BY ESTHER YU-HSI LEE – – – –
Particularly as GOP presidential candidates promise to deport the estimated 11 million undocumented immigrants living in the United States, there’s a lot of public debate over whether those people make any significant contributions in this country.
But there is one area where they are clearly contributing. Undocumented immigrants living in the United States pay $11.6 billion in state and local taxes annually, according to an updated Institute of Taxation and Economic Policy report.
“Regardless of the politically contentious nature of immigration reform, the data show undocumented immigrants greatly contribute to our nation’s economy, not just in labor but also with tax dollars,” Meg Wiehe, ITEP State Tax Policy Director, said in a press release.
Using state-by-state and national estimates of the undocumented population living in the United States as of 2013, the report found that Montana’s 4,000 undocumented immigrant population paid $2.2 million in taxes, while California’s more sizeable three million undocumented immigrant population paid $3.1 billion. To put that into perspective, undocumented immigrants paid an estimated effective state and local tax rate of eight percent of their income in state and local taxes, a higher percentage than the 5.4 percent paid by the top one percent of U.S. taxpayers.
The report also estimated that the implementation of President Obama’s 2014 executive actions on immigration to allow as many as five million undocumented immigrants to legally work in the country would have a “positive effect on effects on labor market growth and productivity.”
“With immigration policy playing a key role in state and national debates and President Obama’s 2014 executive action facing review by the Supreme Court, accurate information about the tax contributions of undocumented immigrants is needed now more than ever,” Wiehe explained.
These executive actions, known as the Deferred Action for Parents of Americans (DAPA) and an expanded program for people who aged out of the original Deferred Action for Childhood Arrivals (DACA) initiatives, are currently put on hold after 26 states sued the Obama administration for overstepping its constitutional authority. The Supreme Court recently indicated that it could likely take up the lawsuit, though the death of Antonin Scalia may delay the Court’s decision. Still, the report estimated that tax contributions could increase by an estimated $805 million a year if those executive actions are put in place.
What’s more, the report also found that fully granting legal status to all undocumented immigrants at the federal level as part of a comprehensive immigration reform package would increase their state and local tax contributions by an estimated $2.1 billion a year, increasing the effective state and local tax rate for this population by 0.5 percent.
Though this evidence is often neglected in the 2016 presidential debate over undocumented immigrants, the findings of the report aren’t new. A 2013 Center for American Progress studyfound that U.S. gross domestic product, or GDP, would grow by an additional $1.4 trillion cumulatively over the 10 years between 2013 and 2022 if undocumented immigrants were granted legal status. And a 2015 study from the same institution found that potential recipients of deferred action could contribute an estimated total of $103 billion more over the next decade, with the GDP increasing cumulatively by $230 billion over the next 10 years.