Do Undocumented Immigrants Pay Their “Fair Share” of Taxes?
Lisa Christensen Gee, MPP, JD, Senior Policy Analyst, Matthew Gardner, Senior Fellow, Misha E. Hill, State Policy Fellow, and Meg Wiehe, MPA, Deputy Director of the Institute on Taxation & Economic Policy (ITEP), in a Mar. 2017 report, “Undocumented Immigrants’ State & Local Tax Contributions,” available at itep.org, stated:
“Like other people living and working in the United States, undocumented immigrants pay state and local taxes. They pay sales and excise taxes when they purchase goods and services (for example, on utilities, clothing and gasoline). They pay property taxes directly on their homes or indirectly as renters. Many undocumented immigrants also pay state income taxes. The best evidence suggests that at least 50 percent of undocumented immigrant households currently file income tax returns using Individual Tax Identification Numbers (ITINs), and many who do not file income tax returns still have taxes deducted from their paychecks.
Collectively, undocumented immigrants in the United States pay an estimated total of $11.74 billion in state and local taxes a year (see Table 1 for state-by-state estimates). This includes more than $7 billion in sales and excise taxes, $3.6 billion in property taxes, and $1.1 billion in personal income taxes.
Another way to measure the state and local taxes that undocumented immigrants pay is through their effective tax rate, which is the share of total income paid in taxes… Undocumented immigrants’ nationwide average effective tax rate is an estimated 8 percent. To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent.”Mar. 2017 - Lisa Christensen Gee, JD Matthew Gardner Misha E. Hill, MPP Meg Wiehe, MPA
The Office of the Chief Actuary of the Social Security Administration, in an Apr. 2013 actuarial note, “Effects of Unauthorized Immigration on the Actuarial Status of the Social Security Trust Funds,” available at ssa.gov, stated:
“While unauthorized immigrants worked and contributed as much as $13 billion in payroll taxes to the OASDI program [the Social Security trust funds] in 2010, only about $1 billion in benefit payments during 2010 are attributable to unauthorized work. Thus, we estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally, and that this effect contributed roughly $12 billion to the cash flow of the program for 2010. We estimate that future years will experience a continuation of this positive impact on the trust funds.”Apr. 2013 - Office of the Chief Actuary of the Social Security Administration (SSA)
Michael Greenstone, PhD, and Adam Looney, PhD, in their Sep. 2010 Hamilton Project Report, “Ten Economic Facts about Immigration, available at brookings.edu, stated:
“Taxes paid by immigrants and their children—both legal and unauthorized—exceed the costs of the services they use… Many government expenses related to immigrants are associated with their children. From a budgetary perspective, however, the children of immigrants are just like other American children… Both the immigrant children and children of U.S.-born citizens are expensive when they are young because of the costs of investing in children’s education and health. Those expenses, however, are paid back through taxes received over a lifetime of work. The consensus of the economics literature is that the taxes paid by immigrants and their descendants exceed the benefits they receive—that on balance they are a net positive for the federal budget.”Sep. 2010 - Adam Looney, PhD Michael Greenstone, PhD
Francine J. Lipman, MBA, LLM, Professor of Law at Chapman University School of Law, in the Spring 2006 Harvard Latino Law Review article “Taxing Undocumented Immigrants: Separate, Unequal and Without Representation,” wrote:
“[U]ndocumenteds actually contribute more to public coffers in taxes than they cost in social services…
[E]ach year undocumented immigrants add billions of dollars in sales, excise, property, income and payroll taxes, including Social Security, Medicare and unemployment taxes, to federal, state and local coffers. Hundreds of thousands of undocumented immigrants go out of their way to file annual federal and state income tax returns.
Yet undocumented immigrants are barred from almost all government benefits…Generally, the only benefits federally required for undocumented immigrants are emergency medical care, subject to financial and category eligibility, and elementary and secondary public education. Many undocumented immigrants will not even access these few critical government services because of their ever-present fear of government officials and deportation.
