Undocumented immigrants pay $83 million in state taxes, would pay more with immigration reform

Undocumented immigrants play a vital role in Minnesota’s economy and currently pay an estimated $83 million in state and local taxes, according to a new report from the Institute for Taxation and Economic Policy (ITEP). Under immigration reform that provides a path to legal status, ITEP estimates these contributions would substantially increase.

The estimated 85,000 undocumented immigrants currently living in communities throughout Minnesota pay taxes in a variety of ways. For example, they pay sales taxes 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.

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ITEP’s report highlights that one of the benefits of welcoming immigration reform is likely to be increased economic activity in our communities and increased tax revenues in Minnesota. When immigrants have legal status, they are often able to take jobs that match their full range of abilities, build on and develop additional skills, and ultimately increase their earnings. ITEP estimates that granting full legal status to all undocumented immigrants would mean $19 million in increased tax revenues in Minnesota.

On the other hand, if many immigrants are deported, then “state and local revenues could take a substantial hit,” according to ITEP. Immigrants are important to our communities for many reasons, including bringing greater cultural diversity and revitalizing struggling cities. Their worth as people is not limited to their economic contributions, but the fiscal impact of removing immigrants would be substantial. ITEP reports that states could lose $12 billion in revenue if all undocumented immigrants were deported.

Undocumented immigrants already play important roles in cities across Minnesota. Recognizing this value and opening paths to legal status for immigrants could further strengthen our communities while also increasing economic activity and tax revenues.

-Clark Biegler

About Clark Goldenrod

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