A up-to-date study shows that undocumented immigrants paid nearly $100 billion in federal, state and local taxes in 2022, while many were excluded from programs funded by their taxes. The findings contradict anti-immigration rhetoric that undocumented immigrants are “destruction” social programs.
Undocumented immigrants paid more taxes than the top 1% of earners in those states, according to a 40-state study. test published on Tuesday by the Institute for Tax and Economic Policy, a left-wing, nonprofit think tank.
The study, which used estimates of undocumented immigrants’ tax contributions from 2022, shows that they would total $96.7 billion that year. The study’s authors also found that undocumented immigrants would pay $40.2 billion more annually in federal, state and local taxes if the entire undocumented population had access to work permits. The Institute on Taxation and Economic Policy found that this escalate would come from higher wages associated with work permits and easier income tax compliance.
The report also shed airy on the tax revenue that undocumented immigrants generate at the state and local levels. Undocumented immigrants pay 46% of their state and local tax bills through sales and excise taxes. Six states — New Jersey, New York, California, Florida, Texas and Illinois — were able to collect more than $1 billion each in tax revenue from undocumented immigrants, the nonprofit said.
Undocumented immigrants pay property and sales taxes and federal payroll taxes withheld from their wages, as well as filing income tax returns using individual taxpayer identification numbers. Although payroll taxes fund Medicare, Social Security and Unemployment Insurance, undocumented immigrants are not eligible to enroll in or regularly receive benefits from these social programs. They also may face barriers to receiving tax refunds, including being scammed by dishonest tax preparers who target immigrant communities, Jackie Vimo, senior policy analyst for economic justice at the National Immigration Law Center, said in a press release about the report.
“There are a lot of laws that prevent undocumented workers from receiving benefits …” said Richard C. Auxier, chief policy associate at the Urban-Brookings Tax Policy Center, a nonpartisan think tank that was not involved in the study. “…They get a lot of political attention. At the end of the day, they’re just normal people paying normal taxes.”
Alexis Tsoukalas, a senior policy analyst at the Florida Policy Institute, a nonprofit focused on the economic mobility of Floridians, told reporters Monday that she was struck by how much the state collected in taxes from undocumented immigrants compared to the state’s wealthiest. The current tax rate for undocumented immigrants in Florida is 8%, compared with 2.7% for the state’s wealthiest 1%.
“This means that hundreds of thousands of ordinary people contribute more than they should to public services that they do not even have access to, while those who have the most to offer and the most benefits contribute the least,” Tsoukalas said.
The study was published in the context of a political climate in which states were passing laws arrest people suspected of entering the U.S. illegally, which is a federal mandate, the Biden administration announced an executive order allow deportation many asylum seekers without having their applications considered and the Republican Party’s program for 2024 I promise “the largest deportation operation in American history” if former President Donald Trump is reelected over presumptive Democratic nominee Kamala Harris. Tax policy will also be at the forefront of Congress and the White House next year as provisions of Trump’s 2017 tax law are set to expire.
In addition to the human costs of deportation to families, policy experts and researchers say undocumented immigrants are a boon to the economy, making them an economic cost as well. Immigration and economic experts who spoke about the significance of the report Monday highlighted the July report by the Congressional Budget Office report on the rise in immigration and its impact on the economy and budget, which shows that the escalate in immigration will escalate federal revenues by $1.2 trillion between 2024 and 2034.
Carl Davis, research director at the Institute on Taxation and Economic Policy, said deporting undocumented immigrants in the U.S. also has negative economic effects beyond taxes.
“If you were to deport someone and they no longer made taxable purchases in their community, that number would reflect a reduction in the sales tax they paid to the community, but it would not account for the second knock-on effect, which is a reduction in business profits because of fewer customers,” Davis told a media outlet about the study.
Auxier said researchers have found that children in undocumented immigrant households receive educational benefits that can be higher than the taxes paid by lower-income working adults, but that’s more of an income issue than a specific immigration issue. The flip side of the coin, Auxier notes, is that in the future, undocumented households may actually give back more than they received.
“The same studies show that if kids go to school and then go to work, now the American household is giving more than it’s getting because the parents came here, worked, paid Social Security, Medicare and didn’t get any benefits,” he said. “The kid went to school and then got a job and then started making enough money to be a net contributor.”
Policy experts also pointed to a shortage of workers — 8.1 million job vacancies and 6.8 million unemployed — as a reason to accept the economic contributions of undocumented immigrants. South Dakota, North Dakota, Maryland, Vermont, Maine and South Carolina are some of the states facing the biggest labor shortages, According to analysis of Bureau of Labor Statistics data conducted by the Washington Post.
“Immigrants are already filling this [labor] “If we have mass deportations where millions of immigrants are torn away from their family members and the country they have made their home, not only will we see the human consequences, but we will also see the economic and workforce implications,” said Vimo, of the National Immigration Law Center, a group that advocates for racial, economic and social justice for low-income immigrants.