Undocumented immigrants living in the United States are subject to the same income tax laws as documented immigrants and U.S. citizens. However, because of their status most unauthorized workers pay a higher effective tax rate than similarly situated documented or U.S. citizens. Yet, these workers and their families use fewer government services than similarly situated documented immigrants or U.S. citizens…As a result, undocumented immigrants provide a fiscal windfall and may be the most fiscally beneficial of all immigrants.”Spring 2006 - Francine J. Lipman, MBA, LLM
Ricardo Parra, former Executive Director of the Midwest Council of La Raza at the University of Notre Dame, in his Aug. 29, 2006 prepared statement to the U.S. House of Representatives Judiciary Committee Hearing on Immigration, “The Reid-Kennedy Bill: The Effect on American Workers’ Wages and Employment Opportunities,” stated:
“The claims that illegal immigrants are costing taxpayers so much are unfounded, over blown, or somehow skewed based on how the analysis is done or what factors are often left out. Actually, undocumented [immigrants] have been a benefit to our economy…
Fact: Undocumented immigrants pay taxes in a number of ways, including income and sales tax. The majority of undocumented immigrants pay taxes using Individual Taxpayer Numbers (ITINs) or false Social Security numbers… [T]he Social Security Administration reports that it holds $420 billion from the earnings of immigrants who are not in a position to claim benefits…
Fact: Undocumented immigrants are ineligible for the vast majority of state and federal benefits and are only eligible for those that are considered important to public health and safety.”Aug. 29, 2006 - Ricardo Parra
Donald Trump, 45th President of the United States, as quoted in a Mar. 1, 2016 US News article, “’Undocumented’ Immigrants Pay Billions in Taxes,” available at usnews.com, stated:
“Do you think that an illegal immigrant getting money is going to be paying taxes? OK, sure, some probably do, only because the employers are insisting on it. But there’s very little, percentage-wise. There’s very little. Probably 5 percent, 10 percent. It’s a very small amount [who] pay taxes.”Mar. 1, 2016 - Donald J. Trump
The Federation for American Immigration Reform (FAIR) in a 2013 report, “The Fiscal Burden of Illegal Immigration on United States Taxpayers,” available at fairus.org, stated:
“Illegal immigration costs U.S. taxpayers about $113 billion a year at the federal, state and local level. The bulk of the costs — some $84 billion — are absorbed by state and local governments…
At the federal level, about one-third of outlays are matched by tax collections from illegal aliens. At the state and local level, an average of less than 5 percent of the public costs associated with illegal immigration is recouped through taxes collected from illegal aliens.
Most illegal aliens do not pay income taxes. Among those who do, much of the revenues collected are refunded to the illegal aliens when they file tax returns. Many are also claiming tax credits resulting in payments from the U.S. Treasury.”2013 - Federation for American Immigration Reform (FAIR)
Robert Rector, MA, and Jason Richwine, PhD, in their May 6, 2013 Heritage Foundation report, “The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer,” available at heritage.org, stated
“Children in unlawful immigrant households receive heavily subsidized public education. Many unlawful immigrants have U.S.-born children; these children are currently eligible for the full range of government welfare and medical benefits. And, of course, when unlawful immigrants live in a community, they use roads, parks, sewers, police, and fire protection; these services must expand to cover the added population or there will be ‘congestion’ effects that lead to a decline in service quality.
In 2010, the average unlawful immigrant household received around $24,721 in government benefits and services while paying some $10,334 in taxes. This generated an average annual fiscal deficit (benefits received minus taxes paid) of around $14,387 per household. This cost had to be borne by U.S. taxpayers.”May 6, 2013 - Jason Richwine, PhD Robert Rector, MA
Randy Alcorn, Senior Writing Fellow for Californians for Population Stabilization (CAPS), in the Sep. 2007 CAPS online article “A Presumption That Taxes Probability,” wrote:
“While it is empirically true that illegal immigrants are hard working, the presumption that they pay their fair share of taxes is not as visibly verifiable or probable…
Although illegal immigrants pay billions of dollars in Social Security taxes, Social Security taxes are not the main source of revenue for state and federal government—income taxes are…[W]hile illegal immigrant workers have less opportunity to avoid Social Security tax withholdings, they do have opportunity and motivation to avoid income tax withholdings.
So, even if an illegal immigrant worker, who in order to reduce tax withholdings had claimed exemptions for dependents living in Mexico, decided to file tax returns, he or she would likely have a larger tax liability than expected. What are the odds that he or she would come up with the money to pay the additional tax bill after the IRS denied the non-qualifying exemptions? And, if the illegal alien falsely claimed that the dependents did live in the U.S., he or she would still be evading his or her fair share of taxes…
By evading taxes, benefiting from taxpayer provided services, and undermining the wage scale of legal workers, it is highly unlikely that illegal immigrants are a net benefit to most Americans.”Sep. 2007 - Randy Alcorn
Steven A. Camarota, MA, PhD, Director of Research at the Center for Immigration Studies (CIS), in the Aug. 2004 CIS report “The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget,” wrote:
“When defense spending is not considered, illegal households are estimated to impose costs on the federal treasury of $6,949 a year or 58 percent of what other households received. When defense spending is included, their costs are only 46 percent those of other households. However, they pay only 28 percent as much in taxes as non-illegal households. As a result, the estimated net cost per illegal household was $2,736. Whether one sees this fiscal deficit as resulting from low tax payments or heavy use of services is a matter of perspective. As already discussed, illegal households comprise 3.6 percent of the total population, but…they account for an estimated 0.9 percent of taxes paid and 1.4 percent of costs.”Aug. 2004 - Steven A. Camarota, PhD