What Taxes Do Undocumented Immigrants Pay?

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Contrary to popular belief, undocumented immigrants pay taxes, with some estimates putting the total figure north of $10 billion, according to "USA Today." Not only do most undocumented immigrants pay taxes, their tax money can be more important than taxes from a regular worker, because undocumented workers might not receive any benefits.

Identification

  • The most important taxes undocumented workers pay is payroll taxes. The majority of undocumented immigrants pay income and payroll taxes, most using a special tax ID number, for those without a Social Security number, called an ITIN. Illegal workers often pay taxes out of civic duty and to not draw suspicion from the IRS, who may look into an illegal worker's finances. Some workers use fake identifying information, so employers can give them a paycheck and take out payroll taxes.

Considerations

  • Even if an undocumented worker avoids paying federal and state income/payroll taxes, he will eventually pay tax into the system by purchasing goods. Most states charge a sales tax. It would be nearly impossible for anyone to skip sales tax altogether -- including people in the underground drug market, because most goods are purchased locally. Also, undocumented workers tend to purchase staples, such as food and clothing, so the amount of sales tax paid tends to be fairly consistent, according to the Tax Foundation. If a person pays rent or owns a home, she will pay property tax or it will be included in the monthly rent.

Benefits

  • Undocumented workers may not always pay everything they should, but they also lack certain benefits of a normal citizen. Social Security, for example, does not allow payments to non-citizens, even when the person pays enough into the program to receive a retirement pension. This acts as a subsidy for the program, and the SSA even factors this money into its funding projections. Some workers pay more than they should in taxes just to be sure they cover their tax liability.

Questions

  • What remains unanswered in 2011 is whether undocumented workers pay their fair share of taxes. A 2006 Urban Institute study of undocumented workers in Washington D.C. found that while illegal immigrants made up 4 percent of the population, they only paid 2 percent of all taxes. The study, however, did not compare that with the cost of the social services received by the respondents. Part of the problem in answering that question is that it is nearly impossible to discern whether a person using a fictitious SSN is a undocumented worker.

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