NC Budget and Tax Center

Undocumented immigrants pay taxes too

The Institute on Taxation and Economic Policy released a study this morning highlighting the current contributions of undocumented immigrants through state and local taxes. In North Carolina, undocumented immigrants pay $278 million in state and local taxes currently. These tax dollars help the state invest in public schools and various other public services.

From the report:

Like other people living and working in the United States, undocumented immigrants pay state and local taxes. In addition to paying sales and excise taxes when they purchase goods and services (for example, on utilities, clothing and gasoline) undocumented immigrants also pay property taxes directly on their homes or indirectly as renters. Many undocumented immigrants also pay state income taxes.5 The best evidence suggests that at least 50 percent of undocumented immigrant households currently file income tax returns using Individual Tax Identification Numbers (ITINs) and many who do not file income tax returns still have taxes deducted from their paycheck.

Under President Obama’s executive actions, that would provide a pathway to temporary status for children who arrived here without documents and parents of US citizens, the contributions of North Carolina undocumented immigrants would increase to $372 million.

At that time, undocumented immigrants would be paying an effective tax rate of 8.3 percent compared to the 5.3 percent paid by the top 1 percent of North Carolina taxpayers whose average income is $1 million. It turns out all those paying taxes in North Carolina face an upside-down system.

This Tax week it is important to recognize that everyone in NC pays taxes. The Executive Actions on immigration that would provide temporary status to currently undocumented immigrants would increase state and local tax revenue at a critical time in NC.

One Comment


  1. Dietrich Schroeer

    April 16, 2015 at 12:31 pm

    I believe that illegal aliens from Mexico are of great benefit to the State of North Carolina through their work in agriculture, construction, etc. But this report does not prove this. How much is this ca. $300 million in taxes compared to the added costs to the State and the local communities. How many illegal school-age children are in NC, and how much does their education cost? What part of these taxes come through gasoline sales that pay only for the wear of roads imposed by these illegals? This report, or at least this summary of it, is not very convincing. Do a better and more politically neutral study.

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