Immigration

Undocumented Workers Do Indeed Pay State Taxes

An Oregon think-tank's study finds undocumented workers contributes $81 million to state and local government coffers.

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Caution Immigration Sign
Caltrans Immigration Sign/wikimedia commons

Undocumented immigrants pay state taxes—a lot of taxes, as it turns out. So says the Oregon Center for Public Policy (OCPP), a left-leaning think tank. In a policy analysis released Monday, the OCPP found that the estimated 116,000-strong population of undocumented Oregonians paid a rough $81 million into state coffers.

Most of what the undocumented pay, says the OCPP report, was from property and income taxes which make up about $66 of the overall $81 million. The other $15 million comes from excise taxes paid on gasoline and alcohol (hopefully not purchased at the same time).

These numbers fit closely with much of the research done on the national level about the effect of undocumented workers on state and local budgets.

A March 2017 study released by the Institute on Taxation & Economic Policy (on whose numbers the OCPP study is largely derived) estimated that of the 11 million undocumented workers in the United States pay an average of 8 percent of their income to their state and local governments, for a grand national total of $11.74 billion a year.

The effective tax rate between states varies considerably however. The OCPP finds that Oregon's unauthorized workers pay a more modest 5.5 percent of their income in state and local taxes, likely thanks in part to that state's lack of a sales tax. The state of Illinois in contrast eats up about over 10 percent of income produced by undocumented residents.

These numbers clash with much of the rhetoric about illegal immigrants emanating from President Trump, who has long complained about the supposed free ride undocumented immigrants are getting in America.

As far back as October 2015, Trump had suggested that only 5 to 10 percent of illegal immigrants paid taxes, while costing the United State economy an alleged $300 billion a year.

Trump has since ridden that message all the way to the White House, repeatedly promising both on the campaign trail and in office to save Americans' tax dollars by deporting those who entered the country illegally.

In his January joint address to Congress, he promised "billions and billions of dollars" would be saved by stricter enforcement of immigration laws.

The numbers coming from the OCPP report and others suggest that the opposite approach might actually be more of a budget winner.

"When previously undocumented workers become authorized, they tend to earn and spend more," writes OCPP policy analyst Janet Bauer. This she says would in turn boost tax revenue, saying that " a path to citizenship would result in about a 48 percent increase in the tax contributions of Oregonians who are currently undocumented."

Whether the possibility of bilking aspiring Americans of more of their hard-earned income will get many immigration skeptics to come around to the idea of reform is certainly an open question. On whether undocumented immigrants do indeed pay into state coffers however, the research leaves little doubt.

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  1. If you have ever handled payroll at a construction company, and I imagine a lot of other industries, you would know that undocumented aliens get away without paying many taxes. All of our workers had very bad driver’s licenses from North Carolina and they claimed a crazy amount of deductions and dependents that others would not attempt for fear of audit.

    We went through the federal online process to register new employees but I suspect it was over burdened to the point of not being able to verify all of these immigrant workers.
    Point being that undocumented workers do get away with skirting the law and not paying taxes the rest of us have to. And I really don’t give a shit because they are better workers and appreciate the bottom line in the investment being made in them by their employer.
    It is horseshit to act like they are pitching in equally though. That said, they do pay all of the required deductions via income tax and other federal/state thefts on the normal paycheck.

    1. Another good reason to get rid of income taxes. Any tax that requires the collection of large amounts of personal data is bad.

      And it’s a lot harder to avoid paying state sales taxes and property taxes (whether directly or as part of rents).

      1. Yes.

      2. But people do avoid sales taxes by shopping online, or buying in a foreign country.

        1. Yes they do. I didn’t say it was impossible. But very few people do so completely. And poor immigrants are less likely to have the means to do so.

