In the run-up to the 2024 presidential election there has been a constant drum beat painting a fictional grotesque picture of the border and undocumented immigration as an existential threat to the United States.
The debate over immigration has leaned heavily on images of weary border-crossers wading in the Rio Grande and inflammatory language using terms like “invasion," "bloodbath” and “poisoning the blood of the country.”
But the reality shows how undocumented immigration is a net benefit to the United States.
A recent study shows that undocumented immigrants are paying sizable amounts into the national tax system including income tax, social security, state and local sales taxes.
The Institute on Tax and Economic Policy undertook the most thorough examination to date of the federal, state, and local tax payments made by undocumented immigrants. The ITEP arrives at nationwide estimates of the overall tax contributions of the estimated 10.9 million undocumented immigrants living in the U.S. as of 2022, as well as state-by-state estimates for those immigrants’ payments of state and local taxes.
Key Findings
- Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022. Most of that amount, $59.4 billion, was paid to the federal government while the remaining $37.3 billion was paid to state and local governments.
- Undocumented immigrants paid federal, state, and local taxes of $8,889 per person in 2022. In other words, for every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue.
- More than a third of the tax dollars paid by undocumented immigrants go toward payroll taxes dedicated to funding programs that these workers are barred from accessing. Undocumented immigrants paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022.
- At the state and local levels, slightly less than half (46 percent, or $15.1 billion) of the tax payments made by undocumented immigrants are through sales and excise taxes levied on their purchases. Most other payments are made through property taxes, such as those levied on homeowners and renters (31 percent, or $10.4 billion), or through personal and business income taxes (21 percent, or $7.0 billion).
- Six states raised more than $1 billion each in tax revenue from undocumented immigrants living within their borders. Those states are California ($8.5 billion), Texas ($4.9 billion), New York ($3.1 billion), Florida ($1.8 billion), Illinois ($1.5 billion), and New Jersey ($1.3 billion).
- 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.
- Income tax payments by undocumented immigrants are affected by laws that require them to pay more than otherwise similarly situated U.S. citizens. Undocumented immigrants are often barred from receiving meaningful tax credits and sometimes do not claim refunds they are owed due to lack of awareness, concern about their immigration status, or insufficient access to tax preparation assistance.
- Providing access to work authorization for undocumented immigrants would increase their tax contributions both because their wages would rise and because their rates of tax compliance would increase. Under a scenario where work authorization is provided to all current undocumented immigrants, their tax contributions would rise by $40.2 billion per year to $136.9 billion. Most of the new revenue raised in this scenario ($33.1 billion) would flow to the federal government while the remainder ($7.1 billion) would flow to states and localities.:
Guest:
Marco Guzman is an analyst with the The Institute on Tax anGuestd Economic Policy
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*This interview will be recorded on Monday, August 5, 2024.
