Undocumented Immigrants Pay Taxes, Just Like Everyone Else

Donald Trump, who exploited anti-immigrant fervor to help win the 2016 election, has claimed that foreigners living illegally in the United States cost the country “billions of dollars a year.”

The president cites expenses related to crime, though immigrants statistically break the law less often than native-born residents. Trump also ignores another fact: About half of undocumented immigrants file income-tax returns, according to the Institute of Taxation and Economic Policy. All of them pay sales taxes and other levies.

That may come as a surprise to many Americans. In a Gallup poll last year concerning taxes, people were asked “whether immigrants to the United States are making the situation in the country better or worse.” Forty-one percent of respondents thought their taxes were higher because of undocumented immigrants. Twenty-three percent gave the opposite response, while 33 percent said foreigners were having “no effect.”

In a 2014 Reuters survey, 63 percent of those contacted considered undocumented immigrants a burden on the economy.

The migrants are not eligible for many of the benefits their tax payments support, such as Social Security, Medicare, and the earned-income tax credit. In 2015, the Internal Revenue Service reported that 4.4 million workers lacking Social Security numbers filed income-tax returns. Most of the documents came from so-called “illegals,” who paid $23.6 billion in income taxes that year.

The IRS requires undocumented immigrants to file returns, and many people comply because they seek to eventually become U.S. citizens. They hope that showing good faith by paying taxes will improve their chances of gaining legal status, though the Trump administration's policies have complicated the process.

Vox reported that at two government-funded facilities in Maryland, about 200 undocumented immigrants received free assistance in filling out income-tax returns in 2017. Because the filers did not qualify for Social Security, aid workers often wrote fabricated Social Security numbers on the forms.

In some cases, the immigrants used individual taxpayer identification numbers that the IRS assigned to them. The agency claims it does not provide the information to immigration-enforcement officials. One taxpayer told Vox that she obtained an identification number so she could file a return. “I think it’s important, and all my relatives pay their taxes, too,” said the woman, who earned $24,845 in 2017 as a house cleaner and construction worker.

The single mother deducted $1,500 for expenses she incurred by buying gas and job-related equipment, and also claimed child tax credits. She planned to arrange an installment plan to pay $1,131 in income taxes to Maryland and $775 to the U.S. government. The federal bill would have been about $500 lower if she had been eligible for the earned-income tax credit that helps other low-income families.

In a cruel twist, the woman had $1,072 for Social Security and $251 for Medicare deducted from her paychecks, even though she could not benefit from the programs. According to the IRS, undocumented immigrants are subject to about $9 billion a year in payroll taxes and contribute $13 billion annually to the Social Security retirement trust fund.

The Institute on Taxation and Economic Policy estimates that undocumented foreigners, including those who do not file income-tax returns, pay about $11.7 billion annually in other fees assessed by state and local governments. They are responsible for almost $7 billion in sales and excise taxes, and $3.6 billion in property taxes.

The Nation noted that the “effective tax rate” for the undocumented is greater than that which the top 1 percent of earners pay. That “dissolves the myth that immigrants do nothing but drain public coffers,” the magazine reported.

Trump has made matters worse by rolling back a number of Obama administration initiatives, including the Deferred Action for Childhood Arrivals program that delays the deportation of those who were brought to the United States as minors. The program's enrollees pay more than $800 million per year in state and local taxes.

Matt Gardner, who heads The Institute on Taxation and Economic Policy, explained that the federal government would receive much more money from the undocumented if Congress approved comprehensive immigration reform because of “more people being incorporated into the system and having income tax withheld from their paychecks who aren’t having that income tax withheld right now.”

He predicted: “Undocumented families will earn more once they’re incorporated into the system. That obviously means they’re going to pay more taxes in their income, they’re going to spend more, they’re going to pay more sales taxes on their spending.”

Trump has accused undocumented immigrants of costing American taxpayers a fortune in health, social services and education costs. However, the president fails to take into account the huge expense of the immigration-enforcement system, not to mention the wall he wants to build along the U.S.-Mexico border. Taxpayers are forking over billions of dollars for privately operated detention centers that house immigrant families.

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