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.

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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.

-Clark Biegler

About Clark Biegler

Clark Biegler is the Minnesota Budget Project's policy analyst.
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