If you’ve been led to believe that undocumented immigrants don’t pay taxes and are therefore a burden to the US taxpayer – you – that’s just not true.
Though president Trump claims otherwise, insisting that undocumented immigrants use billions of dollars of government services and programs they don’t pay for, millions of them file tax returns each year. As taxpayers, they pay for many benefits they can’t even use.
If this sounds outlandish to you – honestly, it did to me, too – estimates from research done by the Institute of Taxation and Economic Policy suggest about half of undocumented workers in the US file income tax returns.
Internal Revenue Service (IRS) data from 2015, the most recent available, shows that 4.4 million workers without Social Security numbers – including a large number of undocumented immigrants – paid $23.6 billion in income taxes.
Why They Pay
To me, it’s curious that the IRS expects them to file their taxes, and even more curious that they do. Undocumented workers pay taxes for benefits they can’t even use, like Social Security and Medicare. Nor are they eligible for benefits like the earned income tax credit.
And of course I thought, if they file won’t they get found and punished for being undocumented in the first place?
Apparently, not so.
Why do undocumented immigrants file their taxes, then?
Because they hope it will help them get legal status. Therefore, filing helps them create a paper trail to show their time of entry into the country, and how long they’ve been contributing tax dollars. Past immigration reform efforts such as Obama’s Deferred Action for Childhood Arrivals (DACA) have made proof of tax payment one of their first requirements
While many immigrants use invalid Social Security numbers with their employers, who fail to verify them, 23 years ago the IRS created the Individual Taxpayer Identification Number (ITIN) so people who aren’t legally allowed to work in the US can still file taxes. The IRS does not share ITIN information with immigration authorities.
A Net Positive Effect On Social Security
If you were to point out that not all undocumented immigrants pay federal income taxes because the government has no way to keep track of their cash earnings, you would be correct. (And of course, that’s true for anyone whether documented or not.)
But simply by living in the US, all undocumented workers fund public schools and local government services by paying an estimated $11.7 billion per year in sales and property taxes like everyone else.
Workers who get a paycheck still have payroll taxes for Medicare and Social Security withheld from their paycheck, even if they put a fake Social Security number on their W-2 form. The money is withheld and sits in an account; sometimes for decades. The IRS estimates that unauthorized workers pay about $9 billion in payroll taxes annually.
And they help fund our Social Security to the tune of an estimated $13 billion per year to Social Security.
In fact, in 2013 the chief actuary of the Social Security Administration, Stephen Goss, said, “We estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally.”
Net Positive, Not A Burden
Despite these facts, the frequently repeated rhetoric that undocumented immigrants are a drain on the US economy has left its mark: 63 percent of people surveyed said they believe undocumented immigrants burden the economy.
But now you have the information to be one of the 37 percent who knows they aren’t a burden.