst and co-author of the study. “The bottom line here is that regardless of immigration status, we all contribute by paying our taxes.”

Of the total $96.7 billion in taxes paid by undocumented immigrants, most – $59.4 billion – was paid to the federal government while the remaining $37.3 billion was paid to state and local governments. Slightly less than half those state and local contributions are through sales and excise taxes (46 percent or $15.1 billion), while 31 percent ($10.4 billion) are through property taxes and 21 percent ($7 billion) are through personal or business income taxes.

While this study is the most comprehensive analysis of taxes paid by undocumented immigrants, it is worth noting that it does not attempt to quantify broader impacts that flow from the increased economic activity created by these individuals. Taking those economic ripple effects into account would likely reveal undocumented immigrants to have an even larger significance to public revenues than is documented here.

This study is another reminder that undocumented immigrants are contributing to our economies and our shared public services, and that immigration policy choices made in the years ahead will have significant consequences for public revenues.

 

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