  2. Oregon Think Tank was my nickname in college.

  3. Citation

    As explained above, current estimates of undocumented
    immigrants’ income tax compliance rates range from 50 to 75 percent. To calculate the anticipated
    income tax gain from allowing undocumented immigrants to work in the U.S. legally, this analysis
    assumes full compliance with state personal income tax laws post-reform given the strong incentives
    for tax compliance likely to be included in a comprehensive reform measure. It is important to note
    that the same tax rules and provisions that apply to the general population will apply to
    undocumented immigrants filing income taxes.

    Assumption: full tax compliance in a demographic where English is not the primary language? Issue: the shocking lack of Federal Income Tax payments or analysis (25% to 50% of total taxation absent). Justification: assumption is rational because of “the strong incentives for tax compliance likely to be included in a comprehensive reform measure”

    “They’re barely free-riders.”

  4. You are being disingenuous here and no one is buying it. Ask anyone who owns a company, such as a landscaping company, and you’ll know they claim an insane amount of deductions even though most of the workers are single.

    I had a friends whose parents used to own a company and they complained about the same thing. They were single with no kids and claimed something like 7 or 8 on their forms. I asked her where they get that advice from, and she said “the churches”

    1. Why do they care?

  5. “Welcome to the US, I love you. Welcome to the US, I love you. Welcome to the US, I love you. Welcome to the US, I love you.”

    1. “You guys are for freedom, right?”
      “Si?”
      “Does C mean yes?”
      “Si?”
      “Okay, we’ll assume C means yes.”
      “Si.”
      “Awesome. Welcome to America dude!”
      “Si.”
      “You know what, this is easy! What’s the big deal?”

  6. Are we arguing that more people should be paying taxes? Is that what’s going on here?

    1. I was gonna say, since when is meek surrender to gubmint robbers a libertarian aspiration?

    2. We’re arguing:
      1) Are non-citizens entitled to special treatment (read: pay less taxes) than citizens by virtue of their plight (read: lawless immigration)
      2) Should laws be applied unevenly?
      3) Is there an underlying pathos that is driving one arm of this libertarian schism, i.e. “egalitarian humanism,” compared to the economic pragmatism of “follow the law and pay your due”
      4) What are the benefits enjoyed versus individual contributions (read: free-rider issues)?

      1. And for the record; I am opposed to Federal Income Tax. However, I am a N-AP enthusiast, and believe in non-violent change of government and/or laws.

        I abhor free-riders.

        1. As long as you abhor free-riders you’ll never get those laws changed non-violently. Because the existence of a free-rider in an otherwise coercive service-provider/client relationship will always be used to justify further coercion keeping you in that relationship.

          1. As long as you abhor free-riders, you’ll never get those laws changed non-violently. Citation, please.

            I can vote my conscience, lead by example, and elect choice representatives in order to effectuate the non-violent political change I wish to see in my society. Pessimism is not a reason to burn it all down, in my view.

            Do you not believe that free-riders are an issue in a free market?

            1. Free riders are only a ‘its not fair’ problem – they’re a problem because its not fair that I’ve got to pay for a whole bunch of services (most of which I don’t want) or I’ll be killed and that guy over there is getting away with not paying for them.

              In a free market – not only are there incentives for service providers to solve the free-rider ‘problem’ (as they don’t like giving away product for free) but, as long as *my* service is unhampered, *it is simply not my problem* if someone else is getting some advantage off of my payment.

              I don’t freak out when my neighbor is advantaged by my having a street number on my house and he doesn’t pay to have one on his. I’m not disadvantaged by paying for private army protection while my neighbor gets some follow-on protection. I’m not disadvantaged when my neighbor’s property value goes up because I’ve made my home look nicer.

      2. We’re arguing:
        1) Are non-citizens entitled to special treatment (read: pay less taxes) than citizens by virtue of their plight (read: lawless immigration)

        We’re arguing that instead of removing the burdens on us we extend those burdens to other people.

        Which puts us in the exact same category as the hotel and taxi industry vis-a-vis AirBnB and Uber or UPS’ position in its fight to force FedEx to unionize.

