In this Article:
- Did undocumented immigrants pay nearly $100 billion in taxes in 2022?
- How does the tax rate for undocumented immigrants compare to the wealthy?
- Are undocumented immigrants really taking American jobs?
- Why did Trump derail bipartisan immigration reform?
- What is the economic impact of deporting undocumented immigrants?
Debunking Common Myths About Undocumented Immigrants
by Robert Jennings, InnerSelf.com
Immigration has been a political football at best. No, we do not have "open borders," and yes, immigration reform is necessary. There was a bipartisan immigration bill under negotiation in the Senate that sought to address both border security and legal pathways for undocumented immigrants. However, former President Donald Trump derailed this effort, preferring to campaign on the false narrative that immigration was out of control under Democrats. This political maneuver blocked potential reform, leaving the immigration system broken and needing urgent attention.
In the ongoing debate over immigration, undocumented immigrants are often scapegoated for a wide range of economic and social issues. Political figures, particularly on the far-right, frequently claim that these individuals take jobs away from Americans, exploit social programs, and even vote illegally. However, these claims crumble when examined in the light of factual evidence. A new study from the Institute on Taxation and Economic Policy (ITEP) reveals that undocumented immigrants contribute nearly $100 billion in taxes annually. This finding directly challenges the rhetoric that undocumented immigrants are a burden on society. Instead, it shows that they are essential contributors to the U.S. economy while being largely shut out of the social programs their taxes help fund.
Myth 1: Undocumented Immigrants Are Draining Social Programs
One of the most persistent myths surrounding undocumented immigrants is that they are draining U.S. social programs like Social Security, Medicare, and unemployment benefits. The narrative goes that undocumented immigrants are overwhelming these programs, bankrupting the system, and leaving fewer resources for citizens. But this isn't true. Some may argue that even if they pay taxes, the amount they contribute is not enough to cover the services they use.
However, the ITEP study reports that undocumented immigrants paid a staggering $ 96.7 billion in federal, state, and local taxes in 2022 alone, which significantly challenges this argument. Of that, $59.4 billion went to the federal government, while $37.3 billion was paid to state and local governments. These contributions are not insignificant—undocumented immigrants paid an average of $8,889 per person in taxes. More than a third of these taxes, $33.9 billion, went toward programs they are barred from accessing, such as Social Security, Medicare, and Unemployment Insurance. In essence, they are funding programs that benefit others while being excluded from them themselves.
This reality upends the narrative that undocumented immigrants are destroying social programs. Far from being a burden, they are helping sustain the programs they are accused of draining. For instance, they contribute to the construction of roads, the maintenance of public spaces, and the provision of essential services. They contribute, yet they cannot benefit—an injustice largely unacknowledged in anti-immigrant rhetoric.
Myth 2: Undocumented Immigrants Don't Pay Taxes
Another common misconception is that undocumented immigrants don't pay taxes, which leads some to believe that they are freeloaders living off the system. However, the facts once again tell a different story.
Undocumented immigrants pay taxes through various means: payroll taxes deducted from their wages, sales taxes on goods and services, property taxes (both directly as homeowners or indirectly as renters), and even income taxes through the use of Individual Taxpayer Identification Numbers (ITINs). According to the ITEP study, undocumented immigrants paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in Unemployment Insurance taxes in 2022. And this is just their contribution to federal social insurance programs.
At the state and local levels, undocumented immigrants pay substantial amounts in sales, excise, and property taxes. Nearly half (46%) of their state and local tax contributions come from sales and excise taxes, totaling $15.1 billion. In comparison, 31% comes from property taxes, adding another $10.4 billion. These taxes help fund public services like schools, hospitals, and infrastructure—services from which everyone, regardless of citizenship status, benefits.
In total, undocumented immigrants contribute significantly to the tax base, disproving the myth that they don't pay their fair share. In fact, in 40 states, undocumented immigrants pay higher tax rates than the wealthiest 1% of households. In Florida, for example, undocumented immigrants pay an average effective tax rate of 8%, compared to just 2.7% for the top 1%. This stark disparity highlights how much undocumented immigrants contribute relative to their income despite facing significant barriers to accessing social services.
