DACA’s Tax Benefits Highlight The Need For Broader Immigration Reform

Jacqueline Lainez Flanagan (District of Columbia), DACA’s Tax Benefits Highlight the Need for Broader Immigration Reform, 107 Tax Notes St. 955 (March 13, 2023):

The Search for Tax Justice is a Tax Notes State series examining the inequities inherent in state and federal taxes.

In this installment, Jacqueline Laínez Flanagan, associate professor of law at the University of the District of Columbia David A. Clarke School of Law, argues that the tax revenue benefits of the Deferred Action for Childhood Arrivals program illustrate the need for additional, innovative approaches to immigration reform.

America’s aging population and declining birth rates are negatively affecting the nation’s Social Security and Medicare safety nets, reducing tax revenue, and weakening the broader economy. Meanwhile, immigration is increasing workforce participation by expanding the number of young adults in the United States. Despite political setbacks, the Deferred Action for Childhood Arrivals (DACA) program exemplifies the economic and tax benefits of immigration, providing data and the impetus for a better way forward. Although not all DACA eligible youth have registered for it, it is estimated that in 2017 alone, more than $2.2 billion in federal taxes were paid by DACA-eligible youth — directly benefitting Social Security and Medicare.

Enacted under President Obama in 2012, DACA allowed youths who qualified for the program the right to legal employment in the United States, with estimates indicating a 91 percent employment rate for DACA recipients. DACA protection allows immigrant youths with no other path to legalization the opportunity to work, seek higher education, and pay taxes. Tax contributions from workers covered under DACA add to state and local tax receipts, including sales, property, and income taxes. In 2019 DACA recipients paid a total of $3.1 billion in state and local taxes and $5.7 billion in federal taxes. Despite its myriad benefits, DACA is temporary, intended as a stopgap, and perennially underattack — most recently by nine state attorneys general. This article contrasts DACA’s macroeconomic success and increased opportunities for young immigrants with the seemingly intractable political constraints to larger reform, urging increased innovative approaches to immigration reform.