Immigration Reform and Tax Revenues

Legalizing 11 million undocumented immigrants continues to be the most controversial part of the immigration reform bill.

Those who oppose immigration reform have tried to claim that legalizing the undocumented would be a financial drain.

However, a new study by the Institute on Taxation and Economic Policy shows that allowing undocumented immigrants to work legally could boost state and local revenues by $2 billion a year.

The report states that creating a pathway to citizenship would result in the following:

  • State income tax profits would see an increase of $1.6 billion
  • Sales tax contributions would see an increase of $420 million
  • Newly legalized immigrants would pay an additional $76 million in property taxes

States with no sales tax and low immigrant populations will gain the most from immigration reform. In Montana, immigration reform could add a 50 percent increase in the total amount of taxes immigrants pay.

Matthew Gardner, the executive director of the Institute on Taxation and Economic Policy, explained, “From the rhetoric of a lot of anti-immigration reform policy makers, you would think that the tax benefit would be a net zero and this report shows that is absolutely not true.”

The study also takes a look at immigrant tax revenues in recent years. It found that in 2010 immigrants contributed $10.6 billion to the U.S. through income, property and sales taxes.

This study is consistent with Congressional Budget Office report released last week that stated immigration reform would reduce the country’s budget deficit and add $450 billion in federal tax revenues in the next ten years.

 

More on Immigration Reform:

  • Immigration Reform 2013
  • Gang of 8
  • Earned Citizenship
  • Streamlining Immigration
  • Strengthening Border Security
  • More Accountability for Employers Hiring Undocumented Immigrants