A recent study by the Institute on Taxation and Economic Policy (ITEP) shows that workers laboring in the U.S. without lawful work authorization contribute nearly $100 billion in taxes to federal, state, and local economies.
Tax experts, economists, and union organizers say it is unfair for undocumented workers to pay into the system in the billions without a legal status to be able to reap the benefits. They say workers do not get to legally participate in social safety net programs or see economic relief from government initiatives.
Advocates say that could change if federal lawmakers commit to pathways toward extending work authorization to the 11 million people living in the U.S. without it due to their immigration status. A move toward a more broad and attainable work authorization status would boost federal and state tax bases and further fund government programs.
“Let’s just be clear: Contrary to stubborn myths and partisan-fueled tropes, undocumented immigrants pay taxes, lots of them,” said Jon Whiten, the deputy director of ITEP.
How much do undocumented workers contribute?
The ITEP report found that in 2022, undocumented workers paid $96.7 billion in federal and state taxes. About $59.4 billion, or 61%, went to the federal government, ITEP Senior Policy Analyst Marco Guzman said.
Guzman said the report estimates 10.9 million workers without a lawful immigration status paid taxes during that year. He added that for every million undocumented workers who reside in the U.S., public services receive $8.9 billion in additional federal, state, and local tax revenue.
“Most are members of families that have mixed-legal status,” Guzman said. This typically entails at least one family member having a permanent status as a resident or citizen of the U.S. “They work hard, and most are adults who have lived in the country for 16 years or more.”
Despite their contributions to the system, their labor does not earn undocumented workers access to some of the programs they help fund. Via payroll taxes, these workers paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022.
The 1996 Personal Responsibility and Work Opportunity Reconciliation Act prevents immigrants from accessing publicly funded federal assistance programs like Medicare, Medicaid, and food stamps.
“In other words, more than a third of the tax dollars paid by undocumented immigrants go toward programs that they are prohibited from accessing,” Guzman said.
The rest of their contributions come from about $15.1 billion in sales and excise taxes, $10.4 billion in property taxes, and $7 billion through personal or business income taxes.
At the state level, six states collect more than $1 billion dollars each in taxes from undocumented workers. For instance, in Florida, about 747,000 undocumented workers paid $1.8 billion to the state and their respective municipal entities in 2022, the report found.
Alexis Tsoukalas, a senior policy analyst with the Florida Policy Institute, said workers without a documented status pay about 8% of their income to state and local taxes. The report estimates that, in contrast, the wealthiest 1% of Floridians only pay about 2.7% of their earnings.
“I want you to think about that for a moment,” Tsoukalas said. “This means hundreds of thousands of everyday people are contributing more than their share to public services they cannot even access.”
Undocumented workers are also excluded from anti-poverty measures that could help their families. For instance, they are not eligible for earning tax relief through the earned income tax credit and, in many states, the child tax credit due to their immigration status.
The earned income tax credit helps workers with low to moderate incomes by giving eligible taxpayers a tax refund. That threshold ranged from $17,640 for unmarried people with no children to $63,398 for married people with three or more children in the 2023 tax year.
The child tax credit can provide up to $2,000 per child to qualifying families. About 40 million families receive this benefit every year.
“Meanwhile, despite all that immigrants contribute to this economy, they’re currently at the center of a concerted dehumanization campaign in which some extremist politicians have chosen to scapegoat people in pursuit of power,” said Jackie Vimo, a senior policy analyst at the National Immigration Law Center. “At the same time as undocumented immigrants are paying taxes, they’re also facing threats of mass deportation. These attacks on immigrant neighbors, co-workers, and family members make no sense.”
Solution and worker organizing
Legislation to extend legal work authorization to undocumented workers could be one potential solution to ensuring they can access the benefits and programs they already fund.
The ITEP report estimates that such legislation could also boost tax contributions by $40.2 billion per year, leading to undocumented workers paying nearly $137 billion into the system.
Carl Davis, the research director at ITEP, said work authorization would also boost earnings for workers. In the report, researchers also write that greater access to job opportunities, better wages, and higher levels of education could solidify high earnings, thus raising taxable earnings, consumption, and property ownership.
“That’s one part of the effect, and the second part is an increase in the tax compliance rate,” Davis said. “You’ll have more wages, for example, being paid above the table, and so you end up with higher withholding rates and a slightly higher income tax compliance rate.”
That lack of solidified working status for some immigrants, undocumented or otherwise, has deterred laborers from organizing their workplaces.
Eric Cortés-Kopp, a longtime fair labor advocate currently organizing workers with the United Electrical, Radio, and Machine Workers of America in New Jersey, said elected officials and corporations have created a culture of fear that confuses immigrant workers.
“I’ve worked with immigrant workers, both who are undocumented and who have legal work authorization, and it doesn’t matter. It’s still a concern for folks; they still think they can be targeted and ultimately deported from this country, even if they do have legal protections,” Cortés-Kopp said. “That is a cultural thing that we as Americans have accepted and that the federal government has no problem implementing and enforcing upon others.”
Ultimately, for Tsoukalas, undocumented workers should be counted as members of their communities and as more than just economic contributors.
“We should be welcoming immigrants no matter their status like we do all new arrivals to the states, tourists and new residents alike,” Tsoukalas said. “We’re ultimately talking about people. These are working people, everyday people—our neighbors, our friends. Even those who don’t work, like children or retirees, have inherent value, and they deserve to feel safe and included in their communities.”
Undocumented workers contribute nearly $100 billion in taxes, study shows is a story from Prism, a BIPOC-led nonprofit news outlet that centers the people, places, and issues currently underreported by national media. Please consider making a tax-deductible donation to support our work today.
