A new study shows that undocumented immigrants paid nearly $100 billion in federal, state, and local tax revenue in 2022 while many are shut out of the programs their taxes fund. The findings run counter to anti-immigrant rhetoric that undocumented immigrants are “destroying” social programs. The study, released by the Institute on Taxation and Economic Policy, a left-leaning, nonprofit think tank, reveals that undocumented immigrants paid higher tax rates than the top 1% in 40 states. In total, their contributions amounted to $96.7 billion last year.
The report highlights that undocumented immigrants are paying 46% of their state and local tax payments through sales and excise taxes. States like New Jersey, New York, California, Florida, Texas, and Illinois each raised over $1 billion in tax revenue from this group. Despite these contributions, undocumented immigrants are not eligible to enroll in and receive regular benefits from programs like Medicare, Social Security, and Unemployment Insurance, which their payroll taxes fund. They also face barriers to getting tax refunds, often falling prey to unscrupulous tax preparers.
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Richard C. Auxier from the Urban-Brookings Tax Policy Center points out that undocumented workers, like all people, pay normal taxes but are excluded from the benefits they fund. This exclusion is particularly striking in states like Florida, where undocumented immigrants pay an 8% tax rate compared to the top 1% who pay 2.7%.
Alexis Tsoukalas from the Florida Policy Institute noted the disparity, highlighting that everyday people contribute more than their share to public services they cannot access, while the wealthiest contribute the least.
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The report also underscored the economic ripple effects of deporting undocumented immigrants. Carl Davis, research director at the Institute on Taxation and Economic Policy, explained that deportations reduce taxable purchases in communities, affecting local businesses and overall economic health. Auxier added that while children in undocumented households might initially receive more in education benefits than their parents pay in taxes, over time, as these children enter the workforce, they become net contributors to the economy.
Policy experts argue that embracing the economic contributions of undocumented immigrants is crucial, especially amid a labor shortage with 8.1 million job openings and 6.8 million unemployed workers. The potential economic and human impact of mass deportations would exacerbate these shortages, warned Jackie Vimo from the National Immigration Law Center.
In a political climate where immigration policies are increasingly restrictive, the study emphasizes the significant economic role undocumented immigrants play. Their contributions challenge the narratives that often dominate political discourse, underscoring the need for more inclusive and fair policies that recognize their integral role in the economy.
