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.


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.