How Much Do Unauthorized Immigrants Pay in Taxes?

By Erin Delmore

“There’s a common misconception that undocumented immigrants don’t pay taxes. In reality, that is not true at all,” said Jon Whiten, vice president of New Jersey Policy Perspective.

New Jersey gets an injection of cash from its unauthorized immigrant population — nearly $600 million in state and local taxes, according to a new report.

“They are not here just taking, if you will. They’re contributing to our tax base and to our economy more broadly,” Whiten said.

A study by the Institute on Taxation and Economic Policy crunched the numbers in all 50 states and found New Jersey gets more money from its unauthorized population than 44 other states.

“They buy things at stores and pay sales tax. They rent a home or an apartment and pay property taxes through their rental or sometimes they even own homes themselves. And a lot of undocumented immigrants also pay income taxes,” Whiten said.

“We need people to buy whether it’s real estate, whether you’re buying products, services. That is what keeps the state moving, keeps the entire country moving,” said Statewide Hispanic Chamber of Commerce of New Jersey Executive Director Jazlyn Carvajal.

America’s estimated 11 million unauthorized immigrants pay nearly $12 billion in state and local taxes, according to the report. Of the $587 million paid in New Jersey, most comes from property and sales taxes. Nearly $50 million comes from income tax. And in New Jersey, unauthorized immigrants pay a higher effective tax rate than the state’s wealthiest residents. The trend holds nationwide.

“It’s the immigrant community that’s responsible for the growth of small businesses, the growth of some urban communities and the growth of maintaining an economic vitality in many of our urban communities. Not only Elizabeth but throughout the state,” said Elizabeth Mayor Chris Bollwage.

New Jersey has one of the largest populations of unauthorized people in the country. The Institute on Taxation and Economic Policy says New Jersey would gain more than most states by passing comprehensive immigration reform at the federal level. The organization says that would bring $73 million more to the state.

“The amount of tax contributions would increase, mostly on the income tax side, because you would have even more undocumented immigrants paying income taxes because they would be on some sort of path to citizenship,” Whiten said.

Comprehensive immigration reform was a key promise of the Trump campaign, but with tax reform and the repeal of Obamacare taking center stage, officials are bracing for a long road ahead.