Study: Immigrants Pay Tax Share
Monday, June 5, 2006
The taxes paid by immigrant households in the Washington region are on par with those paid by native-born Americans, although immigrants here illegally pay less, according to a study being released today.
Overall, area immigrants pay nearly one-third of their income to the government -- at least $10 billion a year -- but those here illegally pay less than $1 of every $5 they earn in taxes, the report says. That is partly because they earn less but also because many are paid off the books and escape payroll taxes.
The study, by the nonpartisan Urban Institute, provides the most detailed snapshot yet of tax payments by the region's immigrant population, which the report says shot up from 870,000 in 2000 to 1.2 million in 2004. The income and tax landscape it reveals is unique to the Washington area, where the foreign-born population -- much of it drawn by think tanks, embassies and the high-tech industry -- is more diverse and wealthy than it is nationwide, the authors say. Here, relatively large populations of Asians, Middle Easterners and Europeans pay more taxes than most native-born Americans, helping offset the low tax payments of illegal and poor immigrants, the study found.
Overall, Washington area immigrants carry their share of the tax burden, the report says. In 1999, the year studied by the authors, foreign-born households accounted for 17.7 percent of all taxes paid by the region's residents -- a figure almost identical to their share of the total population in 2000: 17.4 percent.
The average household of illegal immigrants and those with temporary protected status paid less than 2 percent of the region's taxes, even though they made up more than 4 percent of households.
The report is being released as Congress debates immigration reform, a topic that has inspired intense public discussion, in part over whether immigrants benefit or burden the U.S. economy and taxpayers. Using census data, the report details the local, state and federal taxes paid by legal and illegal immigrant households from 1999 to 2000, an approach that some observers call flawed because it does not attempt to weigh those payments against the cost of social services, education and other expenses linked to immigration.
"It doesn't answer the question that's on everyone's minds: Is it a good deal for American taxpayers?" said Steven Camarota, research director at the Center for Immigration Studies, which favors less immigration. "It's not irrelevant, but it's kind of half the equation, really."
The authors said the report is just one piece of the regional economic portrait of immigration that intends to respond to public perception that the foreign-born often escape taxation. In a recent nationwide survey by the Pew Hispanic Center, 56 percent said they believe that most recent immigrants do not pay their fair share of taxes, while 33 percent said they do. In the Washington region, those figures were 46 percent and 41 percent.
"So much of the conversation around immigration right now is focusing on undocumented immigrants and immigrants from Latin America," said Randolph Capps, an Urban Institute demographer who co-authored the study. "That's only a small piece of the puzzle compared to the larger story of the diverse population of immigrants that we have and the significant amount they contribute to the governments in this area."
The controversy over immigrants and taxes generally centers on illegal immigrants. Reliable numbers are hard to find, but researchers generally agree that 50 to 60 percent of illegal immigrants nationwide work for employers who withhold income taxes and Social Security and Medicare payments from their paychecks. The authors of the Urban Institute study assumed 55 percent do. To get jobs, many of those immigrants use false Social Security numbers. That means they pay into the Social Security system for benefits they will never receive and pay income taxes without ever filing a return to determine whether they have overpaid.
The other 40 to 50 percent of illegal immigrants are paid under the table, researchers say.
But that does not mean that all illegal immigrants -- even those with fake documents -- avoid taxation. Together with immigrants who hold temporary protected status, illegal immigrants in the region paid about $1 billion in taxes in 1999, the study found. That is because there are other taxes unrelated to income: All buyers pay sales tax on new television sets, and tenants generally pay property tax in their rent.