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Immigration 101: Do Immigrants Pay Taxes?

 

The basic answer: yes.

Immigrants, including those without documentation, pay billions of dollars in taxes to federal, state and local governments every year. Immigrants paid $405.4 billion in taxes in 2017, including an estimated $27.2 billion in taxes paid by undocumented immigrants.

Immigrants have always been, and continue to be vital, to the United States — a country made up of immigrants. Immigrant taxes support local schools, Social Security, and Medicaid, among other programs. However, immigrants are unable to benefit from programs such as Social Security and Medicaid, which are only accessible to permanent residents and U.S. citizens.

Immigrant tax contributions help establish a robust tax base, which means that mass-deporting immigrants from the U.S. or preventing new migrants from coming would have disastrous effects on the economy. In 2013, the Senate passed a bipartisan immigration reform bill, and the nonpartisan Congressional Budget Office determined that passing the bill into law would reduce the U.S. deficit by $197 billion over 10 years. (Then-Senator Jeff Sessions, convinced of the harmfulness of the bill, wrote to the CBO and asked for a 20-year score, and the CBO found that the bill would have reduced deficits by an additional $700 billion in the law’s second decade.)

The data from the New American Economy puts numbers to the important role immigrants play in the U.S. economy. here are some of the highlights:

All immigrants

There are some 44.4 million immigrants in the U.S., making up 13.6 percent of the total population. They paid $405.4 billion in taxes in 2017 and deployed $1.1 trillion in spending power.  Some 7.9 million people are employed by businesses owned by immigrants. 14.7 percent of nurses in the U.S. are foreign-born, while 22.7 percent of health aides are foreign-born. These are both critical professions for the aging population of the U.S. — especially in less-populated places.

Undocumented immigrants

Undocumented immigrants paid $27.2 billion in taxes in 2017, $9.9 billion of which went to state and local governments, and had a total spending power of $200.6 billion. In 2013, Stephen Goss, the chief actuary of the Social Security Administration said, “we estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally.”

DACA and TPS recipients

DACA and TPS recipients also pay taxes to the tune of $5.5 billion dollars. The DACA-eligible population pays $4 billion in taxes, with $1.8 billion going to state and local governments. TPS holders pay $1.5 billion in taxes, with $653.8 million going to state and local governments.

Highlights from the state numbers

State Net economic  benefit for the state Total taxes paid Spending power Federal

taxes paid

Local and state taxes paid
California All immigrants in State $38.7 B $105.1 B $282.8 B $73.5 B $31.5 B
Undocumented

immigrants

$5.9 B $42.7 B $3.9 B $2.0 B
DACA recipients $999.9 M $4.9 B $581.3 M $418.6 M
TPS recipients $257.2 M $988 M $152.6 M $104.6 M
Arizona All immigrants in State $2.1 B $6.2 B $19.3 B $4.2 B $2.1 B
Undocumented

immigrants

$480 M $3.8 B $290.5 M $190.1 M
DACA recipients $99.8 M $491.7 M $49.6 M $50.2 M
Colorado All immigrants in State $1.1 B $4.2 B $12.9 B $2.9 B $1.2 B
Undocumented

immigrants

$415.7 M $3.4 B $267.9 M $147.7 M
DACA recipients $75.7 M $419.8 M $44.0 M $31.8 M
Illinois All immigrants in State $8.0 B $17.6 B $46.6 B $11.5 B $6.0 B
Undocumented

immigrants

$1.3 B $9.2 B $720.0 M $539.1 M
DACA recipients $209.0 M $947.9 M $103.1 M $105.9 M
Texas All immigrants in State $12.3 B $34.8 B $109.9 B $24.4 B $10.4 B
Undocumented

immigrants

$3.7 B $30.6 B $2.3 B $1.4 B
DACA recipients $596.2 M $2.9 B $313.6 B $282.5 B
Georgia All immigrants in State $2.8 B $9.3 B $25.9 B $6.4 B $2.9 B
Undocumented

immigrants

$839.4 M $6.4 B $515.2 M $324.3 M
DACA recipients $120.6 M $610.3 M $64.6 M $56.0 M
TPS recipients $47.5 M $180.6 M $20.4 M $27.1 M
Florida All immigrants in State $10.4 B $28.7 B $91.9 B $20.9 B $7.8 B
Undocumented

immigrants

$1.6 B $13.2 B $1.1 B $533.8 M
DACA recipients $256.6 M $1.3 B $141.7 M $114.9 M
TPS recipients $131.7 M $568.7 M $57.4 M $74.3 M
North Carolina All immigrants in State $1.5 B $6.4 B $18.6 B $4.4 B $2.0 B
Undocumented

immigrants

$631.8 M $5.3 B $378.9 M $252.9 M
DACA recipients $77.7 M $456.6 M $39.9 M $37.8 M
TPS recipients $59.2 M $235.8 M $26.0 M $33.2 M
Pennsylvania All immigrants in State $1.9 B $8.7 B $22.9 B $6.0 B $2.7 B
Undocumented

immigrants

$532.8 M $3.7 B $338.9 M $193.9 M
DACA recipients $43.1 M $204.4 M $22.4 M $20.7 M
New York All immigrants in State $18.1 B $51.6 B $117.8 B $33.1 B $18.5 B
Undocumented

immigrants

$3.2 B $18.3 B $2.0 B $1.2 B
DACA recipients $359.3 M $1.4 B $203.0 M $156.3 M
TPS recipients $188.2 M $551.0 M $83.2 M $104.9 M

How do undocumented immigrants pay taxes?

It is the law that everyone who resides in the U.S. and earns income must pay taxes on that income, regardless of their immigration status. This puts undocumented workers in something of a legal quandary. They are required to file a tax return but lack the Social Security Number necessary to file such a return. Many immigrants in such a situation use an Individual Taxpayer Identification Number (ITIN), to legally file tax returns and report their income to the IRS.   

Created in 1996, the ITIN allows for noncitizens in the U.S. to pay income earned in the U.S. while not technically employed by a U.S employer. Basic information is required to obtain an ITIN, but proof of work authorization and legal immigration status is not required. In 2015, 4.35 million people paid over $13.7 billion in taxes using an ITIN.

It is also important to note that ITIN holders’ tax information is legally protected and their information and cannot be shared with DHS or ICE.  

Here are some stories of immigrants paying taxes