At JaiSellers Designs & Photography (JSD & P), our focus extends beyond creative solutions. As we pivot towards our non-profit consulting services, we believe in exploring important societal issues with clarity and balance. One such topic is the financial impact of undocumented immigrants, an issue often entangled in partisan debates. With this blog post, we aim to provide a non-partisan, fact-based analysis of undocumented immigrants' contributions through taxes and the corresponding government expenditures.
Do Undocumented Immigrants Pay Taxes? Despite common misconceptions, undocumented immigrants contribute billions of dollars to federal, state, and local taxes each year. Their tax contributions come in several forms:
Sales Taxes: Every time an undocumented immigrant purchases goods or services, they contribute to sales taxes. According to the Institute on Taxation and Economic Policy (ITEP), undocumented immigrants paid approximately $7 billion in sales and excise taxes in 2017.
Property Taxes: Whether they own homes or rent, undocumented immigrants indirectly or directly pay property taxes. In 2017, this group contributed around $3.6 billion in property taxes, funding local infrastructure and public services like schools.
Payroll Taxes: Some undocumented immigrants use Individual Tax Identification Numbers (ITINs) to file taxes, while others work using false Social Security numbers. In either scenario, they contribute to payroll taxes. The Social Security Administration (SSA) reported that in 2010 alone, undocumented immigrants contributed an estimated $12 billion to Social Security. However, they typically cannot access the benefits funded by these contributions.
Income Taxes: While not all undocumented immigrants file income tax returns, many do so using ITINs. ITEP reported that, on average, they paid $1.1 billion in state and local income taxes in 2017.
Annual Contributions in Context: Undocumented immigrants contribute an estimated $11.74 billion to state and local taxes annually (ITEP). Additionally, their payroll contributions bolster federal programs like Social Security, creating a complex economic dynamic.
Government Expenditures on Undocumented Immigrants: The debate about whether undocumented immigrants are a net fiscal cost hinges on short-term expenses versus long-term contributions:
Short-Term Costs: According to studies, state and local governments bear the immediate costs, primarily in education, healthcare, and public safety. For example, a 2016 study by the National Academies of Sciences, Engineering, and Medicine estimated that providing public services like education and healthcare to immigrants, including the undocumented, can be costly in the short term.
Long-Term Benefits: While the short-term costs can be substantial, many researchers argue that immigrants contribute positively to the economy over time. The Social Security Administration indicates that undocumented immigrants' contributions to Social Security help sustain the program, even though they cannot claim the benefits. The Pew Research Center notes that the labor force participation of immigrants also supports sectors experiencing workforce shortages.
Is There a Fiscal Imbalance? Whether undocumented immigrants "cost" more than they pay in taxes is complex. Many studies, including the National Academies' 2016 report, suggest that while there may be a short-term net fiscal cost, the long-term economic and social benefits often outweigh these initial expenditures.
Moving Forward with Clarity: For our non-profit consulting services, understanding the nuances of immigration economics is crucial. In working with organizations focused on social justice, we believe in leveraging facts and fostering dialogue over polarizing rhetoric. This exploration serves as our first step in expanding into non-profit work, providing the same research-driven, balanced approach we bring to our design projects.\
Conclusion: While the topic of undocumented immigrants and their financial impact is politically charged, the data shows a nuanced picture. Undocumented immigrants do pay taxes—contributing billions to state, local, and federal programs. The costs and benefits of their presence depend on the scope and time frame of analysis. As we transition toward non-profit consulting, our goal is to offer fact-based insights on pressing societal issues, empowering our community and clients to make informed decisions.
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