Undocumented immigrants in US pay nearly $100B in taxes

Undocumented immigrants paid almost $100 billion of taxes, underscoring the importance of border policies on the country's tax collections, according to a new report.

One of the most common arguments for curtailing immigration is the cost borne by the US government. But undocumented immigrants pay more than a quarter, about 26%, of their income in taxes, in line with the median taxpayer, according to a report released Tuesday by the Institute on Taxation and Economic Policy, a left-leaning think tank.

In total, undocumented immigrants paid $96.7 billion, or roughly $9,000 per person, in taxes in 2022, the report shows. While their incomes are usually lower, they're less likely to claim refunds or earn tax-preferred income.

A worker picking apples
A worker picking apples
Ty Wright/Bloomberg

About one-third of the total dollars collected from undocumented immigrants funded programs they're mostly barred from using, including $26 billion to Social Security and $6 billion to Medicare, the report said.

ITEP estimated tax payments including sales and excise taxes, property taxes paid directly or on taxes folded into rent payments, and payroll taxes, which are paid either through paycheck withholding or filing income tax returns. 

According to the report, the nation's undocumented immigrant population is concentrated in a handful of states — more than half live in California, Texas, Florida and New York. Six states, including New York and California, received more than $1 billion in tax revenue from their undocumented residents.  

Nearly 11 million undocumented immigrants live in the country as of 2022 and an ongoing surge has helped cool the labor market.

The report estimated that providing a path to work authorization would raise the tax contributions of undocumented workers by improving their tax compliance and wages — data demonstrate that immigrants with employment authorization earn higher wages. If all undocumented immigrants were legally allowed to work in the US, their tax contributions would increase by $40 billion per year.

Recipients of Deferred Action for Childhood Arrivals, or DACA, already have work authorization and were not included in the report's estimates.

Bloomberg News
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