Undocumented Immigrants Pay Substantial State and Local Taxes

On February 24, 2016, the Institute on Taxation and Economic Policy released a 50-state study titled “Undocumented Immigrants’ State and Local Tax Contributions.” The study found that the 11 million undocumented immigrants currently living in the United States pay $11.64 billion in state and local taxes per year. This is an average of approximately 8{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of the immigrants’ incomes, while the top 1{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of United States taxpayers pay an average of just 5.4{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of their incomes. In Colorado, undocumented immigrants pay almost $135 million in state and local taxes.

Undocumented immigrants pay taxes in a variety of ways. More than 50{b6b8f04f7bd4b863c4cfed8339fd19419bda3e071c79bc5ac8c810cb9c52e30f} of undocumented households currently file income tax returns using Individual Tax Identification Numbers (ITINs). Many who do not file tax returns still have taxes deducted from their paychecks. Undocumented immigrants also pay sales and excise taxes when they purchase goods and services, and they pay taxes on their homes, either directly as owners or indirectly as renters.

The state and local tax contributions of undocumented immigrants would increase by $805 million if President Obama’s 2012 and 2014 executive actions are fully implemented. The tax contributions would increase by $2.1 billion under comprehensive immigration reform, if all undocumented immigrants in the United States were permitted to work legally. In Colorado, the tax contributions with implementation of President Obama’s executive actions would increase over $16 million, while comprehensive immigration reform would increase tax contributions by almost $36 million.

Creating a pathway to citizenship for the 11 million undocumented immigrants currently in the United States would boost tax revenue significantly, resulting in a substantial benefit to the United States.

For more information and for interactive maps by state, please see http://www.itep.org/immigration/