Undocumented Immigrants Pay More Than $11 Billion In State, Local Taxes Each Year

Do undocumented immigrants pay taxes? It’s a question that a lot of American voters are asking as immigration takes center stage in the 2016 presidential election, and filing our taxes stays on the back burner until 11pm on Monday, April 18 (but who’s counting?) They short answer is yes: the estimated 10.9 million immigrants in the U.S. illegally pay taxes. Lots of taxes, according to a new study by the Institute on Taxation and Economic Policy that focuses on state and local taxes (not the federal income tax).

Why do immigrants pay taxes regardless of legal status? Because even if someone works under the table or for themselves (which is legal for undocumented immigrants) they still usually pay income taxes. Some use fake social security numbers and even pay into social security accounts they’ll never benefit from. Those who work under the table and manage to dodge income tax still pay governments in the form of sales and property tax.

According to the ITEP study, the average undocumented immigrant pays around $1,050 in taxes each year (again, that's not including federal income tax and social security). That’s 11.6 billion dollars per year, spread out across 50 states (though concentrated in areas with a high undocumented population).

Tax dollars are just one of the many facets at play in the immigration debate. There’s also moral and philosophical aspects like America’s foreign intervention and the fear that immigration will change its history and culture. But back to the data.

“ Data show undocumented immigrants greatly contribute to our nation’s economy, not just in labor but also with tax dollars,” said Meg Wiehe, ITEP State Tax Policy Director in a statement. “With immigration policy playing a key role in state and national debates and President Obama’s 2014 executive action facing review by the Supreme Court, accurate information about the tax contributions of undocumented immigrants is needed now more than ever.”

There’s no such thing as apolitical economic opinion in the immigration debate. In the past, we have destroyed economic arguments about immigrants on welfare. Some studies from the Center For American Progress we won’t even write about. The big hole in the ITEP report is that it excludes federal income taxes. In other words, it doesn’t give the full picture of what immigrants contribute in taxes.

But ITEP has a fairly solid methodology, and relies on reputable sources like MPP for its main assumptions. Here are a few other interesting findings from the report:

• Nationwide, undocumented immigrants’ nationwide pay about 8 percent of their income to local taxes, compared to 5.4 percent among the nation’s wealthiest (the 1 percent).

• ITEP sides with the Council of Economic Advisers and the left-leaning Center for American Progress arguing that legalizing undocumented immigrants would add about $2.1 billion in local and state tax revenue each year, and that even implementing Obama’s limited executive actions on immigration would add about $800 million a year.

• California, Texas, and New York each rake in over $1 billion per year in state and local tax revenue.

Texas is currently suing the Obama administration, in part of the cost of driver’s licenses for undocumented immigrants that would be eligible to work under his executive actions. Money isn’t the whole debate, but it’s certainly part of it.