Recent research from the Institute on Taxation and Economic Policy (ITEP) reveals that undocumented immigrants contributed an astounding $96.7 billion in federal, state, and local taxes in 2022. Six of the most immigrant-populous states accounted for a combined $21.1 billion of these contributions, with California leading the way at $8.5 billion in tax revenue. The research further showed that these workers pay into programs that they’re barred from accessing, and in most areas pay higher state and local tax rates than their wealthiest neighbors.
Despite ugly anti-immigrant rhetoric and misconceptions, the fact is that immigrants contribute – a lot. ITEP found:
“More than a third of the tax dollars paid by undocumented immigrants go toward payroll taxes dedicated to funding programs that these workers are barred from accessing. Undocumented immigrants paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022.”
Stephen Goss, the chief actuary of the Social Security Administration, said in 2014 that undocumented workers paid about $100 billion into Social Security over the previous decade, helping keep the fund solvent for retired and disabled Americans. Immigrants also contribute more than their fair share. ITEP’s research found that across 40 states, “undocumented immigrants pay higher state and local tax rates than the top 1 percent of households living within their borders”:
“Measured relative to their incomes, undocumented immigrants nationwide paid an average effective state and local tax rate of 8.9 percent toward funding public infrastructure, services, and institutions in their home states. To put this in perspective, the nation’s most affluent taxpayers (those in the top 1 percent of the income scale) paid an average nationwide effective tax rate of just 7.2 percent to their home states.”
Putting these long-settled workers onto a pathway to legalization would be a massive economic boon for the nation, pumping an additional $40 billion in tax revenue into the nation’s coffers, ITEP said. Immigration has been good for the country – and creating a line for millions of long-settled workers and families to fix their immigration status would continue to be beneficial to the nation’s economy and future.
“This study is the most comprehensive look at how much undocumented immigrants pay in taxes. And what it shows is that they pay quite a lot, to the tune of nearly $100 billion a year,” said Marco Guzman, ITEP Senior Policy Analyst and co-author of the study. “The bottom line here is that regardless of immigration status, we all contribute by paying our taxes.”
ITEP’s research echoed the recent findings from the Congressional Budget Office (CBO) on the positive impact of immigrants, which said recent arrivals will help keep inflation in check and drive down the federal deficit by nearly $1 trillion over the next decade. “In CBO’s projections, from 2024 to 2034, inflation is almost unchanged by the surge in immigration,” the report said. More from The Hill’s Rafael Bernal:
“That group is expected to generate $1.175 trillion in increased federal revenue in the 2024-2034 period and $270 billion in mandatory outlays and net federal spending for a net decrease of $897 billion in the federal deficit.”
“Figures shows that the record-high immigration of recent years has been what has kept the U.S. economy afloat, filling vacant job positions,” Nicholas Dale Leal writes at EL PAÍS América. Last year, CNBC reported that the construction industry was facing a shortage of more than 650,000 workers, “the highest level of open positions ever recorded.” But across the U.S., nearly ten million jobs are currently vacant, lawmakers noted. “The U.S. Chamber of Commerce showed that between 20 and 60 percent of jobs remained unfilled in key work sectors including manufacturing, wholesale and retail trade, financial services, professional and business services, and leisure and hospitality.”
“Immigrants are entrepreneurs,” Giovanni Peri, an economist at the University of California and founder and director of the Global Migration Center, told Leal. “They start companies at a much higher rate than Americans, which contributes to job creation by generating demand for labor. Second, many immigrants are scientists, engineers, and innovators who contribute to productivity growth. Third, they are also consumers, which increases demand for goods and services, which in turn drives demand for labor.”
Leal concludes: “The fact that the economy has not collapsed following the Covid pandemic and the war in Ukraine is also due to measures such as the Fed’s interest rate hikes, which have stabilized inflation, and the enormous investment facilitated by legislation such as the Inflation Reduction Act or the CHIPS Act, which has revitalized entire sectors of the economy. But in the end, immigrants are the reason why the consistently growing job vacancies have been filled.”
