Billions in Taxes Paid by Undocumented Immigrants

Yahoo Finance ran an interesting article recently titled: “Undocumented Immigrants Pay Billions in Taxes: Study“.

The article recognized how immigration reform is a hot button issue in the United States today.  It concluded that undocumented immigrants pay a large amount of taxes while in the United States (an estimated $11.64 billion in state and local taxes annually).

““The best evidence suggests that at least 50% of undocumented immigrant households currently file income tax returns using Individual Tax Identification Numbers (ITINs), and many who do not file income tax returns still have taxes deducted from their paychecks,” the report says. (As of 2013, there are 11 million undocumented immigrants living in the US.) Included in their near $12 billion in state and local taxes contribution, around $6.9 billion comes from sales and excise taxes, $3.6 billion from property taxes and $1.1 billion from personal income taxes.

Undocumented immigrants in the US pay on average an estimated 8% of their incomes in state and local taxes – compare that to the top 1% of taxpayers who pay an average effective tax rate of 5.4%, according to the report.”

The article went on to say that if all undocumented immigrants were granted legal status,  (which would allow them to stay in the U.S, and work legally) their respective state and local tax contributions would increase by around $2.1 billion a year.

“In addition, President Obama’s executive actions in 2012 and 2014 – called Deferred Action for Childhood Arrivals and Deferred Action for Parents of Americans and Lawful Permanent Residents – provides eligible undocumented immigrants work permits and temporary relief from deportation. The Supreme Court is scheduled to review the executive actions this spring, and if it rules in favor of the Obama administration, it could make way for an increase in tax contributions from the 5 million undocumented immigrants who stand to benefit”.

The article went on to say that if President Obama’s programs were to be  fully implemented, current state and local tax contributions could increase by more than $805 million.   In addition, if Congress were to pass comprehensive immigration reform our country would benefit even more.  This legislation would likely lead to a wider range of employment opportunities, higher pay for the immigrants, and higher taxes (which would benefit us all).

Lawrence Gruner is a Sacramento Immigration Attorney , green card attorney, and fiance visa attorney who handles cases throughout California, the United States, and the World.  He would be happy to talk to you about your Immigration questions.  He may be reached at 916-760-7270.