        1. Instead of removing the burdens on us (emphasis mine) we extend those burdens to other people not us (emphasis mine)

          How are we getting around the uneven application of the law in favor of non-citizens? In other words, the Affirmative Action for illegal immigrants?

          Do you believe this is the kernel of animosity that builds into full on xenophobic rage?

          1. How are we getting around the uneven application of the law in favor of non-citizens? black-
            and gray-market workers?

            FTFY

            1. Yeah, there are a lot of citizens not paying taxes too.

              I’ve often wondered how many of the people who “officially” left the active workforce during the economic downturn actually just switched to under-the-table employment.

              1. This study can determine how many and what illegals are paying into government coffers but Americans not paying taxes is a mystery?

                I call BS. I wish these “scientists” would just admit they are guessing and don’t know how many illegals are in the USA and how much they pay to the government.

          2. 1. We aren’t. The law is being applied equally. The sorts of things that need to be done to ensure that the government *find* all the scofflaws is, IMO, worse than any damage the scofflaws do by not paying their ‘fair share’ in taxes.

            Such as e-Verify, a horrible program that is just as good at preventing citizens from working as it is in preventing non-citizens.

            2. No, I do not believe that this is a kernal of animosity that build into full xenophobic rage any more than I believe that the oncoming ‘robot revolution’ will require a tax on capital (to be redistributed to the suddenly unemployed masses’ to buy them off. Or even that redistributionist taxes are the price you pay for not having to live in a gated community.

        2. “We’re arguing that instead of removing the burdens on us we extend those burdens to other people.”

          Not really. Some are arguing that the benefits they receive shouldn’t exist, and don’t particularly care about the fight about what they put in.

          1. Not really – 99% of the arguments is that illegals use ‘government services’ without paying in to them and that if they did, then that would be ‘fair. Because they’re not racist xenophobes, its just not fair that illegal immigrants receive the same services as 47% of the country without paying any net tax – like 47% of the country.

            1. By the numbers given (Oregonians) $81M collected from 116K is around $700 each. 700 being 5.5% equals around $12,727. Qualifies for EITC of around $165. A little more than $19M. I would think in Oregon $12K equals poverty.

        3. Equality under the law. We had ‘pragmatic’ solutions to other problems involving spreading bennies to everyone therefore we can have a pragmatic solution spreading responsibilities to everyone.

      3. “2) Should laws be applied unevenly?”

        As a practical matter, the answer must be yes. What is the reasonable alternative? Even in Libertopia, there will be petty crimes that are not prosecuted because the cost exceeds the benefit to doing so.

        1. If the cost of enforcing a law exceeds the benefit of having the law, then why have the law? Do you have an example of such a law being necessary?

          1. I am thinking of petty crimes like shoplifting. Which would be (or ought to be) illegal even in Libertopia. Not every shoplifter will ever be prosecuted.

            1. Ideally, in my mind, those would be civil offenses and not criminal offenses. Let the person who was stolen from decide the cost/benefit for themself.

              1. How are you going to get civil judgments out of the judgment-proof that make up a huge percentage of people committing such crimes?

  7. So, undocumented immigrants pay some taxes by simply participating in the economy. No shit. I don’t see anywhere in this revealing expose a comparison of taxes paid to benefits consumed.

    1. I imagine the biggest tax they consume is the free education and the free childcare in the way of WIC offered to everyone in America when they have a baby at a hospital. There are other welfare benefits illegals can get easily.

      But we need them or else more than half of the stuff that needs to get done in this country would surely not be done by shitty, lazy, complaining American zombies.

      1. what about parts of the country where there are no or little undocumented immigrants. Driving through the country, there were still people being maids and people working at Taco Bell. I don’t buy for a second that without illegals there would be a labor shortage

        1. Not a labor shortage, a cheap labor shortage.

    2. You don’t see that with citizens either – at least not for the lowest income.

      I see absolutely no difference in being forced to pay taxes to cover services to other people, between those people being ‘citizens’ or ‘non-citizens’. Its still my money being taken at gunpoint, put in someone else’s pocket, and under the same justification.

