As the 2021 tax season draws to a close for most people on Monday, April 18th, Boundless took a fresh look at the data on the contributions made by immigrants to the U.S. tax system and the economy more broadly.
One of the biggest misconceptions around immigration relates to payment of federal income and other taxes. Namely, that undocumented immigrants do not pay taxes, or otherwise abuse government safety nets such as Medicaid and Social Security. However, the evidence actually shows that between half and three quarters of undocumented immigrant households file income tax returns using Individual Tax Identification Numbers (ITINs), and many who do not returns still pay taxes through paycheck deductions.
Like everyone else in the U.S., immigrants also pay sales taxes and property taxes , even if they rent. This means undocumented immigrants pay billions of dollars each year in taxes – over $492 billion dollars in total taxes in 2019 alone. In fact, several studies have found that undocumented immigrants would earn much more, and therefore pay much more in taxes, if they had temporary or permanent legal status.
Immigrants in the U.S. contributed more than $330.7 billion in federal income taxes in 2019, and over $492 billion dollars in total taxes (including state, municipal, and sales taxes). The Tax Foundation estimates that American and immigrant taxpayers paid $1.6 trillion in individual income taxes in 2019. In this context, it’s important to note that immigrants made up only 13.5% of the U.S. population in 2020, meaning that immigrants make an outsized contribution to the U.S. revenue system.
To learn more about the income, spending power, tax payment, and economic contributions of immigrants to the American economic system, read the full report here!