Undocumented immigrants are often portrayed as drains on the US economy that pay next to nothing in taxes while receiving free public education for their children, access to infrastructure, and protection from local police and fire departments. Researchers from the Heritage Foundation, a conservative think tank, have argued that the 11 million undocumented people estimated to be living in America create a fiscal deficit for the government.
But as American citizens and permanent residents file their taxes this week, the reality is that undocumented immigrants will also fork over billions worth of their hard-earned dollars to the IRS — and they could end up paying even more if they're ever granted legal status.
The US government estimates that at least half of undocumented immigrants pay income tax, and analysts told VICE News the population will contribute at least $12 billion to the federal government this year, and at least $10.6 billion to state and local governments via income and payroll taxes.
"It's really important to debunk the myth that undocumented immigrants aren't paying taxes," Meg Wiehe, the state tax policy director at the Institute on Taxation and Economic Policy (ITEP), told VICE News.
The ITEP previously found that undocumented immigrants paid $10.6 billion in 2010 to state and local governments, and Wiehe said the figure is now "at least that or higher." The group will release an updated report later this week.
Undocumented workers pay their part despite the fact that they are explicitly banned from taxpayer-funded programs such as Social Security, Medicare, welfare, and food stamps. Undocumented immigrants contributed about $12 billion to the Social Security Trust Fund in 2010, according to the Social Security Administration.
University of Nevada tax law professor Francine Lipman told VICE News that the workers often pay taxes to satisfy demands of their employers, who increasingly push to pay employees on the books.
"More and more employers are wanting to pay people above the table through the tax system because they want the tax deduction," Lipman said, explaining that the companies receive a tax rebate for claiming more workers.
To receive another tax break, some businesses even overstate the money they pay employees on their W-2 forms. Afraid that reporting the false claims will expose them to deportation, the undocumented immigrants end up paying more than they actually owe.
According to Lipman, who has researched immigrants' tax contributions the past 10 years, people who entered the country illegally can also end up paying higher taxes because they don't qualify for the earned income tax credit (EITC), which is intended to benefit low income workers.
"Earned income tax credit is a refundable federal credit you get to claim on your annual income tax return," Lipman said. "But everyone on the return has to have a valid Social Security number, so undocumented immigrants don't get that now."
Analysts told VICE News that many undocumented people file taxes to comply with US laws, hoping it will lessen their chances of deportation and eventually help them gain a path to citizenship or a green card. According to a report from the Center for American Progress (CAP), undocumented workers would contribute $69 billion more in federal taxes and $40 billion more in state and local taxes over the next ten years if they were granted legal status.
Philip Wolgin, CAP's associate director for immigration policy, told VICE News that the potential windfall would be the combined result of more employees stepping forward to pay taxes, and the fact that documented workers tend to earn higher wages.
Wolgin explained that government costs would not immediately increase because federal benefits such as welfare don't typically kick in until five or 10 years after workers receive legal status. "It benefits the entire economy," Wolgin said. "Workers earn more money with legal status, so they have more money to spend at local businesses. Then local businesses can create more jobs — you see wages going up for everyone, not just the undocumented population."
Conservative groups remain skeptical of those arguments, maintaining that granting "amnesty" to immigrants that entered the country illegally would incur more costs for the government.
Jerry Kammer, a senior research fellow at Center for Immigration Studies, a think tank that describes itself as "low-immigration, pro-immigrant," warned in a blog post last week that the earned income tax credit could actually draw more immigrants to the US.
"One has to wonder if the EITC could become another financial magnet, another powerful draw for impoverished people living in impoverished homelands where the idea of a social safety net — including a cash payout from the government for taking a low-paying job — is an impossible dream," Kammer wrote. "Only in America."
But Randy Capps, the director of research for US programs with the Migration Policy Institute, told VICE News that the greater tax contribution by immigrants with legal status would offset the cost of the EITC. And, in the bigger picture, he noted that taxes are just a small part of the role immigrant workers play in the US economy.
"The greatest contribution is the work," Capps said. "The biggest benefit is to society is from the work they're doing."
Follow Meredith Hoffman on Twitter: @merhoffman