ITEP: Undocumented Immigrants Pay Taxes, Too

The Institute on Taxation and Economic Policy (ITEP) recently published a report detailing the significant contributions to tax revenues that undocumented immigrants make in each state, including California. California has long been an attractive destination for people seeking economic opportunity and is home to more than 3 million undocumented immigrants, according to ITEP. These undocumented immigrants pay more than $3.1 billion in state and local taxes in California — an amount nearly equal to the $3.2 billion in General Fund spending for the California State University in 2016-17 under Governor Brown’s proposed state budget.

Like other residents of our state, undocumented immigrants pay sales and excise taxes when they buy certain goods — clothing and gasoline, for example — and some services, and they pay property taxes as well, either directly on homes they own or indirectly as renters. What’s more, at least half of undocumented immigrant households nationwide file income tax returns using Individual Tax Identification Numbers — and even if they don’t file a return, many still have taxes deducted from their paychecks.

The follow-the-numbers, “green eyeshade” question of whether undocumented immigrants are somehow a net cost to the public is a murky one — but that’s really the case for any segment of the population. The assumptions one makes about how to both define and divvy up the costs and benefits of public services make a big difference to the results. What is clear from ITEP’s and other research, though, is that undocumented immigrants in California contribute substantial tax revenues and make significant contributions to economic activity while consuming less in public benefits than other residents do.

Read ITEP’s report here.

— William Chen