Myth 3: Undocumented Immigrants Are Taking Jobs from Americans
The idea that undocumented immigrants are stealing jobs from American workers is another common argument used to fuel anti-immigrant sentiment. In times of economic uncertainty, this myth often gains traction. But in reality, the labor market paints a different picture.
Undocumented immigrants tend to hold jobs in industries that many Americans are unwilling to take, such as agriculture, construction, and food services. These jobs are often labor-intensive and low-paying, yet they are critical to the functioning of the U.S. economy. The labor force participation rate among undocumented immigrants is higher than among the native-born population. While they make up just 3.4% of the overall population, undocumented immigrants account for 4.7% of the workforce.
Moreover, the U.S. is currently experiencing a labor shortage. According to the Washington Post's Bureau of Labor Statistics data analysis, states like South Dakota, Maryland, Vermont, and Maine need help to fill available jobs. The labor market is stretched thin, with 8.1 million job openings and only 6.8 million unemployed workers. Undocumented immigrants help bridge this gap, especially in industries facing the most significant labor shortages. This shortage is not just a temporary issue but a long-term trend due to factors such as an aging population and a decline in birth rates, making the role of undocumented immigrants even more crucial.
The claim that undocumented immigrants are taking jobs from Americans ignores the realities of the labor market. They are not stealing jobs; they are filling roles essential to the economy but often undesired by American workers. Deporting them en masse only exacerbates labor shortages, hurting businesses and local economies.
Myth 4: Undocumented Immigrants Are Mostly Criminals or From Mental Asylums
Another harmful myth spread by some anti-immigration advocates is the belief that a significant portion of undocumented immigrants are either criminals or individuals released from mental asylums. This narrative, often used to stir fear, implies that undocumented immigrants are disproportionately dangerous and mentally unstable. However, the facts show that these claims are unfounded, and the data suggests that undocumented immigrants commit crimes at lower rates than U.S. citizens. There is no evidence to suggest they are disproportionately from mental health institutions.
A comprehensive study by the Cato Institute dispels the idea that undocumented immigrants are more prone to criminal activity. In Texas, one of the few states that tracks the immigration status of offenders, data from 2020 shows that undocumented immigrants committed crimes at significantly lower rates than native-born Americans. The crime rate for undocumented immigrants was 45% lower than that of U.S. citizens. This includes both violent and non-violent crimes, further discrediting the claim that undocumented immigrants pose a more significant criminal threat.
The notion that undocumented immigrants are released from mental asylums in their home countries is equally baseless. There is no evidence to support this claim, and mental health institutions in most countries do not release individuals to cross international borders. Undocumented immigrants come to the U.S. primarily for economic opportunities, family reunification, and safety, not because they have been released from mental health facilities.
Moreover, research indicates that immigrants, including undocumented ones, tend to be more law-abiding than native-born citizens. Many avoid interactions with law enforcement due to fear of deportation, which incentivizes them to prevent criminal activity. The fear-based narratives that paint undocumented immigrants as mentally unstable or criminally inclined are not only false but also harmful, contributing to discrimination and unjust policies.
The truth is that undocumented immigrants are mainly peaceful, hardworking individuals contributing to the U.S. economy and society. The myth that they are primarily criminals or from mental asylums is nothing more than an attempt to stoke fear and justify punitive immigration policies. By focusing on the facts, we can move towards a more just and informed discussion on immigration.
The Economic Ripple Effect of Deportations
Beyond the immediate labor shortages that would result from deporting undocumented immigrants, there are broader economic ripple effects to consider. When undocumented immigrants are deported, they stop making taxable purchases in their communities. This reduces sales tax revenue and leads to fewer customers for local businesses, which then see lower profits.
