Do Undocumented Immigrants Pay Taxes? (with Lesson Plan)


It's a common refrain among tough-on-immigration advocates that undocumented immigrants use up valuable public services while paying next to nothing in taxes.

In other words, the argument goes, this population of 11 million people living in the U.S. without legal status are essentially freeloading.

President Trump, among others, has long espoused this view. As a candidate he told CNN:

"Do you think an illegal immigrant getting money is going to be paying taxes? Sure, some probably do only because employers are insisting on it. But there's very little percentage wise very little, probably 5 percent, 10 percent. It's a very small amount pay taxes ... Look, they're here illegally. They're not paying taxes."

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On the surface, the claim seems plausible. This is a population that largely lives in the shadows. And it's fair to assume that many undocumented workers are paid under the table, with little incentive to report their earnings.

But while this may be the case for some, it certainly does not hold true for the majority.

In fact, tax records show that the federal government receives billions of dollars each year from undocumented workers who pay income taxes and payroll taxes.

In 2010 alone, more than 3 million undocumented workers contributed as much as $13 billion to Social Security, even though most won’t be eligible to receive those retirement benefits, according to a Social Security Administration report.

Many undocumented workers have fake Social Security cards that they show their employers, who in turn submit W-2 forms and federal tax payments on their behalf. Even if the Social Security numbers don’t actually link to anyone on file, the government gladly accepts the payroll taxes it receives, no questions asked.

“We estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally, and that this effect contributed roughly $12 billion to the cash flow of the program for 2010,” the report concluded.

A large number of undocumented workers without Social Security numbers also pay federal income taxes through an Individual Taxpayer Identification Number, or ITIN, that the Internal Revenue Service issues regardless of immigration status.

In 2014, the IRS  received $9 billion in payroll taxes from about 4 million people filing ITINs, the vast majority of whom were undocumented.

In addition to federal tax contributions, the undocumented population also contributes a sizeable portion of state and local taxes.

A 2016 report from the left-leaning Institute on Taxation and Economic Policy found that undocumented immigrants in 2013 also contributed an estimated $11.6 billion in taxes to state and local governments, mostly through sales and property taxes.

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