Do Illegal Immigrants Pay Taxes?

But Do Their Estimates Reflect Reality?

Illegal immigrant mother hugs child while being questioned by US Border Patrol agents
Border Security Remains Key Issue In Presidential Campaigns. John Moore / Getty Images

The belief that illegal immigrants, sometimes referred to as unauthorized immigrants, in the United States pay little or no taxes is far from correct, according to the Immigration Policy Center, which estimates that households headed by illegal immigrants paid a combined $11.2 billion in state and local taxes during 2010.

Based on estimates compiled by the Institute for Taxation and Economic Policy (ITEP), the Immigration Policy Center reported that the $11.2 billion in taxes paid by illegal immigrants in 2010 included $8.4 billion in sales taxes, $1.6 billion in property taxes and $1.2 billion in state personal income taxes.

"In spite of the fact that they lack legal status, these immigrants -- and their family members -- are adding value to the U.S. economy; not only as taxpayers, but as workers, consumers, and entrepreneurs as well," states the Immigration Policy Center in a press release.

Which States Got the Most?

According to Immigration Policy Center, California led all states in taxes from households headed by illegal immigrants, at $2.7 billion in 2010. Other states gleaning significant revenue from taxes paid by illegal immigrants included Texas ($1.6 billion), Florida ($806.8 million), New York ($662.4 million), and Illinois ($499.2 million).

Note: While California may have realized $2.7 billion from taxes paid by illegal immigrants in 2010, a 2004 report by the Federation for American Immigration Reform showed that California spends over $10.5 billion annually on the education, health care and incarceration of its illegal immigrant population.

Where Did They Get These Figures?

In coming up with its estimate of $11.2 billion in annual taxes paid by illegal immigrants, the Institute for Taxation and Economic Policy say it relied on: 1) an estimate of each state's unauthorized population; 2) the average family income for unauthorized immigrants, and 3) state-specific tax payments.

Estimates of the illegal or unauthorized population of each state came from the Pew Hispanic Center and Census 2010. According to the Pew Center, an estimated 11.2 million illegal immigrants lived in the U.S. during 2010. The average annual income for households headed by an illegal alien was estimated at $36,000, of which about 10% is sent to support family members in countries of origin.

The Institute for Taxation and Economic Policy (ITEP) and the Immigration Policy Center assume illegal immigrants actually pay these taxes because:

  • "Sales tax is automatic, so it is assumed that unauthorized residents would pay sales tax at similar rates to U.S. citizens and legal immigrants with similar income levels."
  • "Similar to sales tax, property taxes are hard to avoid, and unauthorized immigrants are assumed to pay the same property taxes as others with the same income level. ITEP assumes that most unauthorized immigrants are renters, and only calculates the taxes paid by renters."
  • "Income tax contributions by the unauthorized population are less comparable to other populations because many unauthorized immigrants work 'off the books' and income taxes are not automatically withheld from their paychecks. ITEP conservatively estimates that 50 percent of unauthorized immigrants are paying income taxes."

    But One Big Disclaimer Looms

    There is no question that illegal immigrants do pay some taxes. As the Immigration Policy Center correctly points out, sales taxes and property taxes as a component of rent are basically unavoidable, no matter a person's citizenship status. However, when the U.S. Census Bureau so emphatically states that illegal immigrants are the most difficult individuals for them to locate and count in the decennial census, any figure as elusive as the total taxes they pay must be considered a very rough estimate. In fact, the Immigration Policy Center acknowledges this fact by adding the following disclaimer:

    "Of course, it is difficult to know precisely how much these families pay in taxes because the spending and income behavior of these families is not as well documented as is the case for U.S. citizens.

    But these estimates represent a sensible best approximation of the taxes these families likely pay."