'Undocumented' immigrants pay billions in taxes

Immigrants illegally in the U.S. collectively contribute nearly $12 billion each year to state and local tax coffers, according to a new report that challenges recent election cycle rhetoric.

The study from the Institute on Taxation & Economic Policy found that immigrants in the U.S. without legal permission kick in their billions in the form of income, property, sales or excise taxes.

There were roughly 11 million immigrants estimated to be in the U.S. illegally as of 2013, according to the report. And each and every state collects at least a few million dollars from tax payments made by such immigrants each year, ranging from Montana's $2.2 million to California's $3.2 billion.

"Regardless of the politically contentious nature of immigration reform, the data show undocumented immigrants greatly contribute to our nation's economy, not just in labor but also with tax dollars," Meg Wiehe, the institute's state tax policy director, said in a statement last week.

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The Pew Research Center recently estimated there were more than 8 million immigrants in the U.S. illegally who were either employed or looking for work in the country in 2012, representing roughly 5 percent of the domestic labor force.

A separate Pew study found that about a third of such immigrants were employed in service positions, while 15 percent worked construction and extraction jobs and another 14 percent worked in production, installation and repair professions. About 13 percent were believed to work in sales, office and administrative support roles, while another 13 percent held professional, management or business and finance positions.

The Institute on Taxation & Economic Policy's study found that individuals lacking legal permission to be in the U.S. consistently receive lower wages than their immigrant counterparts who are in the country legally, which inherently limits how much they pay in terms of income taxes. The report estimates the average income of an "undocumented family" is a little more than $30,000, well below the country's median household income of around $54,000, according to the Census Bureau.

However, when looking at the share of total income paid in taxes, the institute's report estimates the average tax rate for immigrants in the country illegally is higher than the rate paid by America's top earners.

"Undocumented immigrants' nationwide average effective tax rate is an estimated 8 percent," the report said. "To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent."

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Border control has become a defining issue in the 2016 presidential election cycle, and in November, Republican front-runner Donald Trump called CNN's Erin Burnett "naive" for suggesting immigrants pay taxes.

"Who pays in taxes? You really believe they pay in taxes? ... Do you think that an illegal immigrant getting money is going to be paying taxes?" Trump asked during an interview. "OK, sure, some probably do, only because the employers are insisting on it. But there's very little, percentage-wise. There's very little. Probably 5 percent, 10 percent. It's a very small amount [who] pay taxes."

The actual percentage of immigrants lacking legal permission who pay taxes is much higher, according to researchers. The institute's report estimates about a third of such immigrants nationally are homeowners, subjecting them to property tax payments. Another 50 percent are believed to pay income taxes. And as much as 75 percent of the population is believed to pay into the U.S. Social Security system (a system of benefits they wouldn't be eligible to receive anyway unless they became U.S. citizens).

"With immigration policy playing a key role in state and national debates and President [Barack] Obama's 2014 executive action facing review by the Supreme Court, accurate information about the tax contributions of undocumented immigrants is needed now more than ever," Wiehe said.

Indeed, the Supreme Court later this year is expected to deliver a ruling on Obama's reforms that would provide deportation relief for millions of immigrants. The White House has estimated the president's actions will contribute between $90 billion and $210 billion to domestic economic growth over a 10-year window.

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Economic growth is tricky to assess over such a large time frame, considering increased employment and economic output associated with a greater number of immigrants legally in the country could be offset by their greater access to government benefits and subsidies. Just in terms of state and local taxes, however, the perceived benefits are much smaller, clocking in at just $805 million each year added to coffers, according to the institute's report.

It's also important to consider the relatively large percentage of workers in the country illegally who actually are dodging income taxes. Even if 50 percent pay into the system, as the study assumes, that means millions of others could be avoiding taxes.

"In 2010, the average unlawful immigrant household received around $24,721 in government benefits and services while paying some $10,334 in taxes," a report from the right-leaning Heritage Foundation think tank said in 2013. "This [deficit's] cost had to be borne by U.S. taxpayers."

In other words, even though immigrants in the country illegally pay billions of dollars to the U.S. government in the form of taxes, some research still pegs them as a net drain on government resources. But while neither the Heritage Foundation's report nor the institute's latest taxation study are likely to completely clear up much debate around whether such immigrants are a boon or a burden to the U.S. economy, the institute's report makes it clear that local governments collect at least some revenues from them.

And that means the idea that a gross majority of such immigrants dodge taxation altogether, in Trump's own words, looks pretty naive.