How many illegals file federal tax return? Discover the surprising truth about undocumented immigrants contributing billions in taxes annually.
When you think of taxes, you likely imagine the mad scramble each year to round up W-2s and receipts, or the sting of watching your paycheck shrink after deductions. But have you ever stopped to consider who else pays into the U.S. tax system? Here’s a surprising fact that may upend what you thought you knew: millions of undocumented immigrants pay billions in taxes every year. Yes, you read that right.
Not possessing the prerequisite legal status, these undocumented immigrants face significant tax return filing challenges but still greatly contribute to financing public services and strengthening the economy of the United States. Let’s understand in detail this interesting and often misunderstood subject.
Article Breakdown
Breaking the Myth: Do Undocumented Immigrants Pay Taxes?
Let’s face it: the elephant in the room is that undocumented immigrants don’t pay taxes. I once thought this too. It wasn’t until some time ago, when I first began reading up about economic contributions, that I was surprised to find this common belief couldn’t be further from the truth. Undocumented immigrants pay taxes a myriad of ways, with hardly any benefits accruing to them as given to citizens.
Here’s how it works:
1. Individual Taxpayer Identification Numbers ITINs
Many undocumented immigrants have used ITINs, administered by the Internal Revenue Service to file their income tax returns, enabling those individuals who do not have a Social Security number to satisfy their tax responsibility. These numbers were implemented specifically to encourage more people into the nation’s tax systems, and their success has proven remarkable.
Fun fact: Over 3 million federal tax returns were filed on ITINs in 2010 alone-many by undocumented immigrants. That’s millions of people stepping up to contribute to public services despite all they face.
2. Payroll Taxes
Even those who don’t file returns contribute via payroll withholding. Undocumented immigrants often use made-up Social Security numbers or ones they borrow from friends and relatives, so their employers often withhold Social Security and Medicare taxes from their paychecks. Here’s the kicker: They’re paying into systems they likely will never benefit from.
3. Daily Taxes
Beyond income taxes, undocumented immigrants also pay state and local taxes, such as sales tax, property tax-even if they rent-gas taxes. Every time they purchase groceries, fill up their tank, or pay rent, they are contributing to the community.
The Numbers Don’t Lie: Billions in Contributions
When you look at the data, the scale of contributions by undocumented immigrants is staggering. Let’s break it down:
Federal Taxes
In 2022, undocumented immigrants contributed approximately $59.4 billion to federal taxes. That’s not a small sum. For perspective, that’s enough to fund the entire budget for several federal agencies combined.
State and Local Taxes
They also paid $37.3 billion in state and local taxes, helping to fund schools, roads, and emergency services. In fact, on average, undocumented households contribute about 8% of their income in state and local taxes, which is comparable to the effective tax rate for middle-income families.
Social Security and Medicare
Here’s where things get even more surprising. Undocumented immigrants contributed $25.7 billion to Social Security and $6.4 billion to Medicare in 2022 alone. And yet, because of their legal status, most will never see a dime of these benefits. These contributions go into what’s known as the “Earnings Suspense File”, a pool of money that bolsters Social Security without being claimed.
When I first learned about this, I was floored. Imagine paying into a retirement fund your whole life, knowing you’ll never get to use it. That’s the reality for millions of undocumented workers.
Why Do They Pay Taxes?
You might be wondering: if they don’t receive benefits, why do undocumented immigrants pay taxes at all? The answer lies in a mix of practicality and hope.
1. Compliance with Laws
Many undocumented immigrants pay taxes to stay compliant with the law. Filing taxes is often seen as a way to demonstrate good moral character, which could be helpful if they ever have an opportunity to adjust their immigration status.
2. Contribution to Society
There’s also a sense of responsibility. Many undocumented workers see paying taxes as their way of giving back to the country they call home, even if it doesn’t legally recognize them.
3. A Path to Legitimacy
Filing taxes can serve as evidence of residency and employment in the U.S., which could be beneficial in immigration cases. It’s a small act of hope for a better future.
The Bigger Picture: Economic and Social Impact
Undocumented immigrants’ contributions go far beyond the numbers. Their taxes help keep public services running, from schools to emergency services. For example:
- Public Schools: Property taxes, often paid indirectly through rent, help fund education for millions of children.
- Healthcare: Sales taxes and other contributions support Medicaid and public health programs.
- Infrastructure: Gas taxes help maintain roads and bridges that everyone uses.
Think of it like a potluck dinner. Everyone’s supposed to bring a dish, but undocumented immigrants are the ones bringing an extra tray of food without taking a plate for themselves. They contribute more than their fair share while asking for little in return.
What If Undocumented Immigrants Were Given Legal Status?
Here’s where things get even more interesting. Studies show that granting legal status to undocumented immigrants would significantly increase their tax contributions. Why? Legal status often leads to better-paying jobs, which means higher income taxes and more spending in the economy.
The Numbers
If undocumented immigrants were given work authorization, their tax contributions could increase by an estimated $40.2 billion per year, bringing the total to $136.9 billion annually. That’s enough to make a serious dent in national and state budgets.
This isn’t just theory. When the Deferred Action for Childhood Arrivals (DACA) program was introduced, it allowed recipients to work legally. As a result, their economic contributions, and tax payments, skyrocketed.
What This Means to Me
Learning about this topic has been a humbling experience. I’ve always believed in fairness and giving credit where it’s due. Knowing that undocumented immigrants contribute so much to our society despite facing so many barriers has made me rethink what it means to be part of a community.
I remember meeting a man named Luis at a local community center. He’d been working in the U.S. for over a decade, paying taxes faithfully every year with his ITIN. When I asked him why he did it, his answer was simple: “Because this is my home. Even if I’m not recognized, I want to do my part.” His words have stuck with me ever since.
What This Means for Policy and Perception
The contributions of undocumented immigrants challenge us to rethink our narratives around immigration and taxes. Here are some key takeaways:
1. Recognize Their Contributions
It’s time to move past the stereotype that undocumented immigrants drain public resources. The reality is quite the opposite: they’re helping to fund the very programs that many of us rely on.
2. Inform Policy Decisions
Immigration reform that provides pathways to legal status could unlock even greater economic benefits. It’s not just about doing what’s right; it’s about making smart economic choices.
3. Shift Public Perception
By sharing stories and data, we can help combat misinformation and build a more inclusive understanding of what it means to contribute to society.
Key Takings
- At the end of the day, taxes are about more than just numbers; they’re a reflection of our shared responsibilities.
- Undocumented immigrants’ contributions remind us that being part of a community isn’t just about what you take; it’s about what you give.
- So the next time you hear someone claim that undocumented immigrants don’t pay taxes, you’ll know the truth. And maybe, just maybe, you’ll feel inspired to share it.
Useful Articles:
- Undocumented Immigrants’ Payments Into Social Security: This analysis by the Institute on Taxation and Economic Policy details how undocumented residents contribute billions to Social Security without receiving benefits.
- Donald Trump Is Lying About Immigrants and Social Security and Medicare: This article debunks claims about undocumented immigrants receiving Social Security and Medicare benefits, highlighting their actual contributions.
- New Study: Undocumented Immigrants Contribute $8.5 Billion in California Taxes a Year: A report showcasing the significant tax contributions made by undocumented immigrants in California, emphasizing their role in the state’s economy.
- Undocumented Texans Paid $4.9 Billion in State and Local Taxes in 2022: This article discusses the substantial tax contributions of undocumented immigrants in Texas and their impact on the local economy.
