Lauren Fox, US News and World Report
July 10, 2013
The economic impact of legalizing 11 million immigrants who entered the country illegally is one of the main stumbling blocks keeping some fiscally conservative lawmakers from backing any path to citizenship.
A new study by the Institute on Taxation and Economic Policy, however, shows the economic impact of legalizing immigrants is a positive one, not the financial drain some have claimed.
The report finds that giving immigrants a chance to work legally in the U.S. could help boost state and local revenues by $2 billion a year. State income tax profits would increase by an estimated $1.6 billion, sales tax contributions would increase by $420 million and immigrants would pay an additional $76 million in property taxes. A few states with relatively low immigrant populations but no sales tax have the most to gain from legalizing the 11.2 million immigrants living in the shadows. In Montana, for example, immigration reform could add a 50 percent increase in the amount of taxes immigrants pay.
The tax group also shows that despite assumptions that immigrants enter the country illegally and drain government resources without contributing, many immigrants are already paying a large share of tax revenues. The study found immigrants paid an average 6.4 percent effective tax rate and contributed $10.6 billion in 2010 through a combination of income, property and sales taxes.
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