Guest commentary: They take more than they give? The tax data tells a more complicated story
By John Grace
The debate over undocumented immigration usually begins with what it costs taxpayers. But what if the conversation also included what undocumented immigrants contribute?
According to the Institute on Taxation and Economic Policy, undocumented immigrants paid an estimated $96.7 billion in federal, state and local taxes in 2022.
Of that, $37.3 billion went directly to state and local governments to help fund schools, roads, public safety and other essential services.
California led the nation with approximately $8.5 billion in state and local tax revenue generated by undocumented immigrants, followed by Texas at $4.9 billion, New York at $3.1 billion, Florida at $1.8 billion, Illinois at $1.5 billion and New Jersey at $1.3 billion.
The tax contributions extend beyond state revenues. ITEP estimates undocumented immigrants also paid roughly $25.7 billion into Social Security and $6.4 billion into Medicare in 2022 through payroll taxes.
Many of these workers are generally ineligible to collect retirement benefits under current law, meaning their contributions help support programs from which they may never directly benefit.
That point deserves particular attention because Social Security is already facing significant long-term financing challenges. Undocumented workers are not a solution to the program’s broader demographic problems, but their payroll tax contributions are nevertheless part of the money flowing into the system.
In other words, the immigration debate isn’t simply about who receives benefits. It is also about who is contributing to the programs that millions of Americans depend upon.
Contrary to a common perception, undocumented immigrants are not entirely outside the tax system. They pay sales taxes on everyday purchases, property taxes directly or through rent and many pay income and payroll taxes through employer withholding or by filing returns with Individual Taxpayer Identification Numbers.
These figures do not end the immigration debate, nor do they answer important questions about border security, healthcare, education, or the overall cost of public services. Those issues remain central to immigration policy and deserve careful consideration.
However, meaningful public policy requires examining both sides of the ledger. Focusing only on government expenditures — or only on tax contributions — provides an incomplete picture.
There is also an important distinction between tax contribution and net fiscal impact. Paying billions in taxes does not necessarily mean that a particular population costs governments less than it contributes.
The answer can vary by state, level of government, age, household composition and which public services are included in the calculation.
That is precisely why the debate benefits from looking at the complete ledger rather than relying on a single statistic.
As Congress and state lawmakers continue debating immigration reform, voters deserve a discussion rooted in facts rather than assumptions.
Regardless of where one stands on immigration policy, the evidence shows undocumented immigrants are not simply consumers of public services.
They are also significant contributors to the nation’s tax base. Understanding both realities is essential for crafting policies that are effective, fiscally responsible and informed by the full scope of the data.
• John Grace is a financial planner and president of Investor’s Advantage in Thousand Oaks.
