NC Budget and Tax Center, Trump Administration

Young undocumented immigrants’ tax contributions would drop by nearly half without the protection of the DACA program

Young immigrants eligible for DACA (Deferred Action for Childhood Arrivals)  annually contribute $2 billion in state and local taxes, according to new analysis from the Institute on Taxation and Economic Policy. The ITEP report finds that this number would drop by nearly half without DACA protection at a time when the Trump Administration has sent mixed signals on whether it intends to honor the DACA executive order in the long term.

The 1.3 million DACA-eligible population pays an average effective tax rate of 8.9 percent, which is on par with the state and local tax rate paid by the middle 20 percent of Americans. ITEP’s report analyzed taxes paid by working immigrants eligible for and receiving DACA (852,000 people), as well as taxes paid by those who are eligible but not receiving DACA (453,000 people).

DACA recipients’ state and local tax contributions increase substantially in part because they can legally work and are required to file income taxes using the Social Security number granted through their DACA enrollment. Employment rates in fact go up for young immigrants receiving DACA protection (from 51 percent to 87 percent), and they experience increased wages. ITEP estimates that young immigrants’ state and local tax contributions would drop from $2 billion to $1.2 billion without DACA protection, while their collective tax contributions would increase by $504 million if they were granted full citizenship.

In North Carolina – where more than 65,000 young people are eligible for DACA – young immigrants’ tax contributions could be as high as $75 million if all those eligible received DACA status.  State and local governments would lose $35 million if DACA protections are not continued, compounding further the loss of dollars for critical investments in public schools, community infrastructure, and the health and well-being of families.

The report concludes: “If the Trump administration fails to protect this population from deportation, the nation risks forcing them back into the shadows and losing the economic and societal contributions these engaged young people are making in their communities.”

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