Immigrants pay 19.2% of taxes in the United States, more than $650 billion

Immigration is not only a fundamental part of American history; it is an inherent part of the social and economic fabric of the United States and is key to the country’s future. Changing this fabric through “the largest deportation in history” will have two costs: the price of carrying out the operation of mass detentions and expulsions, and the consequences of having done so. This is revealed by Census figures, which indicate that this population is essential to the country’s bottom line. In 2023, according to the American Immigration Council (AIC), immigrants paid a total of $651.9 billion in federal, state, and local taxes.

As for federal taxes, they accounted for approximately 19.25% of the total tax revenue that year and just over a quarter of a trillion dollars of the revenue collected for Social Security and Medicare. Of the total tax amount, $89.9 billion (2.6% of federal revenue) was paid by undocumented immigrants, who represent almost 25% of all immigrants.

Undocumented immigrants not only pay taxes—with an Individual Taxpayer Identification Number (ITIN), not a Social Security number—but they also lack access to many deductions and most of the services they fund. For example, they are barred from the EITC, the earned income tax refund for low-income families. The EITC is considered one of the most effective fiscal tools in the fight against poverty. “Immigrants’ contributions are much greater than the cost of the public services they use,” the AIC explains.

What's more, according to calculations by Americans for Tax Fairness, undocumented immigrants paid a higher effective state and local tax rate in 40 of the 50 states than the top 1% of households with the highest incomes, who pay about 7.2% of their income on average. Undocumented immigrants pay 10.1%. In the case of federal taxes in 2022, and based on data provided by ProPublica on corporate taxation, undocumented immigrants paid an effective federal tax rate of 5.27% in 2022, higher than that of 55 large Fortune 500 companies in the country. Exxon Mobil and AT&T, for example, had effective tax rates of 2.5% and 3.1%, according to this data.

Immigration is therefore a firm pillar of many states’ finances. In New York, some $74.8 billion was raised from an immigrant population that makes up 23.1% of the total and had a purchasing power of $160.5 billion. In New Jersey, immigrants make up 24.2% of the population and contributed nearly $40 billion in taxes and more than $94.5 billion in spending power two years ago. In California, they are even more so, accounting for 27.3% of the population, and paid just over $168 billion to the public treasury. Virginia, Maryland, Washington, Pennsylvania, Texas, and Vermont are some of the states where this population contributes the most taxes.

The deportations sought by the Trump administration will not only separate families (4.1 million children who are American citizens live with undocumented parents), but also, given the numbers, will take a bitter toll on federal and local economies. “Immigrants help increase the wealth and prosperity of all Americans. And yet, both the White House and Congress are considering increasing ICE’s budget by billions to detain and deport people while simultaneously cutting essential social services like Medicaid and food assistance,” says Nan Wu, research director at the AIC.

The irony that immigrants have paid taxes that will be used “to penalize all Americans with a massive, cruel, and wasteful deportation plan” is not lost on Wu.

Immigrants, both legal and undocumented, inject trillions of dollars into the economy, according to Census figures tabulated by the AIC. Specifically, they have an income of $2.4 trillion and a purchasing power of $1.7 trillion.

Furthermore, the vast majority don’t rely on states or public entities to provide housing, but they are still investing in homes to revitalize neighborhoods. In 2023, they paid $167 billion in housing and held $6.6 trillion in real estate-based wealth.

Population increase

Since 2023, immigration has been crucial to demographics and, consequently, to the labor and business markets at a time of declining birth rates in the country. In the midst of a demographic slowdown, immigration was responsible for the entire US population growth between 2022 and 2023. This is the first time this has happened since 1850, as verified by the Migration Policy Institute.

Currently, the migrant population is at its highest level in absolute numbers, at nearly 47.8 million people (which includes three-quarters of them legally as naturalized citizens, permanent residents, or with temporary visas, among other possibilities), but not in percentage terms, since at 14.3% it is still below the situation in 1910.

Beyond their role as taxpayers and consumers, Steve Hubbard, senior data analyst at AIC, explained to EL PAÍS in a telephone conversation that not only is the “tax base being lost, but we must not forget the important role of immigration in the workforce.” Some 30.7 million migrants are part of a workforce from which baby boomers are retiring. They represent almost 18% of the workforce with a mixed educational and professional background, many with higher education, others without, which “helps close labor gaps on both sides of the skills spectrum.”

“We're in a position where the country needs more workers,” explains Hubbard, who points out that 26.1% of agriculture relies on migrant labor, 25.7% of construction, and even STEM professions (science and engineering). This data analyst explains that sectors like healthcare are critical, particularly nursing and home health care, but also medical care. “We have states that are losing population, communities with jobs that lack workers, especially in rural areas,” he explains.

Hubbard points out that the immigration debate at the national level is very different from the one at the local level. “Many of the immigration laws we have are from the 1960s and reflect the dynamics and careers of a world that no longer exists. There are more conversations to be had about immigrants, and one of them is how necessary they are for the economy to move forward.”

Risk-takers

One of the most deeply rooted myths in the narrative of many companies is the story of the person working out of their garage where the seeds of a business giant were planted. Reality is always somewhat more complex than this story of ingenuity and perseverance, but reality also points to one indisputable fact: 230 Fortune 500 companies were founded by immigrants or children of immigrants.

And this isn't just a moment in history. According to AIC's 2023 Census figures, there are nearly 3.9 million immigrant entrepreneurs. In fact, more than one in five entrepreneurs are immigrants, and they manage an annual revenue of $116.2 billion between them while creating jobs in the country. "The risk they take by emigrating is very similar to the risk you have to take when starting a business," explains AIC senior analyst Steve Hubbard.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition