By John Grace
Contributing Columnist
The debate over undocumented immigration usually begins with what it costs taxpayers. But what if the conversation also included what undocumented immigrants contribute to the U.S. economy? Let’s do the math.
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. The Institute on Taxation and Economic Policy 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 those workers are generally ineligible to collect retirement benefits under current law, meaning their contributions help support programs from which they may never directly benefit.
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, health care, 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.
As Congress and state lawmakers continue debating immigration reform, voters deserve a discussion rooted in facts rather than the fiction of 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 as essential for intelligent discussions as it is for crafting policies that are effective, fiscally responsible, and informed by the full scope of the data.
John Grace is a registered representative with LPL Financial. His On the Money column runs monthly in The Wave. The opinions expressed here are for general information only and are not intended to provide specific advice or recommendations for any individual.
LIFTOUT
Contrary to a common perception, undocumented immigrants are not entirely outside the tax system.
