Undocumented immigrants paid $96.7 billion in taxes to the U.S. in 2022

A new study from the Washington-based Institute on Taxation and Economic Policy (ITEP) finds that Caribbean and other undocumented immigrants paid $96.7 billion in federal, state and local taxes in 2022.

The study found that the majority of that amount, $59.4 billion, was paid to the federal government, with the remaining $37.3 billion going to state and local governments.

The report said undocumented immigrants paid $8,889 in federal, state and local taxes each in 2022.

In other words, for every million illegal immigrants living in the United States, public services receive $8.9 billion in additional revenue.

“More than a third of the taxes paid by undocumented immigrants go to payroll taxes specifically designed to fund programs that these workers are barred from participating in,” the report said, noting that undocumented immigrants paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes and $1.8 billion in unemployment insurance taxes in 2022.

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At the state and local level, slightly less than half — 46 percent, or $15.1 billion — of the taxes paid by illegal immigrants is paid through sales and excise taxes on goods they purchase, the report found.

Most other payments were made through property taxes, such as those on homeowners and renters (31%, or $10.4 billion), or through individual and corporate income taxes (21%, or $7 billion), the report said.

Tax revenue from six states exceeds $1 billion

Six states each collected more than $1 billion in taxes from illegal immigrants within their borders: 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).

The report found that in most states (40), undocumented immigrants pay higher state and local tax rates than the wealthiest 1% of households in their states.

“Undocumented immigrants’ income tax payments are impacted by laws that require them to pay higher taxes than other similarly situated U.S. citizens,” the report said. “Undocumented immigrants are often denied access to meaningful tax credits and are sometimes unable to claim refunds they are owed due to lack of awareness, concerns about their immigration status, or a lack of access to adequate tax planning assistance.”

Work permit increases contributions

Providing work permits to undocumented immigrants would increase their tax contributions “because their wages would increase and their tax compliance rates would improve,” the report said.

The study shows that if all current illegal immigrants were given work permits, their annual tax contributions would increase by $40.2 billion to $136.9 billion.

The report says most of the new revenue raised in this scenario ($33.1 billion) would go to the federal government, with the remainder ($7.1 billion) going to states and localities.

“The immigration policy debate raises a host of questions that are deeply relevant to American life. To shed light on one of those questions, this study provides the most thorough examination to date of the federal, state, and local taxes paid by undocumented immigrants,” ITEP said.

To achieve this, ITEP said the study combined “established techniques for estimating the size and tax-relevant characteristics of illegal immigration with extensive data from ITEP’s comprehensive study of the U.S. tax burden.”

It added: “In doing so, it produces estimates of the overall tax contribution nationwide by the approximately 10.9 million undocumented immigrants living in the United States as of 2022, as well as state-by-state estimates of the state and local taxes paid by these immigrants.”

The report also predicts a scenario where these taxpayers would see their contributions increase if they were granted work permits.

“Like everyone living and working in the United States, undocumented immigrants are subject to sales, excise, property, income and payroll taxes,” Murad Awawdeh, executive director of the New York Immigration Coalition (NYIC), an umbrella policy and advocacy organization representing more than 200 immigrant and refugee rights groups in New York, told Caribbean Media Corporation (CMC) following the release of the report.

“Even though they pay into Social Security, Medicare and unemployment insurance, they are unable to receive those benefits,” Awad lamented. “Granting work permits would increase the contribution of undocumented immigrants in New York to nearly $4 billion.”

He also said that nationally, undocumented Caribbean and other immigrants make up a larger share of the workforce than the native-born population, with undocumented immigrants making up 4.7% of the workforce, even though “they only make up 3.4% of the total U.S. population.”

“These figures clearly show that immigration policy choices have a significant impact on public revenues at all levels of government,” ITEP said.