The Congressional Budget Office's July 2024 report found that an increase in immigration would add $1.2 trillion to federal revenue between 2024 and 2034. Undocumented immigrants are a vital part of the consumer base, and their removal would have a cascading impact on the local and national economy. This goes far beyond tax contributions and touches on the overall health of the business ecosystem.
Carl Davis, research director at ITEP, emphasized the importance of recognizing these ripple effects. When someone is deported, the economic void they leave behind is far-reaching. It's not just a loss of taxes—it's a loss of purchasing power, economic activity, and local businesses that rely on their contributions.
State-by-State Contributions of Undocumented Immigrants
While undocumented immigrants contribute significantly to the national economy, their impact is particularly evident at the state level. Six states—California, Texas, New York, Florida, Illinois, and New Jersey—each raised over $1 billion in tax revenue from undocumented immigrants in 2022. California alone received $8.5 billion, and Texas followed with $4.9 billion. These states rely heavily on the tax contributions of their undocumented populations to fund public services.
What's even more striking is the fact that, in 40 states, undocumented immigrants pay higher tax rates than the top 1% of the income scale. In these states, the wealthiest residents pay less in proportion to their income than undocumented immigrants, who are often struggling to make ends meet. This is a powerful reminder of the equity issues within the tax system, where those with the least usually pay the most.
The Role of Work Authorization in Increasing Tax Contributions
The ITEP study also explores the potential for increased tax contributions if undocumented immigrants were granted work authorization. Currently, many undocumented immigrants face barriers to fully complying with tax laws due to their lack of legal status. Work authorization would allow them to earn higher wages and increase their tax compliance, leading to higher tax revenues.
ITEP estimates that if all undocumented immigrants were granted work authorization, their tax contributions would rise by $40.2 billion annually. This would bring their total tax contributions to $136.9 billion, with $33.1 billion flowing to the federal government and $7.1 billion to state and local governments. Such a scenario underscores the economic potential of integrating undocumented immigrants into the legal workforce. By allowing them to work legally, their wages improve, and their ability to contribute to the economy also increases.
Undocumented Immigrants as a Boon to the U.S. Economy
It's time to rethink the narrative around undocumented immigrants. They are not the economic threat that anti-immigrant rhetoric would have us believe. Instead, they are integral contributors to the U.S. economy, paying billions in taxes and filling vital roles in the workforce.
Far from draining social programs or taking jobs, undocumented immigrants help sustain the very systems they are barred from benefiting from. If we genuinely want to strengthen the economy, we must acknowledge their contributions and work toward policies that allow them to participate fully in society. Immigration reform is long overdue.
The findings from the ITEP study make it clear: undocumented immigrants are an economic boon, not a burden. The question is whether we will continue to allow misconceptions and fear to drive policy or if we will embrace the truth and create a more inclusive, equitable society.
Article Recap:
Undocumented immigrants contributed nearly $100 billion in taxes in 2022 while being excluded from many social programs they help fund. Contrary to popular myths, they pay higher tax rates than many wealthy individuals, fill critical labor gaps, and commit fewer crimes than native-born citizens. Bipartisan immigration reform was derailed by political maneuvering, but the facts underscore the urgent need for change.
Further Reading
About the Author
Robert Jennings is co-publisher of InnerSelf.com with his wife Marie T Russell. He attended the University of Florida, Southern Technical Institute, and the University of Central Florida with studies in real estate, urban development, finance, architectural engineering, and elementary education. He was a member of the US Marine Corps and The US Army having commanded a field artillery battery in Germany. He worked in real estate finance, construction and development for 25 years before starting InnerSelf.com in 1996.
InnerSelf is dedicated to sharing information that allows people to make educated and insightful choices in their personal life, for the good of the commons, and for the well-being of the planet. InnerSelf Magazine is in its 30+year of publication in either print (1984-1995) or online as InnerSelf.com. Please support our work.
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This article is licensed under a Creative Commons Attribution-Share Alike 4.0 License. Attribute the author Robert Jennings, InnerSelf.com. Link back to the article This article originally appeared on InnerSelf.com
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