August 23, 2024 | Vol. 53, Issue 16

The only bilingual Chinese-English Newspaper in New England

Undocumented Immigrants Pay Billions in U.S. Taxes Annually

The nearly 11 million immigrants in the U.S. who lack the paperwork needed to stay here legally are often the target of politicians who decry the ills of “illegal” immigration. Yet, this group actually makes a massive contribution to the federal, state and local governments – paying billions to social programs they will never benefit from – according to a recent study.


In fact, undocumented immigrants paid $96.7 billion in total taxes to all levels of government in 2022, through employment taxes, consumption taxes, property taxes and other types of taxes. Most of the taxes the group paid that year – $59.4 billion – went to the federal government. The rest went to state and local governments, researchers at the Institute on Taxation and Economic Policy found in the report, “Tax Payments by Undocumented Immigrants.”


On average, undocumented immigrants paid federal, state, and local taxes of $8,889 per person in 2022, found the report.


“In other words, for every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue,” wrote researchers Carl Davis, Marco Guzman and Emma Sifre.


One in three dollars paid went to payroll taxes that the immigrants themselves cannot access because they lack proper authorization to be in the U.S., such as Social Security, Medicare and unemployment insurance. The immigrants are also typically blocked from getting substantive tax credits. Yet, as a whole they paid nearly $26 billion into Social Security alone in 2022, found the report.
Other types of taxes paid went to local sales and excise taxes and property taxes, including through rental housing.


States that took in the most tax revenue from undocumented immigrants were California at $8.5 billion, Texas at $4.9 billion, New York at $3.1 billion, Florida at $1.8 billion, Illinois at $1.5 billion, and New Jersey at $1.3 billion.


In Massachusetts, the total tax contribution from the undocumented immigrants came out to nearly $650 million.


The reports’ authors argue that if the immigrants were given access to legal work authorization the amount paid in taxes would substantially increase.


“Under a scenario where work authorization is provided to all current undocumented immigrants, their tax contributions would rise by $40.2 billion per year to $136.9 billion. Most of the new revenue raised in this scenario ($33.1 billion) would flow to the federal government while the remainder ($7.1 billion) would flow to states and localities,” the authors write.


Massachusetts alone could have boosted its total tax revenue from the undocumented immigrants to $847 million in 2022 under such a program, say the authors of the report.


“Undocumented immigrants work without authorization and, as a result, their tax contributions are lower than what would be paid by a worker with legal status in an otherwise comparable position. Granting work authorization to undocumented immigrants would increase their tax contributions for two reasons,” wrote the researchers. “First, income tax revenues would increase because legal status would lessen barriers to complying with existing income tax laws. Second, the data demonstrate that immigrants with employment authorization earn higher wages than undocumented immigrants. Greater access to job opportunities and higher-level education would provide immigrants with the opportunity to earn substantially higher wages which would have the effect of raising taxable earnings, consumption, and property ownership.”


Undocumented immigrants make up a minority of the nation’s total immigration population. The number of total foreign-born residents in the U.S. rose to 46.1 million in 2022, according to an unrelated report for the Pew Research Center. Immigrant make up just shy of 14% of the U.S. population, and account for much the recent population growth.


Of those here without proper paperwork, most entered the country “without legal permission or arrived on a nonpermanent visa and stayed after it expired,” according to the Pew Research Center, which points out that some unauthorized immigrants actually have permission to live and work in the U.S. and other protections because they are fall under protective categories such as the Temporary Protected Status program, because returning to their home country could be too dangerous; the Deferred Action for Childhood Arrivals program, or DACA, program, which allows people who were brought to the U.S. as kids before 2007 to say in the country; and as asylum applicants.

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