Immigrants Pay Taxes Too  

As the country has become increasingly diverse, the role of immigrants in paying taxes has become more significant for the U.S economy. Immigrants, both documented and undocumented, contribute billions of dollars to the U.S. economy each year through their tax payments, providing a significant benefit to the country. 

Immigrants pay a variety of taxes in the United States, including:  

• Income taxes 
• Social Security taxes 
• Medicare taxes  

Immigrants willingly choose to pay taxes for a variety of reasons. The National Immigration Law Center found some of the reasons include:

• It shows they’re complying with federal tax laws.
• It can help them demonstrate “good moral character” if they later have an opportunity to legalize their immigration status.
• Tax return records could be used to document work history and presence in the US, steps that may help them be eligible for legal immigration status in the future if lawmakers pass immigration reform.

How Much Do Immigrants Pay in Taxes?

According to a report by the Institute on Taxation and Economic Policy, undocumented immigrants alone paid an estimated $12.6 billion in taxes in 2019, including $9.4 billion in sales and excise taxes, $3.4 billion in property taxes, and $1.8 billion in personal income taxes. Additionally, undocumented immigrants contribute to the economy by paying taxes on the goods and services they purchase, and by starting businesses that create jobs and stimulate economic growth. Immigrants Punch Above Their Weight as Taxpayers (immigrationimpact.com)  

Documented immigrants also pay taxes, and they have a positive impact on the U.S. economy too. The National Academies of Sciences, Engineering, and Medicine reported immigrants who arrived in the United States in the past few decades are more likely to be of working age and to participate in the labor force than U.S-born citizens. As a result, they pay more in taxes and use fewer government services than the average U.S-born citizen. 

Immigrants and Taxes Historically 

In the late 19th and early 20th centuries, millions of immigrants came to the United States from Europe, Asia, and Latin America. Many of these immigrants were poor and had few resources, but they worked hard and built successful businesses. More recently, immigrants have continued to play a key role in the U.S. economy. In a report published by the National Immigration Forum, the authors note that immigrants are more likely than native-born Americans to start businesses, and that immigrant-owned businesses generate $1 trillion in annual revenue and employ more than 8 million people in the United States. 

Research over the past 10 years has also shown that immigrants pay more in taxes than they receive in government benefits. According to a report by the National Bureau of Economic Research, immigrants pay over $11 billion in taxes each year. This means that immigrants are making a significant net positive contribution to the U.S. economy. 

Social Security Needs Immigrants

For the Social Security Administration alone, immigrants are a crucial asset. If all undocumented immigrants were deported today, Social Security trust funds would have approximately $13 billion less for benefit payouts. It’s a considerable loss of dollars, especially when it’s projected that the Social Security funds will be depleted by 2034. Undocumented immigrants’ contributions to the Social Security funds help its finances, especially because undocumented immigrants are not receiving benefits, explains Monique Morrissey, an economist who focuses on retirement at the Economic Policy Institute, a D.C.-based think tank. But since “it’s done so on the backs of the more vulnerable people in society,” she said, “it’s not a good thing.” 

Acknowledging Immigrant Contributions

Immigration and taxes are closely linked, and immigrants make a significant contribution to the U.S. economy through their tax payments. Historically, immigration has played a key role in the economic development of the United States, and immigrants continue to contribute to the country in significant ways.

Research over the past decade has shown that immigrants pay more in taxes than they receive in government benefits and that they are more likely than U.S.-born Americans to start businesses and create jobs. OPA's research has also found that despite their valuable financial contributions, immigrants are still falling behind in terms of economic mobility. Overall, immigrants are a vital part of the U.S. economy, and their contributions are essential to the country’s stability.