America’s Undocumented Immigrants: Giving Without Taking
A recent report by the Institute of Taxation & Economic Policy found that undocumented immigrants contribute an estimated $12 billion to the American economy annually. This contradicts the commonly accepted rhetoric, particularly articulated during presidential election season, that undocumented immigrants are a drain on the country’s economy by taking jobs and benefits without contributing back.
According to the report there were approximately 11 million undocumented immigrants living in the United States in 2013, 8 million of which were either employed or looking for work according to the Pew Research Center. The money that undocumented immigrants contribute back to state and local economies arise from a variety of sources.
On a basic level, undocumented immigrants and legal citizens alike all pay variations of sales tax. In New York, for example, where over 300,000 undocumented live, every sales purchase is taxed at a rate of at least 8 percent. Sales and excises taxes paid by undocumented immigrants constitute an estimated 7 billion dollars per year. Furthermore, whether homeowners or renters, immigrants also pay about $3.6 billion dollars in real estate every year. Another $1.1 billion is paid in income taxes.
Another way to evaluate how much undocumented immigrants contribute to the economy is how much their effective tax rate is, which is a measure of their percentage of income paid in taxes. The average effective tax rate for undocumented immigrants is estimated to be 8 percent. This dwarfs the average effective tax rate of the top 1 percent of taxpayers which is estimated at just 5.4 percent. Undocumented immigrants are contributing a bigger share of their income to the economy than the richest people in the country.
This does not even take into consideration the contributions undocumented immigrants make through their labor, for which they are usually compensated at rates much less than they deserve; immigrants are among the most underpaid populations in the country. Not only do undocumented immigrants pay many of the same taxes as legal citizens, but they also reap much fewer benefits. Benefits that American citizens are entitled to, such as social security or academic scholarships, are unavailable to these populations due to their undocumented status with the federal government. Millions of immigrants will pay into federal aid and entitlement programs, but never receive the benefits.
These are giant figures and huge contributions, and yet still only represent a portion of the economic contributions that undocumented immigrants could be making if they were citizens. If all of America’s undocumented immigrants were granted legal status as part of a comprehensive immigration reform policy, the report estimates they would contribute at least another $2 billion dollars annually. The case for the legalization of these undocumented immigrants is often made morally or politically, but it’s also important to note that accepting them into our country as equal citizens makes not just moral sense, but economic sense too.