A political movement that is based on demonizing a group of people needs a demon. So the efforts of the Trump administration to generate anger and hatred toward immigrants, both documented and undocumented, has been combined with repeated claims by the administration and its supporters about the terrible burden immigration creates on the United States. Immigrants have been called rapists and murders and terrorists and have been said to be dragging down our economy and burdening citizens with higher taxes.
That rhetoric has heated up as Congress struggles to pass legislation to restore the DACA program, which protects the Dreamers — undocumented immigrants brought to this country as children — from deportation. It has reached even higher levels as the Trump administration uses the debate over DACA as a bargaining chip to win Congressional support for a border wall with Mexico and radical changes to immigration policy.
Most of those claims have been rebutted, time and again. It is not clear how effective facts can be in tempering hatred. But we intend to do our part by putting the truth before Pennsylvanians.
We begin today with the impact of undocumented immigration on state and local taxes, particularly in Pennsylvania. Those who fear immigration often claim that immigrants are a large burden on state and local governments because they benefit from the services those governments provide but do not pay taxes to support them. That is simply not true
A recent study by the Institute on Tax and Economic Policy (ITEP) shows that the estimated 137,000 undocumented immigrants in Pennsylvania pay our state and local governments almost $135 million in taxes each year. (They pay $11.7 billion in state and local taxes nationwide.)
How is that possible? Well, to begin with undocumented immigrants work hard and their average family income in Pennsylvania is $31,400. While that is more than $20,000 below the average for all families, it is enough to generate substantial tax payments. Undocumented immigrants pay about $64 million in sales taxes in Pennsylvania. They also pay $36 million in property taxes both directly, as 30% of families headed by undocumented immigrants own homes in our state, and indirectly, as property taxes are passed through in the rents paid by those who don’t own their own homes.
Undocumented immigrants also pay $34 million in personal income taxes (PIT) to the state. That may surprise people who think of undocumented immigrants as being paid under the table in cash. But federal laws have forced may undocumented immigrants to secure papers, including Social Security numbers or Individual Tax Identification numbers that allow them to be paid through payroll systems that withhold personal income taxes from their paychecks.
Of course, some undocumented immigrants are paid through channels that do not withhold personal income taxes. Yet, overall, undocumented immigrants pay 7.2% of their income to state and local governments. That is less than the percentage paid by low and middle-income Pennsylvanians (which is 12% for those in the bottom 20% of families and 10% for the middle 20% of families.) But it is far more than the rate paid by the richest 1% of Pennsylvania families, which is 4.2%.
While undocumented immigrants pay a bit less in taxes, they also receive fewer government benefits. Contrary to what the demonizers say, undocumented immigrants are not eligible for federal programs such a Medicare, Social Security, Food Stamps or federal-state programs such as general assistance or Medicaid or CHIP. (We will consider the cost of educating the children of immigrants in future posts and show that, by and large, these costs do not place a large burden on Pennsylvania taxpayers.)
And if we want undocumented immigrants to pay more in taxes, there is a simple solution: give them legal status. ITEP estimates that doing so would bring another $52 million, mostly in personal income and wage taxes, into the coffers of the state and local governments of Pennsylvania and raise the taxation rate of currently-undocumented immigrants almost to the level of middle income Pennsylvanians.
One last point: this entire analysis only looks at what undocumented immigrants themselves pay in taxes. It does not take into account the dynamic effects of undocumented immigration on Pennsylvania’s economy, that is the impact of the consumption of undocumented immigrants on the earnings of other Pennsylvanians and the taxes they pay. Comprehensive studies of the impact of immigration on the American economy have shown that our economy, and thus the taxes raised by federal, state, and local governments, realize benefits from immigration of all kinds.
When it comes to the DACA issue, the first thing we should consider is the moral horror of sending young people brought to this country through no choice of their own “back” to countries they may not even remember, whose language they do not speak, whose culture they do not know, and where they have few connections to other people. That should settle the issue. But for those who worry that a generous policy towards the Dreamers will create an economic burden on Pennsylvania and other states, we can state clearly that the answer is the opposite. Undocumented immigrants pay substantial taxes to state and local governments in Pennsylvania. And offering them legal status will increase the taxes they pay even more.