Study Finds Illegal Immigrants Pay $11.8B in Taxes
Policy + Politics

Study Finds Illegal Immigrants Pay $11.8B in Taxes

A new nationwide study on the fiscal implications of illegal immigration concludes that millions of undocumented immigrants are paying billions of dollar in taxes into state and local coffers, and that substantially more would be generated if President Obama prevails in imposing a new executive order protecting many of those workers from deportation.

The 50-state analysis by the Institute on Taxation and Economic Policy released on Thursday found that roughly 8.1 million of 11.4 million undocumented immigrants who work paid more than $11.8 billion in state and local taxes in 2012, even while they were living illegally in the country.

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The group’s analysis estimated that illegal immigrants’ combined nationwide state and local tax contributions would increase by $845 million under full implementation of Obama’s 2012 and 2014 executive actions and by $2.2 billion under comprehensive immigration reform.

Tax contributions from illegal immigrants ranged from less than $3.2 million in Montana with an estimated undocumented population of 6,000 to more than $3.2 billion in California with more than 3.1 million illegal immigrants, according to the study.

“The numbers alone make a compelling case for reform,” said Matthew Gardner, executive director of ITEP. “This analysis shows that undocumented immigrants already are paying billions in taxes to state and local governments, and if they are allowed to work in the country legally, their state and local tax contributions would considerably increase.”

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The findings come as Congress appears hopelessly deadlocked over immigration reform and President Obama’s efforts to shield millions of illegal immigrants from deportation through executive orders are enmeshed in an aggressive court challenge brought by Texas Gov. Greg Abbott and other Republican state officials who claim Obama exceeded his constitutional authority.

Early this month, a federal judge in Texas denied the federal government’s request to allow Obama’s immigration executive actions to proceed, even as an appeals court signaled that it might disagree with the judge when it takes up the issue, according to The New York Times. Judge Andrew S. Hanen of Federal District Court for the Southern District of Texas in Brownsville refused to lift the injunction that he imposed in February on the president’s program, saying that to do so would cause irreparable harm.

With the 2016 presidential campaign beginning to heat up, prospects for any meaningful action on immigration in Congress in the foreseeable future seem remote at best. The Senate approved a comprehensive, bipartisan immigration reform plan in 2013 that would have provided a path to citizenship for many illegal immigrants. But that plan died in the House where conservatives are adamantly opposed to any legislation that includes amnesty for illegals.

Conservative groups are also battling the president’s immigration policies, arguing that they are providing special assistance to scofflaws who take advantage of state and local education and social services and that are taking away jobs from many unemployed Americans.

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The Federation for American Immigration Reform (FAIR), a conservative group opposed to amnesty, once estimated that the 2010 annual cost of illegal immigration at the federal, state and local level was about $113 billion – nearly $29 billion at the federal level and $84 billion at the state and local level. The study noted that tax receipts from illegal immigrants “do not come close to the level of expenditures” by federal and state government on behalf of undocumented workers.

The Institute on Taxation and Economic Policy (ITEP) is a non-profit, non-partisan research organization that works on federal, state, and local tax policy issues. Here are its key findings:

  • Undocumented immigrants contribute significantly to state and local taxes, collectively paying an estimated $11.84 billion in 2012.
  • The effective state and local tax rate for undocumented immigrants’ nationwide   is about 8 percent. 
  • Under   Obama’s 2012 and 2014 executive actions, which would make temporary immigration reprieve available to up to 5.2 million undocumented immigrants (about 45 percent of the undocumented population), their state and local tax contributions would increase by an estimated $845 million a year once fully in place. 
  • Granting lawful permanent residence to all 11.4 million undocumented immigrants and allowing them to work in the United States legally would increase their state and local tax contributions by an estimated $2.2 billion a year.

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