Undocumented immigrants contribute $77 million in Minnesota taxes, more with immigration reform

Undocumented immigrants play a vital role in Minnesota’s economy and currently pay $77 million in state and local taxes, 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 81,000 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 would expand relief from deportation for an estimated 38,000 undocumented immigrants in Minnesota. Eligible immigrants include youth who came to the United States before they turned 16 and have lived here since 2010, as well as parents of U.S. citizens or lawful permanent residents who have been in the country since 2010.

However, Obama’s 2014 executive actions are delayed in a lawsuit involving 26 states. That case has been brought to the U.S. Supreme Court for review, and a decision could be made by June.

Immigrant tax contributions 2016 report-01

These executive actions would also allow these immigrants to apply for temporary work authorization and Social Security Numbers, which would mean they can also apply for driver’s licenses. With these tools, immigrants could obtain jobs better in line with their skills, and get to and from their jobs more reliably. ITEP expects that this will result in increased earnings for many immigrants. And this wouldn’t be just good for individuals, it would result in increased economic activity in our communities and increased tax revenues in Minnesota. The executive actions, if enacted, are expected to result in approximately $7.3 million in additional state and local taxes paid by undocumented immigrants. Alternatively, ITEP estimates that granting full legal status to all undocumented immigrants, not just a temporary measure for selected populations, would mean $18 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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