      If I have a duty to the poor of this country, why don’t I have a duty to the poor of the world?

      1. My sentiments exactly.

      2. If I have a duty to the poor of this country, why don’t I have a duty to the poor of the world?

        If I have a duty to the poor, do I get to choose the poor? Beggars can’t be beggar choosers?

        IMO, the whole point is that there is no duty to the poor, equally. If illegal immigrants can be deported at a moment’s notice and aren’t maxing out deductions to maximize their short-term take home pay, they’re doing it wrong.

        1. Under what principle do the poor of this country, which I happen to be a citizen of by accident of birth, gain precedence over the poor of Mexico?

      3. If I have a duty to my family don’t I have a duty to the poor of this country? See how ridiculous that line of reasoning is? I get that your point is that you don’t have a duty to anyone, but it’s painfully obvious that different people are in different circumstances and have different obligations.

        1. I think the point is (and I agree) that we have exactly the same obligation to subsidize the poor of this country as we do the poor everywhere else and it’s no less immoral to take people’s money by force to give to US citizens than it is to take it and give it to illegal immigrants.

          Of course individuals can decide who is most worthy of receiving their money on their own through voluntary donations.

        2. Other than *you’ve chosen to take on a duty* to your family – its not imposed from outside.

          My duty to the poor of the US is imposed from outside. By what principle do these people impose that duty on my but cut it off at the line on the map.

  8. count what they pay in and ignore what the state pays out

    1. Same as we do for 47% of the country.

    2. I’d like to see an analysis of that as well. Do immigrants and their dependents receive more benefits than they pay in taxes, overall? And how does it compare to citizens at similar income levels?

      1. Do immigrants and their dependents receive more benefits than they pay in taxes, overall?

        That’s where these things always hit the rocks. Near as I can tell after having delved into a lot of the numbers surrounding this debate, the problems associated with “illegal immigrants” vis a vis the welfare state aren’t caused by them but by their citizen progeny. Long term, the best way forward (assuming we’re stuck with a welfare state, which I do) is to amend the 14th to abolish jus soli birthright citizenship.

        And how does it compare to citizens at similar income levels?

        Different age levels would be my concern. Individual income can be quite inconsistent YOY.

        1. That’s where these things always hit the rocks. Near as I can tell after having delved into a lot of the numbers surrounding this debate, the problems associated with “illegal immigrants” vis a vis the welfare state aren’t caused by them but by their citizen progeny. Long term, the best way forward (assuming we’re stuck with a welfare state, which I do) is to amend the 14th to abolish jus soli birthright citizenship.

          Wow. You do a fantastic job of not really providing any evidence or proof of anything while managing to reach a definitive, divisive, and absurd conclusion. I think you’d start a Second Civil War with your recommendation. And, tracing your logic, it would be easier to fight a Second Civil War than get rid of the welfare state.

          1. I think changing our mixed birthright citizenship to a solely jus sanguinis system like many other countries (which is what I intended, but didn’t specify) would be a much easier lift than abolishing the welfare state, especially since it wouldn’t affect any current citizens or their descendants.

            I still don’t think it likely by any means, mind you, but “stop the anchor babies” is a much, much easier sell than “you control your own retirement / education / etc.” One is a measure which protects the welfare state, which at this point is the primary function of western governments, where as the other proposes to radically alter the social contract in an unpopular fashion. And in this age of rising nationalism…

            1. I can see the arguments for not making anyone whose mother steps across the border before giving birth a citizen. But I think automatic citizenship for children of immigrants who actually live here is a good thing and something that makes the US better than a lot of countries. If someone is born here and it’s the only home they know, they damn well should be citizens. I even think that people who were brought here as young children and have no personal connection to their birth country should be given citizenship, but that’s a separate matter.

              And as I say below, I think that killing or greatly reducing the welfare state would be an easier sell than changing the 14th. But that’s really an unknowable, and neither seems very likely in any case.

            2. I think changing our mixed birthright citizenship to a solely jus sanguinis system like many other countries (which is what I intended, but didn’t specify) would be a much easier lift than abolishing the welfare state, especially since it wouldn’t affect any current citizens or their descendants.

              Except that it will, by definition, affect some peoples’ descendants.

              I don’t think you or anyone could seriously implement the idea without inherently sewing notions of white supremacy in some minds and laying the firmaments of a Reconquista de Aztl?n in others. Regardless of yours or anyone elses’ ability to sell the idea, I think, especially in today’s political climate, it would quickly be co-opted to bludgeon political others in order to bring them to heel.

        2. I don’t think that amending the 14th amendment would be a whole lot more practically/politically possible than abolishing the welfare state. I also don’t think it’s a good idea. The good far outweighs the bad, IMO.

          1. Like I said above, I disagree. Note that I don’t want to / think it possible to abolish birthright citizenship in its entirety, but citizenship coming with welfare privileges is most definitely an issue that will need to be resolved at some point.

            Note that I say this as someone who is an open borders / end the welfare state guy. I just don’t see the second half of that ever, ever happening absent a radical rethinking of the philosophy of government by western citizens. Civilization at this point assumes a welfare state.

      2. Once their children are born the children are not counted as illegal immigrants yet the children receive monies from the government but it is their illegal immigrant parents who are in control of that money. that is never counted for in the accountings

        1. Well then let’s account for that as well. Look at the immediate families of immigrants.

          I make no bones about favoring pretty open immigration, but I also like to know the actual facts about things (though it’s unlikely to change my views on immigration).

  9. likely thanks in part to that state’s lack of a sales tax.

    I was waiting for this nugget. Undocumented workers would pay the same taxes as everyone else if income taxes were abolished because they’re inherently immoral, and replaced with a sales tax.

    1. I’d be in favor of only a sales tax, value added tax and abolish all other taxes then immigration would not be an issue at all you could be almost open borders then.

      1. Absolutely!

      2. Yep, it fixes so many structural problems– and moral problems with government, policy and incentive surrounding it. The state has no business knowing how I spend my time during the day. Or who gave me what.

      3. Definitely not an added value tax. Sales taxes are still subject to a lot of manipulation between ‘essentials’ (food) and ‘non-essentials. VATS require a shitload of paperwork on top of that – which is an excessive burden on smaller businesses.

  10. this analysis assumes full compliance with state personal income tax laws

    science, yo

    1. Yeah, I think the study is bullshit. Apropos of my post above, Oregon is probably the worst state to pick to prove that undocumented workers pay taxes. Wherever there’s a sales tax, they absolutely do. But sans sales tax, there’s not a lot of opportunity for the undocumented to contribute to the state revenue. They don’t own property, their incomes are often cash or under the table, so without a sales tax, I think it’s dubious.

      And if you were undocumented, HOW would you pay income taxes? I’ve never heard an explanation for that.

      1. Some employers do pay full taxes on illegal immigrants so that they can write that off of their taxes but in those cases the illegal may not get the benefit of those paid taxes since he used a fake SS# but at the same time many illegals who use stolen SS#’s screw the right full owner of that SS# out of their SS benefits

        1. P.S. If a legal citizen uses an unlawfull SS# they go to prison if your illegal you are sent back to your country of origin so that you can cross the border again and repeat the process. one of the many ways it pays to be illegal they have more rights than citizens these days. In California just being an illegal that has committed a crime but has children is reason enough for them to not be jailed anymore.

          1. In California just being an illegal that has committed a crime but has children is reason enough for them to not be jailed anymore.

            That’s more of a privilege than a right, really. And pretty fucked up.

            The SSN problem could pretty easily be solved by letting people work without a SSN. But I guess it’s more important to seem tough on immigration than to protect people’s identities.

