Yes, Immigrants Do Pay Taxes - Texas Immigrants and Federal, State and Local Taxes
Tomorrow is Tax Day and a perfect opportunity to celebrate the contribution of immigrants, both residents and undocumented, to tax revenue and the economy.
Let's start off by saying flat out -- Immigrants pay taxes! Yes, contrary to the beliefs of many an angry citizen, undocumented immigrants pay taxes in the form of income, property, sales, and taxes at the federal and state level. A range of studies find that immigrants pay between $90 and $140 billion a year in federal, state, and local taxes nationwide.
Unfortunately, it's 2014 and we're still battling this myth. As the folks over at Immigration Policy Center say, "As with nearly all aspects of the immigration debate, the controversy over how immigrants impact the public treasury is far too often dominated by emotionally charged rhetoric rather than hard facts."
Let's use some of those hard facts and take a look at how immigrants pay taxes at the federal level and here in Texas at the state and local levels.
Undocumented immigrants pay income taxes, as evidenced by the Social Security Administration's "suspense file" (taxes that cannot be matched to workers' names and social security numbers), which grew by $20 billion between 1990 and 1998.
Additionally, Individual Taxpayer Identification Numbers (ITINs) let people who do not have a social security number pay into the system, which builds the tax base. Between 1996 and 2003, more than 7.2 million ITINs were issued. More than $300 million was collected in taxes in 2001 alone from ITIN filers—a large portion of whom are undocumented.
Immigrants pay more in taxes than they use in services over their lifetimes. Depending on skills and level of education, each immigrant pays, on average, between $20,000 and $80,000 more in taxes than he or she consumes in public benefits.
State & Local
Unauthorized immigrants in Texas paid $1.6 billion in state and local taxes in 2010, according to data from the Institute for Taxation and Economic Policy, which includes:
• $177.8 million in property taxes.
• $1.4 billion in sales taxes.
If all unauthorized immigrants were removed from Texas, the state would lose $69.3 billion in economic activity, $30.8 billion in gross state product, and approximately 403,174 jobs, even accounting for adequate market adjustment time, according to a report by the Perryman Group.
In 2005, the only year in which the State of Texas has undertaken a comprehensive financial analysis of the impact of undocumented immigrants on a state's budget and economy, undocumented immigrants produced $1.58 billion in state revenues, which exceeded the $1.16 billion in state services they received.
Local tax revenue comes through property taxes as well as a portion of the sales tax. The Texas Comptroller estimates undocumented immigrants paid more than $513 million in local taxes throughout the state in 2005.
While undocumented immigrants produced more state revenues than what they received in state services all while paying $513 million in local taxes, local governments bore the burden of $1.44 billion in uncompensated health care costs and local law enforcement costs not paid for by the state.
Immigration reform would alleviate the financial burden to local governments by allowing greater access to health insurance through legalization. Undocumented immigrants are currently excluded from eligibility under the Affordable Care Act. Immigration reform would provide access to the health insurance market place under the ACA as well as employer-provided benefits.
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