The Institute on Taxation and Economic Policy (ITEP) has released a report that says that the 11 million undocumented immigrants currently living in the United States collectively paid $11.64 billion in state and local taxes.
An updated 50-state study, Undocumented Immigrants’ State and Local Tax Contributions, also concluded that undocumented immigrants tax contributions “would increase by more than $800 million” if President Obama’s executive actions on immigration were to be fully implemented and “by more than $2.1 billion” if comprehensive immigration reform — granting all undocumented immigrants lawful permanent residence — were to pass.
“Regardless of the politically contentious nature of immigration reform, the data show undocumented immigrants greatly contribute to our nation’s economy, not just in labor but also with tax dollars,” said Meg Wiehe, ITEP’s State Tax Policy Director. “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.”
The study also found that:
◆ Undocumented immigrants nationwide pay on average an estimated 8 percent of their incomes in state and local taxes (this is their effective state and local tax rate). To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent.
◆ Tax contributions range from almost $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.
◆ Creating a pathway to citizenship for the 11 million undocumented immigrants living in the United States and allowing them to work here legally would boost their current state and local tax contributions by more than $2.16 billion a year. Personal income tax collections would increase by more than $1 billion a year. Sales and excise taxes would increase by $695 million, and property taxes would grow by $360 million. As a result, the overall state and local taxes paid by undocumented immigrants as a share of their income would increase from 8 percent to 8.6 percent.
