Just Taxes Blog by ITEP

Undocumented Immigrants’ Tax Contributions in California: County-by-County Analysis

April 27, 2017

ITEP Staff

Guest Blogger; Josue Chavarin, Program Associate at the California Endowment

California’s counties gain hundreds of millions of dollars in tax revenues from undocumented residents— collectively over $1.53 billion according to a new analysis from the Institute on Taxation and Economic Policy.

Public debates in California over immigrants, specifically around undocumented immigrants, often suffer from insufficient and inaccurate information about the contributions of undocumented immigrants, particularly tax contributions at the local and state level. This new analysis indicates that undocumented immigrants living in the California pay hundreds of millions of dollars each year in local taxes to the counties where they live (more than $1.5 billion) and collectively $3 billion combined in state and local taxes in the state of California.

As California counties and localities mull over their approach to immigrant rights issues, accurate and objective information about the tax contributions of undocumented immigrants in communities is needed now more than ever. Most state and local taxes are collected from people regardless of citizenship status. Undocumented immigrants, like everyone else, pay sales and excise taxes when they purchase goods and services.  They pay property taxes directly on their homes or indirectly as renters. And, many undocumented immigrants also pay state income taxes. Property, income, and sales and excise taxes are one of the many ways that undocumented residents contribute to the health of California communities.

The new ITEP analysis provides county-by-county estimates on the current state and county level tax contributions of California’s 2.7 million undocumented immigrants as of 2014, and the increase in contributions if all these taxpayers were granted legal status as part of comprehensive reform[1].

Just how much do undocumented Californians contribute California and its counties in tax revenues? We estimate that Undocumented California’s tax contributions total $154 million in the Central Valley, $145 million in Orange County, $110 million in San Diego County, $100.6 million in Santa Clara County, $58.3 million in San Bernardino County, $29.3 million in Ventura County, $29.6 million in Sacramento County, and $544 million in Los Angeles County.  Undocumented immigrants in these counties also pay a variety of state taxes as documented in the table below.

Tax contributions in California would increase significantly above current levels if all undocumented immigrants currently living in the United States were granted a pathway to citizenship as part of a comprehensive immigration reform.  Granting legal status to all undocumented immigrants in the California as part of a comprehensive immigration reform and allowing them to work legally would increase their effective tax rate, thereby increasing their state and local tax contributions.

For example, we estimate that California’s Central Valley stands to gain $14 million, Orange County $14.5 million, San Diego $11 million, Santa Clara $10 million, San Bernardino $6 million, Ventura $3 million, Sacramento $3 million, and Los Angeles $140.6 million. In all, California as a whole stands to gain nearly half a billion dollars ($455 million) in tax revenues under comprehensive immigration reform. This does not include tax contribution increases at the federal level.

Find the estimates for California’s 35 most populous counties HERE.

[1] Note: To maintain statistical accuracy, counties with smaller populations of undocumented residents were combined.