Immigration Reform Would Net States More Tax Revenue

An ITEP report released today found that the 11.4 million undocumented immigrants living in the US  contribute significantly to state and local taxes – to the tune of $11.84 billion in 2012, our analysis shows. Under the terms of President Obama’s executive actions on immigration that figure could increase by $845 million a year; if legal status were granted to all undocumented immigrants their state and local tax contributions would increase by $2.2 billion a year.  

Immigration reform efforts have languished in Congress since 2005, and more recently the House of Representatives failed to consider a comprehensive immigration bill passed by the Senate in 2013. A frustrated President Obama announced last November that he would offer temporary legal status to close to 4 million undocumented immigrants who are parents of US citizens or lawful permanent residents and who pass a background check. He also expanded his 2012 order to defer deportation for undocumented immigrants who arrived in the country as children. Roughly 5.2 million undocumented immigrants could benefit from the president’s 2012 and 2014 proposals.

In February a federal judge in Texas temporarily blocked the president’s executive actions in response to a lawsuit against the federal government by 26 states. Judge Andrew Hanen granted the injunction on the grounds that the suing states “would suffer irreparable harm in this case” were the executive actions enforced before the lawsuit wound its way through the federal judiciary, since a revocation of legal status would be extraordinarily unlikely and since the states would be forced to increase “investment in law enforcement, health care and education. 

Our recent report shows that granting legal status to undocumented immigrants would be a net benefit to states since these workers already contribute to paying for state and local services and would pay even more taxes were they allowed to work legally. In Texas, where the injunction was granted, undocumented immigrants already pay an estimated $1.5 billion a year in taxes, and under the terms of Obama’s executive actions they would pay an additional $57 million.

Despite contrary claims – similar to the falsehood that 47 percent of Americans do not pay taxes – the reality is that undocumented immigrants contribute to paying for local and state services. Those who make these arguments focus narrowly on federal income taxes, ignoring the sales, excise and property taxes to which all Americans contribute and which make up a significant share of taxes collected. Extending lawful permanent residence to those who are currently undocumented would be a positive benefit for the economy and the communities where undocumented immigrants live, allowing them to fully contribute and support the important work we do together.