Feb. 7, 2018
The U.S. Congress has been heatedly debating immigration, in particular whether young aspiring citizens (including “Dreamers”) should be eligible for citizenship. This is in response to the Administration’s decision to end the Deferred Action for Childhood Arrivals (DACA) policy, which provides a pathway for previously undocumented young adults to live and work in the United States.
A recent report from the Institute of Tax and Economic Policy (ITEP) shows how undocumented immigrants in Kansas demonstrate their commitment to our state and increase state revenue through the taxes they pay.
New Americans bring their families to the United States to provide a better life for their children and contribute to our culture. The ITEP report explains how undocumented immigrants contribute to state and local economies and how creating a pathway to citizenship would increase economic contributions from the undocumented immigration population.
- Currently, undocumented immigrants residing in Kansas pay nearly $68 million a year in state and local taxes.
- By granting undocumented immigrants full and legal status, Kansas could receive an additional $11 million in state and local taxes annually, creating a nearly $79 million state and local tax contribution from the undocumented immigrant population.
The report breaks down the tax contributions of undocumented immigrants by tax type and provides some key takeaways.
Pathway to citizenship would double the personal income taxes of undocumented immigrants
While undocumented immigrants pay similar amounts of sales tax compared to immigrants with full legal status, personal income tax contributions could nearly double, from $6 million to $11 million, if this population was granted full legal status. Nationally, it is estimated “at least 50 percent of undocumented immigrant households currently file income tax returns using Individual Tax Identification Numbers (ITINs), and many who do not file income tax returns still have taxes deducted from their paychecks.” If citizenship or programs such as DACA expanded, so too would personal income tax contributions from the new American population.
Property taxes: More than four in 10 undocumented immigrants are homeowners
Interestingly, Kansas has one of the highest homeownership rates among its undocumented immigrant population. More than four in 10 (44 percent) of undocumented immigrants in the state are homeowners. Idaho (44 percent) and New Mexico (45 percent) have similar rates, and all are much higher than the national average (31 percent). With such a high percentage of undocumented immigrants being Kansas homeowners, they are making large economic contributions through property taxes, which help to pay for schools, libraries, community mental health centers, and public safety.
Undocumented immigrants in Kansas pay a higher effective tax rate than the top 1 percent
Undocumented immigrants in Kansas pay a higher effective tax rate (8.2 percent of their income goes towards state and local taxes) than the national average for undocumented immigrants (8.0 percent). This tax rate is much higher than the average effective tax rate among the top 1 percent of taxpayers (5.4 percent nationally). If undocumented immigrants living in Kansas received full legal status, their wages would likely increase, and their effective tax rate would also increase to an estimated average of 8.7 percent.
Granting full legal status to Dreamers and other similar new American populations strengthens the Kansas economy by providing pathways for previously undocumented young adults, raised and educated in Kansas, to get and keep jobs and contribute to the state’s prosperity. In addition to maintaining DACA, comprehensive immigration reform would not only keep families together and remove barriers facing this population, it would also increase the economic contributions of the undocumented immigrant population.
To strengthen the economy, we need policies such as a clean DACA bill that allow everyone who lives in Kansas to work and participate in our society. Lawmakers should lower barriers to opportunity for aspiring citizens in Kansas and nationwide.
Emily Fetsch is the Kansas Center for Economic Growth’s policy and research analyst.