        2. As I recall, stealing SSNs was much less of a problem before they tried to tighten up the verification stuff.

          I think the IRS used to just assign a taxpayer ID to undocumented workers so they could withhold taxes. Which seems like a smart plan if maximizing revenue is the goal.

          1. I guess this is confusing to me.

            Business owner: I’m hiring this guy, he’s an illegal alien.

            IRS: No problem, here’s your tax ID.

            *agent hangs up phone, picks up red phone to ICE headquarters*

            IRS: We got another one. Release the hounds.

            1. I think it happens. As long as the IRS isn’t required or incentivized to report illegals, it could be like that. These are government career employees, remember. Going beyond what their job description requires of them isn’t really a common thing.

              1. Going beyond what their job description requires of them isn’t really a common thing.

                I’m inclined to agree with this on an individual level– in regards to the backroom pencil pusher, but mission creep an expansion is a central feature of Government agencies.

                1. There is that too, I guess.

                  But I’m pretty sure they used to do something a lot like that. Anyone who knows better should correct me if I’m wrong. I’m going on memories of things I read several years ago.

          2. As I recall, stealing SSNs was much less of a problem before they tried to tighten up the verification stuff.

            You mean government actions have unintended consequences? Well, I never.

      2. Being undocumented doesn’t mean you don’t pay property tax – it just means that you don’t pay it directly.

        They still rent. The landlord’s still pay property tax. Some or all of that tax is paid by the renter (and the rest by the landlord).

        1. If you are renting you are probably also indirectly paying income taxes on the landlord’s income from rent.

  11. The other $15 million comes from excise taxes paid on gasoline and alcohol (hopefully not purchased at the same time).

    Gas stations sell beer.

    It’s okay.

    Just don’t drink it on the way home.

  12. “As far back as October 2015, Trump had suggested that only 5 to 10 percent of illegal immigrants paid taxes”

    Clearly when people speak to illegal immigrants not paying much or no taxes they are referring to income taxes and not sales taxes, gasoline taxes, and misc excise taxes.

    Don’t be stupid. Even the numbers that the Oregon based think tank released show how little they paid,

    “In a policy analysis released Monday, the OCPP found that the estimated 116,000-strong population of undocumented Oregonians paid a rough $81 million into state coffers.”

    Well, $81,000,000 divided into 116,000 people is a whopping $698.28 per person. Of that, $66,000,000 was property and income taxes combined, or a whopping $569 per person.

    So on average the illegal immigrant’s tax payments averaging $47 per month to $58 per month is supposed to be impressive? I am pretty sure that creates a huge net negative when you compare what they are able to get out of the system.

  13. It does not matter how much taxes these people pay, they are here illegally. We are either a nation of laws or we are not. If we are not perhaps Louis Marinelli made the right decision to go to Russia where there is no doubt that Russia is not a country of laws.

    Also, there are a lot of immigrant day workers that hang out at the hardware stores and you can bet your sweet bottom dollar they are being paid cash and I would not be surprised if much of that cash goes back to Latin America.

    Were these topics factored into the study?

  14. Oregon is the wrong state to consider when asking if illegals pay taxes. They don’t have a State Income Tax, but obviously they would pay property taxes and alcohol and tobacco taxes. Those are consumption taxes. The question is do they pay Federal Taxes, and State Taxes in those states that have them…And the answer is yes for the most part. Illegals or US born, there are still many jobs paid under the table to avoid taxes or child support, etc. But aside from paying taxes on consumables, last year for example, 6.1 million illegals not only paid Federal and State taxes, but contributed to Social Security and Medicare through FICA withholdings. And the dirty secret is that most of these will never collect Social Security or Medicare, and often don’t file on April 15th to collect any excess taxes that were withheld.

  15. Of course “undocumented workers” pay taxes, as noted in the article.

    The question is how much they consume in taxpayer-provided benefits versus the tax revenue they contribute.

  16. I bet no one bothered to do the math on the revenue generated….well, I did….it works out to only $700/person. I will guess most of them collect way more than that in entitlements/benefits.

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