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Immigration Dispute Carries High Stakes for States

States have lots at stake in the legal dispute over President Obama’s executive actions giving certain unauthorized immigrants temporary legal status and enabling them to apply for temporary work permits.  The executive actions would yield $845 million a year in new state and local tax revenue nationally, the Institute for Taxation and Economic Policy estimates, as more immigrants pay income taxes and earn higher wages. 

Obama’s actions would permit unauthorized immigrants who are parents of either U.S. citizens or lawful permanent residents to work here legally on a temporary basis after undergoing a rigorous background check, applying for work authorization, and paying a fee.  The state of Texas has launched a court challenge, and the Supreme Court recently agreed to hear the case.

Because unauthorized workers operate in the shadows of the labor market, they’re cut off from many job opportunities and employers can more easily exploit them.  Integrating them more fully into the economy would help them achieve more of their earning potential.  If these workers could improve their skills more easily and get jobs that better match those skills, they’d earn higher wages and spend more in the economy.  They’d also contribute more to the tax base from which states fund schools and other investments critical to a strong economy.

Unauthorized immigrants already contribute nearly $12 billion a year in state and local taxes (see graph).  The President’s actions would boost that amount, and comprehensive immigration reform that extended permanent legal work status to all currently unauthorized workers would boost it further.

Instead of pursuing litigation and policies to exclude unauthorized immigrants, states would be better served by pursuing inclusive policies, as our recent report explains.