Who said undocumented immigrants only take from the system? Contrary to popular misconceptions, undocumented immigrants contribute significantly to the U.S. economy, paying nearly $100 billion in federal, state, and local taxes in just one year. This finding, from the Institute on Taxation and Economic Policy (ITEP), a nonprofit, nonpartisan tax policy organization, challenges the narrative that undocumented immigrants are a drain on public resources.
More than a third of these tax dollars go toward payroll taxes that are dedicated to funding programs from which these workers are largely excluded: Despite contributing to Social Security, Medicare, and unemployment insurance, undocumented immigrants cannot access most of these benefits.
According to ITEP, undocumented immigrants paid $96.7 billion in taxes in 2022, with $59.4 billion going to the federal government and $37.3 billion to state and local governments. With an undocumented population of 10.9 million people, this tax contribution averages $8,889 per person. This means that for every million undocumented immigrants, public services receive $8.9 billion in additional tax revenue.
In 40 states, undocumented immigrants pay higher state and local tax rates than the top 1% of households. U.S. income tax laws often require undocumented immigrants to pay more than their U.S. citizen counterparts in similar situations.
At the state and local levels, 46% of the taxes paid by undocumented immigrants come from sales and excise taxes on their purchases, amounting to $15.1 billion. Property taxes, paid by both homeowners and renters, account for 31 percent, or $10.4 billion. The remaining 21%, or $7 billion, comes from personal and business income taxes.
Six states each raised more than $1 billion in tax revenue from undocumented immigrants: California ($8.5 billion), Texas ($4.9 billion), New York ($3.1 billion), Florida ($1.8 billion), Illinois ($1.5 billion), and New Jersey ($1.3 billion).
Undocumented immigrants also paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022. However, they are often barred from receiving meaningful tax credits and may not claim refunds due to a lack of awareness, concerns about their immigration status, or insufficient access to tax preparation assistance.
ITEP argues that granting work authorization to undocumented immigrants would increase their tax contributions significantly. With work authorization, their contributions could rise by $40.2 billion per year, totaling $136.9 billion. Most of this new revenue—$33.1 billion—would benefit the federal government, while $7.1 billion would flow to state and local governments.
“These figures make clear that immigration policy choices have substantial implications for public revenue at all levels of government,” the report’s authors concluded.
Contrast this with the claim made in January 2024 before the Immigration Integrity, Security, and Enforcement Subcommittee of the House Judiciary Committee by Steven A. Camarota of the Center for Immigration Studies. At a hearing titled “The Impact of Illegal Immigration on Social Services,” Camarota said that “illegal immigrants are a net fiscal drain, meaning they receive more in government services than they pay in taxes.”
While acknowledging that “illegal immigrants actually have high rates of work, and they do pay some taxes, including income and payroll taxes,” Camarota claimed they are a net drain because “they have a low average education level, which results in low average earnings and tax payments.”
Camarota further argued that “a large share qualify for welfare programs, often receiving benefits on behalf of their U.S.-born children. Like their less-educated and low-income U.S.-born counterparts, the tax payments of illegal immigrants do not come close to covering the cost they create.”
ITEP’s report clearly disputes Camarota’s assertions. In addition, Pew Center data shows that non-Hispanic white people accounted for 44.6% of adult SNAP recipients and 31.5% of child recipients in 2020, while about 27% of both adult and child recipients were Black. Hispanic people, who can be of any race, accounted for 21.9% of adult recipients and 35.8% of child recipients.
Those are the facts!
EDITOR’S NOTE: Felicia J. Persaud is the publisher of NewsAmericasNow.com, a daily news outlet focused on positive news on the Black immigrant communities of the Caribbean and Latin America.