Undocumented Immigrants Pay More In Taxes Than The Top 1 Percent

Kate Brown
Undocumented immigrants are paying much more than you would think in taxes—that includes sales tax, property tax, and, to the confusion of some, income tax.

immigration reform

Republican front-runner Donald Trump has blatantly exposed a fear spread throughout the Republican Party and is using it to his advantage: undocumented immigrants and their ability to “steal jobs” away from Americans, taking money away from hard-working Americans and contributing nothing in taxes.

However, as many of his talking points have proven to be, these are based on nothing more than anxieties and fears, having nothing to with actual facts.

The Institute on Taxation and Economic Policy released a report this week that highlights some interesting facts (the GOP’s worst allergy).

The study found that undocumented workers actually pay a lot in taxes—almost $12 billion annually. That amount would only increase if there were to be immigration reform.

“Undocumented immigrants contribute significantly to state and local taxes, collectively paying in estimated $11.54 billion a year,” the report of the study states. “Contributions range from almost $2.2 million in Montana with an estimated undocumented population of 4,000 to more than $3.1 billion in California, home to more than 3 million undocumented immigrants.”

undocumented immigrants

Another important find of the study: “Undocumented immigrants nationwide pay on average an estimated 8 percent of their incomes in state and local taxes (this is their effective state and local tax rate). To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent.”

How exactly are they paying taxes if they are undocumented workers? Easy: sales tax (when you buy goods or services like food, gas, or clothing), property tax (when you buy a house or property), and income taxes (when they are paid for services that they provide).

While the sales tax and property tax are pretty self-explanatory, income taxes are a little more complicated.

The first question that might come to mind when you hear that undocumented workers pay income tax is, “How could the government be taking money out of their paycheck if they aren’t allowed to work in the U.S.?”

Mic explains this perfectly:

The stereotypical idea of how undocumented immigrants are paid is that it's all done off the books — workers are quietly paid low wages in cash in exchange for not exposing their legal status. But there are a number of studies that estimate that at least half of undocumented immigrants pay income taxes using false Social Security numbers or individual taxpayer identification numbers (a code for tracking tax payments for people ineligible for Social Security numbers, like foreign nationals authorized to work). Some of them file income tax returns, and some don't — either way, both income tax and payroll tax are withheld from their paychecks, and become a source of government revenue.  Combined, these taxes come out to $11.6 billion, according to the ITEP report.

illegal immigrants

Even more importantly, the study found that if we were to have serious immigration reform, the numbers would only increase: “Granting legal status to all undocumented immigrants in the United States as part of a comprehensive immigration reform and allowing them to work legally would increase their state and local tax contributions by an estimated $2.1 billion a year. Their nationwide effective state and local tax rate would increase to 8.6 percent.”

What’s more, President Barack Obama has already put some immigration reforms in place that would increase state and local tax contributions of these undocumented immigrants by “an estimated $805 million a year once fully in place.”

Despite these incredible statistics, we all know that the GOP is going to promptly ignore these facts and continue to spew hate and anxiety about undocumented workers getting “free handouts” and working without contributing their fair share of taxes. 

Banner Image Credit: michaelrighi/Flickr