Undocumented immigrants contribute $87 million in Minnesota taxes, more expected with immigration reform

Undocumented immigrants play a vital role in Minnesota’s economy and paid $87 million in state and local taxes in 2012, according to a new report from the Institute for Taxation and Economic Policy (ITEP). Under immigration reform, ITEP estimates these contributions would substantially increase.

The estimated 91,000 undocumented immigrants currently living in communities throughout Minnesota pay taxes in a variety of ways. For example, they pay sales tax when they buy school supplies, property taxes through their rents, and income taxes when it is deducted from their paychecks and when they file taxes in the spring. Even though undocumented immigrants are ineligible for many services that taxes pay for, they are doing their part to support the state’s schools, roads and bridges, and other public services.

ITEP’s report highlights that one of the benefits of immigration reform is likely to be increased tax revenues for the state. President Barack Obama’s executive actions in 2012 and 2014 expand relief from deportation for an estimated 42,000 undocumented immigrants in Minnesota, including youth who have lived in the United States since 2010 and are either in school or have a high school degree, as well as parents of U.S. citizens or lawful permanent residents who have been in the country for over five years.

These executive actions also allow these immigrants to apply for work authorization and a Social Security Number, which in many states, including Minnesota, means they can also apply for a driver’s license. With these tools, immigrants will be able to obtain jobs better in line with their skills, and to get to and from their jobs more reliably. For many immigrants, ITEP expects that this will result in increased earnings. And this isn’t just good for immigrants, it results in increased economic activity in our communities and increased tax revenues in Minnesota. The executive actions are expected to result in approximately $7 million in additional state and local taxes paid by undocumented immigrants. Alternatively, ITEP estimates that granting legal status to all undocumented immigrants would mean $17 million in increased tax revenues in Minnesota.

Undocumented immigrants already play important roles in communities across the state. Obama’s executive actions can expand opportunity for undocumented immigrants who are living and working here, and could bring increased economic activity and tax revenues to Minnesota.

This post was written by Clark Biegler and originally published on Minnesota Budget Bites. Follow the Minnesota Budget Project on Twitter: @mnbudgetproject.

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Comments (5)

  1. Submitted by joe smith on 05/12/2015 - 01:43 pm.

    Does that number deduct for social services, education and other programs?

    • Submitted by Steve Titterud on 05/12/2015 - 03:04 pm.

      NO !! Although this column would seem to imply a net gain.

      This column leaves out the costs, preferring to highlight tax revenue gains standing alone. In columns like this, we see the promotion of immigration reform in a rather biased light.

      I agree that these causes need to be promoted and defended in the public space, and there are clearly contributions to the public good that immigrants provide. Obama is fighting against some real head-winds as he seeks to create some immigration reform by executive order, due to the intransigence of the opposition in Congress. He needs all the help he can get.

      But to publish such a slanted, biased view of the issue is a very poor way to do it. Once the reader realizes the costs have been deliberately ignored, he may distrust the proponents altogether.

      For some eye-catching ADDITIONAL FACTS, see http://cis.org/immigrant-welfare-use-2011, which analyzes recent Census data. The site has some very interesting and easy-to-read tabular and graphical views of data. In particular, look at Table 5, “Welfare Use For Immigrant and Native Households With Children by State and Locality, 2008/2009” and also Table 7, where you can see Minnesota data laid up alongside other states’ figures.

      ALL facts need to be taken into account in this debate.

      Also, note this from a summary given by FactCheck on the subject of costs:

      […a 2007 report by the nonpartisan Congressional Budget Office examined 29 reports on state and local costs published over 15 years in an attempt to answer this question. CBO concluded that most of the estimates determined that illegal immigrants impose a net cost to state and local governments but “that impact is most likely modest.” CBO said “no agreement exists as to the size of, or even the best way of measuring, that cost on a national level.”]
      http://www.factcheck.org/2009/04/cost-of-illegal-immigrants/

      So the CBO concludes there is a net cost, rather than a revenue boost, as this column implies – but also indicates how difficult it is to get a handle on the level of those costs.

  2. Submitted by John Appelen on 05/12/2015 - 03:07 pm.

    Low Wages

    I will never understand the rationale of Liberals who want higher wages for low skill /low knowledge workers, and want to pardon people who budged in line in front of others, immigrated illegally and currently help to keep wages depressed in some fields.

    Imagine the upward pressure on wages if 90,000 illegal workers were deported from MN. And if 17 million were deported from the country. Of course, the big question is would legal citizens be willing to take those jobs even if the wage increased some?

  3. Submitted by Ilya Gutman on 05/12/2015 - 09:29 pm.

    Wow

    If we run some calculations, based on the numbers this article provides, each illegal immigrant pays about a thousand dollars in taxes a year. If one follows the author’s logic, we should invite the entire world to come here since they will be paying taxes thus making us all rich. Just think about it: a million illegal immigrants in Minnesota will bring in a billion in taxes… Wow!

  4. Submitted by Don Honda on 05/13/2015 - 10:13 pm.

    Illegal Aliens good for the economy? Uh, nope!

    An Atlantic Monthly article that shows that most economists’ thinking that an increased influx of immigrants provides more jobs for Americans is FALSE and does harm jobs for US workers and the economy:

    http://www.theatlantic.com/business/archive/2015/01/does-immigration-harm-working-americans/384060/

    Also, it is patently untrue that “immigrants” are the solution to low rate of start-ups:

    http://smallbiztrends.com/2015/01/immigration-reform-declining-start-rate.html

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