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New Study: Young Undocumented Immigrants Pay $2 Billion a Year in State and Local Taxes

Immigrants who came to the United States as children and benefit from the 2012 executive action that gave them temporary legal status under the Deferred Action for Childhood Arrivals (DACA) program pay $2 billion a year in state and local taxes that support schools, health care, and other essential services, a new study by the Institute on Taxation and Economic Policy (ITEP) finds. And they pay a larger share of their incomes in state and local taxes than the top 1 percent of taxpayers do (see chart).

Like all other state residents, DACA participants pay state and local sales taxes on their purchases and property taxes on homes they own or as part of the rent they pay. With the temporary legal status they receive through DACA, they’re also eligible for work permits and pay millions of dollars in state and local income taxes. Their total tax contributions would rise to more than $2.5 billion a year if policymakers replaced DACA with a path to citizenship, ITEP estimates. Indeed, a separate ITEP report estimated that comprehensive immigration reform would boost the state and local tax contributions of all undocumented immigrants by $2.1 billion.

Inclusive state policies toward refugees and immigrants not only help the nation live up to its ideal of openness but also make good financial and economic sense for states by helping more residents participate fully in the economy. That’s particularly important now, with two-thirds of states facing revenue shortfalls.

Moreover, immigrants and U.S.-born struggling individuals and families often face similar economic barriers that states can address with some of the same solutions. These include higher minimum wages and strong enforcement of labor laws, housing assistance (including help in becoming homeowners), and culturally appropriate strategies to help entrepreneurs succeed. These policies can help states build better, more resilient economies and a future less divided along lines of race and ethnicity.