California’s undocumented paid $3.2 billion in state, local taxes

LOS ANGELES — An updated study by the Institute on Taxation and Economic Policy (ITEP) found that undocumented immigrants who reside in California collectively paid almost $3.2 billion in state and local taxes in 2013.

“Regardless of the politically contentious nature of immigration reform, the data show undocumented immigrants greatly contribute to our nation’s economy, not just in labor but also with tax dollars,” said ITEP State Tax Policy Director Meg Wiehe in a statement.

The nationwide analysis released on Wednesday, February 24, entitled “Undocumented Immigrants’ State and Local Tax Contributions,” concluded that the Obama administration’s executive actions (including the expansion of Deferred Action for Childhood Arrivals, DACA) would increase state and local tax contributions in California by at least $184 million.

An even more substantial increase of $450 million is projected under comprehensive immigration reform granting all undocumented immigrants lawful permanent residence, reported ITEP and the California #Health4All Initiative.

Nationwide, undocumented immigrants contribute more than $11.6 billion to state and local coffers each year, and pay an average of 8 percent of their total incomes in state and local taxes. (The top 1 percent of taxpayers nationwide pay an average effective tax rate of just 5.4 percent.)

The analysis also found that combined state and local tax contributions of the nation’s total undocumented immigrant population (around 11 million) would increase by more than $800 million, under full implementation of President Barack Obama’s 2012 and 2014 executive actions to grant temporary protection for up to 5 million (1.52 million in California) eligible undocumented immigrants living in the U.S.

Under comprehensive immigration reform, these contributions are estimated to rise to over $2.1 billion.

“With immigration policy playing a key role in state and national debates, and President Obama’s 2014 executive action [on immigration] facing review by the Supreme Court, accurate information about the tax contributions of undocumented immigrants is needed now more than ever,” Wiehe added.

While the report focuses on the financial and economic consequences of immigration reform on state and local-level taxes, the results mirror those at the federal level. According to a 2010 report from the Congressional Budget Office, full immigration reform at the federal level would decrease the deficit and generate more than $450 billion in additional federal revenue over the next decade.

Obama’s executive actions are also estimated to have overall positive effects on labor market growth, productivity, wages, and economic growth, said the Council of Economic Advisers and the Center of American Progress.

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