Undocumented Immigrants Pay Billions in State and Local Taxes and Would Pay Substantially More Under Comprehensive Immigration Reform

Immigration policy—it’s a politically contentious issue but one of key importance in current state and national debates. To dispel inaccuracies and provide sufficient information to inform these debates, ITEP released today an updated report on the state and local tax contributions of undocumented immigrants.

The report, Undocumented Immigrants’ State and Local Tax Contributions, finds that undocumented immigrants living in the United States collectively pay an estimated $11.64 billion dollars each year in state and local taxes. Contributions vary by state, ranging from less than $2.2 million in Montana with an estimated undocumented population of 4,000 to more than $3.1 billion in California, home to more than 3 million undocumented immigrants. Nationwide, the average tax contributions of undocumented immigrants equal 8 percent of their income. In contrast, the top 1 percent of taxpayers in the United States pay an average nationwide effective tax rate of just 5.4 percent.

See the report for state-by-state estimates on undocumented immigrants’ current state and local tax contributions, including breakdowns of sales and excise, personal income, and property taxes.

Further, the report shows how the tax contributions of undocumented immigrants would increase if more were granted a pathway to legal status due to increased earnings and higher compliance with the tax code. If all undocumented immigrants in the United States were granted legal status and allowed to work legally, their state and local tax contributions would increase by an estimated $2.13 billion a year, with their nationwide effective state and local tax rate increasing to 8.6 percent.

The report also examines the potential state and local tax impact if President Obama’s 2012 and 2014 executive actions are upheld and fully implemented.  We estimate that the tax contributions of the more than 5 million undocumented immigrants who would be eligible for temporary reprieve under the actions would increase by an estimated $805 million. (Smaller gains in this scenario reflect the fact that the executive actions would only affect around 46 percent of the undocumented population and do not grant a full pathway to legal status.)

See the report for state-by-state estimates of the post-reform state and local tax contributions of the total undocumented immigrant population and of the 5 million undocumented immigrants directly affected by President Obama’s executive actions.

Full text of the article here.

About NAE

New American Economy is a bipartisan research and advocacy organization fighting for smart federal, state, and local immigration policies that help grow our economy and create jobs for all Americans. More…