Wednesday, July 10, 2013
Institute on Taxation and Economic Policy, Undocumented Immigrants’ State and Local Tax Contributions:
The potential fiscal costs of legalizing undocumented immigrants have been central to the immigration reform debate. This report contributes the most reliable figures available about the potential benefits to state governments, showing that the 11.2 million undocumented immigrants living in the United States are already paying a significant share of their income in state and local taxes, and that figure would rise under immigration reform.
A report from the non-partisan Congressional Budget Office (CBO) estimated the impact the immigration bill passed in the Senate would have at the federal level and found that it would decrease the deficit and generate more than $450 billion in additional federal revenue over the next decade.
This report provides state-by-state estimates of the state and local tax contributions of the 11.2 million undocumented immigrants living in the United States.
The key findings are:
- Undocumented immigrants currently contribute significantly to state and local taxes, collectively paying an estimated $10.6 billion in 2010 with contributions ranging from less than $2 million in Montana to more than $2.2 billion in California. This means these families are likely paying about 6.4 percent on average of their income in state and local taxes.
- Allowing undocumented immigrants to work in the United States legally would increase their state and local tax contributions by an estimated $2 billion a year. Their effective state and local tax rate would also increase to 7 percent on average, which would put their tax contributions more in line with documented taxpayers with similar incomes.