Illegal Immigrants Do Pay Taxes, But Not Enough To Make Up For What They Take


CNN this week posted an article “debunking” 5 immigration myths.

Articles that debunk myths have gained enormous popularity on the internet despite the fact that they bear no resemblance to either debunking or myths. They should really be called, “here are some skewed stats to make our take on the issue seem right!” Somehow we now live in a world where “myths” are political opinions by a majority of the country, but searching for Big Foot belongs on the Discovery Channel in between nature shows and documentaries about King Tut.

One can quibble with all five of CNN’s immigration point, however, the first one is most egregious:

Myth # 1: They don’t pay taxes

Undocumented immigrants are already U.S. taxpayers.

Collectively, they paid an estimated $10.6 billion to state and local taxes in 2010, according to the Institute on Taxation and Economic Policy (ITEP), a research organization that works on tax policy issues. Contributions varied by state. In Montana they contributed $2 million. In California, more than $2.2 billion. On average they pay about 6.4% of their income in state and local taxes, ITEP said.

To start, this myth is a bit of a straw man argument. No one is saying that illegal immigrants pay absolutely no taxes. The bulk of the taxes cited in that 6% figure is the portion of immigrants’ rent that ends up going to property taxes as well as the excise and sales taxes the immigrants pay with their purchases. But I don’t think anyone was ever arguing that the problem with illegal immigrants is that the cashiers at Walgreen’s kept forgetting to add sales tax to their Rice-A-Roni purchases. Everyone knows they pay sales taxes, and everyone knows most of the apartments they live in pay property taxes.

What people complain about is that they don’t pay income taxes, and when you take that into account the 6.4% figure is far more damning than it is helpful. In California, people pay a 9% tax on state income tax alone on income over $49,0000. That is in addition to the sales and property tax we are patting illegal immigrants on the back for paying, and more importantly it does not even include income tax (which costs the average American around 22% of their salaries) not to mention capital gains and inheritance taxes.

So yes, illegal immigrants “pay” taxes in the same way Adam Morrison helped the Los Angeles Lakers win two championships with his 0.8 points per game average. Their chipping in, but at a fraction of what the average American is contributing.

However, the bigger problem with this statistic is that ignores two important facts: (i) the top 20% of Americans pay 94% of the income taxes, and (ii) 6% of an illegal immigrant’s salary is about as much money as 6% of the sales at a music store that only sells Robin Thicke’s new album.

It’s a sad fact that illegal immigrants are poor. That’s why they’re illegal immigrants. They didn’t escape their home country because they were getting bruises from all the money people were throwing at them. They left looking for a better life and a chance.

But let’s not confuse the fact that they pay a tiny bit of their minuscule salaries on taxes with them contributing to the American tax base in a meaningful way. There’s no disputing that when it comes to government dollars, Mitt Romney was right – there are takers and there are makers. Even if we taxed illegal immigrants at 50%, they would still not be putting nearly as much money into the pot as their top 20% are.

For instance, studies have shown that Wal-Mart’s low paid employees cost taxpayers $6.2 billion per year, and those employees are all paying state and local income taxes. How much do illegal immigrants cost us given that they are more numerous, make less on average, and pay a smaller percentage of their incomes to taxes?A woman takes a photo of "Chariot" by Alberto Giacometti during a media preview at Sotheby's auction house in New York

That is not to say that America’s tax base is too progressive – we could easily increase taxes on the ultra rich without having any negative effect on the economy (the only negative effect being they’d stop spending $100 million on pieces of crap like the above sculpture that could easily be found in the clearance aisle of Pier 1 imports). However, we do need to realize that given their paltry salaries, illegal immigrants and their children each another person eating out of America’s tax apple pie while contributing a minuscule amount to that pie.

That’s why anyway you slice it, illegal immigrants are just not contributing meaningful tax dollars. $10.2 billion sounds like a lot of money, but it’s really about $35 per person in America. Ask a parent in Southern California paying for private school if they’d rather just pay an extra $35 in taxes for their kids to go to a public school where the majority of the kids speak English – I bet they would all take you up on the deal. That’s not to say Spanish is a bad language – it’s just acknowledging the fact that it is exponentially more difficult and expensive for schools to operate when everyone is literally speaking different languages.

So rather than “debunking myths” with bogus facts, we should face the hard truths. Illegal immigrants are more often than not hard working people who had the misfortune of being born in in countries with poor opportunities. Central America is basically a Chutes and Ladders game where every third square is a chute to the bottom, and all of the ladders have been replaced with drug cartels that chop of your head. It is impossible not to empathize with their desire to come to America. However, it is also impossible to deny that their arrival comes at a monetary price to every American citizen.



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