The Truth about Undocumented Immigrants and Taxes

Every year, the government collects billions of dollars of taxes without knowledge of its origins. In some cases, the taxes were paid by people who got married and did not change their names for tax documents. Roughly, $12 billion annually is paid to state and local governments from illegal immigrants.

Lower Wages

Undocumented immigrants are typically paid lower wages than legal citizens. This reduces how much the illegal immigrants have to pay in income taxes, allowing those workers to send financial aid to family members outside of the U.S. Despite receiving lower wages, undocumented immigrants, on average, pay more income taxes than the highest earners in the country.

Income Taxes

Undocumented immigrants account for roughly 5 percent of the U.S. labor force. Without legitimate social security numbers and photo identification, income taxes are paid, but there are holes in the paper trail as to where the funds came from. About 14 percent of undocumented immigrants work in hard labor positions while another 13 percent work in sales and administrative roles.

Tax Dodgers

A large portion of undocumented immigrants pay income taxes merely because their employer requires it. And a large percentage of undocumented immigrants pay no income tax at all: it is estimated that 50 percent of undocumented immigrants do not pay income tax. Many of these persons are also receiving some kind of government benefit on top of their regular earnings.

Closing Thoughts

Many believe that undocumented immigrants do not pay taxes, but a large portion of them do. Without necessary paperwork, however, if they are due a refund, they may never see it. Reports show that one third of U.S. homes are owned by undocumented immigrants who are required to pay property taxes.

Image credit: Linus Henning