Undocumented immigrants pay a lot in taxes and would pay even more with legal status

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By Kathy White

CFI Deputy Director

In case you missed it, last week the Institute on Taxation and Economic Policy (ITEP) released a report that showed that the estimated 180,000 undocumented immigrants who call Colorado home paid $144 million in state and local taxes in 2012 and would contribute another $17 million if given a path to citizenship and lawful permanent residence.

ITEP’s report showed that undocumented Coloradans working and living in the state pay sales and excise taxes when they purchase goods and services, such as clothing and gas, as well as property taxes and income taxes. Each year, undocumented residents pay $85 million in sales and excise taxes, $22 million in income taxes and $37 million in property taxes either as homeowners themselves or renters.

ITEP also calculated what the benefit to Colorado would be if Congress were to pass comprehensive immigration reform, giving those 180,000 people a path to citizenship and full participation in our economy. They estimated that Colorado and its local governments could see $182 million, an additional $38 million per year for schools, roads and other critical priorities, if all undocumented Coloradans were granted lawful permanent residence.

Short of comprehensive reform, President Obama’s executive action of November 2014 would also have big benefits in Colorado. ITEP estimates that it would allow up to half of Colorado’s undocumented residents, 90,000 people, to more fully integrate into our communities and contribute to our local economies to the tune of an additional $17 million in revenues for state and local governments.

The president’s executive action allowed some undocumented immigrants with children to apply for a temporary reprieve from deportation or “deferred action” and a three-year renewable work permit. This is the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA). It also expanded the Deferred Action for Childhood Arrivals (DACA) program of 2012, increasing the number of immigrants who came to the country as children who can apply for lawful work status and permanent residency.

ITEP’s analysis showed that in Colorado, the executive action would affect about 50 percent of the undocumented population, higher than most states and the nation as a whole. Those 90,000 people currently pay an estimated $72 million in state and local taxes. If they were allowed come out of the shadows and fully participate in our economy and our tax system, Colorado would see economic growth across the state and enjoy an additional $17 million in state and local taxes.

ITEP’s report comes just as a stay issued on the Executive Action goes before a federal court. Despite the uncertainties of current immigration reforms, ITEP’s report shows that one thing is certain — fully integrating immigrant workers and families into our communities is good for our economy and good for Colorado.