State & Local Tax Contributions of Young Undocumented Immigrants

ITEP, Apr. 25, 2017 - "DACA enrollment has helped young immigrants become more engaged in their communities. A national survey of DACA enrollees in 2016 found that more than 40 percent of respondents secured their first job after enrollment in DACA, and more than 60 percent landed a job with better pay. DACA enrollment also allowed 60 percent of respondents to pursue educational opportunities that were previously unavailable to them. The young immigrants enrolled in DACA work in diverse industries, including educational and health services, wholesale and retail trade, and professional and business services.

The 1.3 million young immigrants eligible for deferred action contribute tax dollars to communities that help pay for schools, public infrastructure, and other services. Their contributions could be increased by taking steps to ensure that all individuals eligible for deferred action are enrolled, or even by offering a path to citizenship. Conversely, stripping their temporary lawful status or deporting them would decrease their tax contributions and deprive our country of a dedicated and diverse generation.

An ITEP report from March 2017 found the 11 million undocumented immigrants living and working in the United States contribute more than $11.74 billion in state and local taxes.[iii] This report specifically examines the state and local tax contributions of undocumented immigrants who are currently enrolled or immediately eligible for DACA and the fiscal implications of various policy changes. The report includes information on the national impact (Table 1) and provides a state-by-state breakdown (Appendix 1). 

Key Findings

• The 1.3 million young undocumented immigrants enrolled or immediately eligible for DACA contribute an estimated $2 billion a year in state and local taxes.[iv] This includes personal income, property, and sales and excise taxes. 
  
  
• DACA-eligible individuals pay on average 8.9 percent of their income in state and local taxes. Their effective tax rate is higher than the average rate paid by the top 1% of taxpayers in state and local taxes of just 5.4 percent and is on par with the average rate paid of 9.4 percent paid by the middle 20 percent of taxpayers.[v]
  
  
• Continuing DACA and ensuring all who are eligible for the program are enrolled would increase estimated state and local revenue by $425 million, bringing the total contribution to $2.45 billion, and increasing the effective tax rate for those enrolled to 9 percent.
  
  
• Replacing DACA with a path to citizenship could provide nearly $505 million in additional state and local taxes, increasing total contributions to at least $2.53 billion a year.
  
  
• Repealing the temporary legal status and work authorizations permitted by DACA would reduce estimated state and local revenues by nearly $800 million, and drop the total contributions to just over $1.2 billion annually.
  
  
• Every state benefits from the economic contributions of the young immigrants eligible for DACA (see Appendices 1 and 2). For example, the 379,000 young immigrants living in California are contributing more than $534 million to the golden state while the 2,000 immigrants in our nation’s capital contribute $2.7 million to the District. Likewise, every state stands to lose considerable revenue if we do not maintain the protections and opportunities DACA has allowed."