April 15th: A Reminder that Undocumented Immigrants Pay Billions in Taxes

Posted by Matthew Green | Apr 30, 2014 | 0 Comments

April is tax month. It's never a time anyone actually looks forward to, but it still comes around every year. We all have to pay taxes. No one is immune and that includes undocumented immigrants living in the United States. It has been reported that these immigrants pay billions of dollars in taxes and will likely pay even more if and when Congress passes a comprehensive immigration reform bill.

A study by the Institute for Taxation and Economic Policy (ITEP) found that undocumented immigrants paid a total of $10.6 billion in both state and local taxes in 2010. This number includes $1.2 billion for personal income taxes, $1.2 billion in property taxes and in excess of $8 billion in sales and excise taxes. In addition, the study found that undocumented immigrants are “likely paying about 6.4% of their income in state and local taxes.” When you look into this, that means that they are paying close to the same tax rate as “taxpayers in similar income situations and, in many states, can be higher than the effective tax rates paid by upper income taxpayers.”

When people try and argue that undocumented immigrants do not pay taxes, it is simply not true. The majority of states have an automatic sales tax tacked on with every purchase. These kinds of taxes are found on common goods and services, like clothes and gasoline. Property taxes are also difficult to avoid. This is true whether you rent or own. Typically, landlords simply pass apartment taxes onto their renters through increased rent.

In April of 2013, the Social Security Administration issued a report stating undocumented immigrants (and their employers) paid an estimated $13 billion in payroll taxes. Furthermore, a recent Harvard University study showed that more than $3 billion each year was put towards Medicare through contributions by undocumented immigrants.

When you break it down, state by state, you will notice a similar pattern. Take a look at the following numbers:

  • California: Undocumented immigrants paid more than $2.2 billion in state and local taxes in 2010
  • Virginia: In 2005, the state's undocumented immigrant population paid taxes to the tune of $145 million to $174 million
  • Colorado: In 2005, this demographic paid a sum somewhere between $159 million and $194 million in taxes

The Center for American Progress issued its own report saying that “immigration reform could increase tax revenues since legal status and an eventual pathway to citizenship” would mean:

  1. An additional 5 million (accounted for) immigrants paying payroll taxes;
  2. That immigrants would pay $69 billion more in federal taxes over a 10-year period;
  3. That immigrants would pay $40 billion more in state and local taxes over a 10-year period;
  4. That there would be an additional $606 billion added to the Social Security trust fund;
  5. That there would be a net contribution of $155 billion to the Medicare trust fund; and
  6. That immigration reform would, itself, reduce the national deficit by $820 billion over two decades.

What do you think about these statistics? Have they changed the way you thought about undocumented immigrants and taxes?

About the Author

Matthew Green

Managing Attorney. The Law Offices of Matthew H. Green focuses on the aggressive defense of immigrants. A native of Arizona, Mr. Green understands the difficulties that immigrants and families of immigrants face when a loved one is charged with a crime. He knows how frightening it can be for some...

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