Just because an immigrant is undocumented doesn’t mean her taxes are. In fact, undocumented immigrants currently pay more than $11 billion in state and local taxes each year, according to a report released Wednesday by nonpartisan think tank Institute on Taxation and Economic Policy.
If these immigrants were to receive legal status, they’d likely contribute about $2.18 billion more in taxes, because they’d earn more and be able to fully comply with the tax code.
“Public debates over federal immigration reform, specifically around undocumented immigrants, often suffer from insufficient and inaccurate information about the tax contributions of undocumented immigrants, particularly at the state level,” reads the report, which criticizes the Trump administration’s policies on the matter as “haphazard in design and impact.”
The study arrives in the middle of a turbulent week in America’s ongoing immigration debate. During Trump’s Tuesday address to Congress, he reiterated his controversial promise to create the VOICE Office, which would provide aid to the victims of crimes committed by undocumented immigrants. The DHS has also pledged to release a weekly list of immigrants’ crimes, which critics say will inflame the belief that immigrants are violent criminals — a belief largely unsupported by research, as an analysis by the government leadership publication Governing found Thursday.
The Institute on Taxation and Economic Policy study drew on data showing how much undocumented immigrants pay in sales taxes on goods and services, and property taxes on homes they buy or rent.
If these immigrants were to become citizens, all these taxes would balloon. The personal income tax alone would rise by $1.1 billion per year, the study concluded, based on research indicating that documented immigrants earn higher wages than undocumented ones.
Plus, right now, only about half of undocumented immigrants file income tax returns. While it’s possible to file a return without a Social Security Number, immigrants must apply for what’s called an Individual Tax Identification Number, and many don’t. Still, undocumented immigrants who don’t file income tax returns may get taxes deducted from their paychecks.
Unsurprisingly, the states that would benefit most are those with the highest number of undocumented citizens — California, for instance, would receive more than $450 million in tax contributions.
The study did not address the cost each state faces providing services to undocumented immigrants, such as education, emergency medical care or housing subsidies.
This is not the first time the institute has examined the impact of undocumented immigrants’ contributions to state and local tax coffers. In 2010, the group found that undocumented immigrants pay a total of $10.6 billion in state and local taxes. That number has since risen by $1.14 billion.
“In a time when most states are facing revenue shortages,” the study concludes, “the potential budgetary impacts of mass deportation merits careful consideration.”