New Jersey has one of the nation’s largest undocumented-immigrant populations, and the aggressive federal-deportation policy launched by President Donald Trump in recent weeks has sparked a widespread debate among state and local officials about public safety and human rights.
But a new national study that looks only at the tax contributions of undocumented immigrants suggests New Jersey could be among the states with the most to lose financially if Trump’s new deportation effort starts targeting more than just the very small group of immigrants who pose the most serious threat to public safety and national security.
[img-narrow:/assets/16/0518/0120]As a group, New Jersey’s undocumented immigrant population contributes an estimated $587.4 million to the state and local governments via income, property and sales taxes, according to the Washington, D.C.-based Institute on Taxation and Economic Policy. That total tax haul ranks sixth-highest among U.S. states, behind only California, Texas, New York, Illinois and Florida, according to the study, which was released this morning.
The ITEP study also reviewed how much tax revenue states and local governments could gain if comprehensive federal immigration reform granting legal status to undocumented immigrants were to be enacted, estimating New Jersey could add another $73.7 million, pushing the total above $661 million. But the study did not look at the expense side of the equation, meaning any government spending on schools, healthcare and other services for undocumented immigrants and their children was not included in the analysis.
Urged not to ignore immigrants’ financial contributions
The new figures come out just days after Gov. Chris Christie put forward a new state budget that banks on increasing revenue from both the income and sales taxes during the fiscal year that begins July 1 to help support an overall boost in state spending of about $1 billion. The study’s release also comes on the heels of new data from the state Department of Community Affairs that showed overall property tax revenue for county and local governments in New Jersey increased by about $700 million last year.
The authors of the new report urged policymakers not to ignore the financial contributions that undocumented immigrants make as they evaluate Trump’s new deportation effort. New Jersey Policy Perspective, a Trenton-based liberal think tank, said the data demonstrate undocumented immigrants are providing a real boost to the state economy, and that they often receive fewer services than other residents while paying taxes at a higher effective rate than the wealthy.
A memo issued last week by John Kelly, Trump’s handpicked secretary of the U.S. Department of Homeland Security, outlined the federal government’s more aggressive approach to deportation, saying criminals who “pose a risk to public safety or national security” are now being prioritized for removal. But the memo also suggested federal immigration officers “have full authority to arrest or apprehend an alien whom an immigration officer has probable cause to believe is in violation of the immigration laws.” Except for limited cases, “the Department no longer will exempt classes or categories of removable aliens from potential enforcement,” the memo said.
What impact the new deportation policy will have on communities in New Jersey remains to be seen, but concerns are running high given the state has an estimated 500,000 undocumented immigrants, ranking fifth-highest nationally behind California, Texas, Florida and New York. State lawmakers have already started to hold hearings on the immigration issue to take testimony from those who could be impacted by a harsh crackdown.
‘Undocumented New Jerseyans are entrepreneurs’
Legislation has also been introduced to push back against Trump’s threat to strip federal aid from so-called sanctuary cities that provide safe harbor to law-abiding immigrants. Under the bill introduced by Democrats last month, funds from the state budget would be used to offset any loss of federal dollars, a proposal some Republicans have criticized as a potential drain on the state budget.
But the new figures released by the Institute on Taxation and Economic Policy suggests that a widespread deportation of undocumented immigrants could also have a negative financial impact on the state budget, along with county and municipal government budgets in New Jersey as well.
In all, undocumented immigrants contribute an estimated $11.7 billion in state and local taxes nationally. The $587 million estimate for New Jersey includes $315 million in state income and sales taxes by undocumented immigrants, and another $272 million in property taxes.
“Undocumented New Jerseyans are entrepreneurs, homeowners and vital contributors to the state’s economy and communities,” said Erika Nava, a policy analyst at New Jersey Policy Perspective. “Facts matter — and this report is yet more proof that undocumented immigrants are an asset to our state and our nation.”
To come up with an estimate for property taxes, the study’s authors used figures compiled by the National Migration Institute, and also assumed that undocumented immigrants living in rental housing are indirectly covering half the property tax bills levied on their landlords. The estimate for income taxes paid by undocumented immigrants, which totals $49 million in New Jersey, factored in research that indicates between 50 percent and 75 percent of undocumented immigrants pay income taxes using fake Social Security or tax identification numbers. The estimate for sales taxes paid by New Jersey undocumented immigrants, which totals $266 million, assumes that undocumented immigrants send roughly 10 percent of their income to relatives in their country of origin.
“Keep in mind most state and local taxes are collected from people regardless of immigration status,” said Meg Wiehe, ITEP’s director of programs.
“Undocumented immigrants, like everyone else, pay sales and excise taxes when they purchase goods and services,” she said. “They pay property taxes directly on their homes or indirectly as renters. And many undocumented immigrants also pay state income taxes.”
Enacting comprehensive federal immigration reform that granted legal status to all undocumented immigrants would net an extra $2.18 billion in state and local tax revenue nationally, according to the study.