immigration, NC Budget and Tax Center

Undocumented immigrants pay their fair share of taxes, too

Tax Day is just around the corner, and this year is no different than any other for countless undocumented immigrants filling tax forms in North Carolina. Current rhetoric on immigration often overlooks the important contributions undocumented immigrants make to our communities as neighbors, workers, and taxpayers. The Institute on Taxation and Economic Policy recently released a study that highlights the significant contributions that undocumented immigrants make to our state and local economies by paying taxes. According to the report, undocumented immigrants across the United States collectively pay $11.74 billion in state and local taxes.

In North Carolina, these community members pay sales and excise taxes on things such as utilities, clothing and gasoline. They also pay property taxes, either directly on their homes or indirectly as renters. Furthermore, undocumented immigrants also pay state income taxes that help grow state investments in schools, transportation, health care, and other services. At least 50 percent of undocumented immigrant households currently file tax returns using Individual Taxpayer Identification Numbers (ITINs), which are the numbers assigned to foreign nationals who do not have a Social Security number. Among those who do not file tax returns, many still have taxes deducted form their paychecks.

Policymakers can also analyze tax contributions through the “effective tax rate,” which measures the share of total income paid in taxes. Across the country, the average effective tax rate for undocumented immigrants is 8 percent. This number is especially striking when you compare it to the average nationwide effective tax rate among the richest taxpayers: 5.4 percent.

Policymakers can still make wise choices that strengthen our communities and recognize the substantial contributions that immigrants make to our economy and to government revenues. A policy of mass deportation of undocumented immigrants would result in the harmful separation of families, and the loss of neighbors, students and friends. It would also result in a tremendous loss for state and local economies struggling to sustain a post-recession recovery. When it comes to immigration, state and national leaders have an opportunity to explore and enact sound public policies that promote economic growth and immigrant integration, based on facts and reality rather than playing out the politics of fear and division.

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