Deporting N.J.’s Undocumented Immigrants Would Cost State Millions In Taxes: Study

If every undocumented immigrant in New Jersey were to leave its borders overnight, the state would be $587 million poorer by the end of the year, a recent study claims.

The Garden State’s undocumented immigrants contribute $587 million in state and local taxes annually, the sixth-highest total in the nation, according to a study released Thursday by the non-profit research organization Institute on Taxation and Economic Policy (ITEP).

Nationwide, undocumented immigrants pay a total of $11.7 billion in taxes every year, the ITEP states, a stark contrast to the claims of some political leaders and pundits such as President Donald Trump and Bill O'Reilly, who have suggested that “illegal immigrants” don’t pay nearly what they should to the government.

But how can “undocumented” residents pay taxes?

“Keep in mind most state and local taxes are collected from people regardless of immigration status,” ITEP Director of Programs Meg Wiehe said. “Undocumented immigrants, like everyone else, pay sales and excise taxes when they purchase goods and services. They pay property taxes directly on their homes or indirectly as renters. And many undocumented immigrants also pay state income taxes.”

See the full report and learn about its methodology here.

According to the ITEP study:

• New Jersey’s undocumented immigrants pay a higher effective state/local tax rate (7.7 percent) than the state’s top 1 percent of households (those with incomes over $758,000 a year, who pay an effective state/local tax rate of 7.1 percent)
• New Jersey’s undocumented immigrants pay $49 million in personal income taxes; $272 million in property taxes and $266 million in sales and excise taxes
• After “comprehensive immigration reform,” the personal income tax contributions of New Jersey’s currently undocumented residents would increase by up to 40 percent (or $20 million); their property tax contributions would rise by 10 percent (or $27 million) and their sales/excise tax contributions would increase by 10 percent (or $27 million)

“Undocumented New Jerseyans are entrepreneurs, homeowners and vital contributors to the state’s economy and communities,” said Erika Nava, a policy analyst at New Jersey Policy Perspective. “Facts matter, and this report is yet more proof that undocumented immigrants are an asset to our state and our nation.”

• See related article: 5 Reasons Why Immigrants Make New Jersey Better

OPPOSING VIEWPOINT

The Federation for American Immigration Reform (FAIR) – a nonprofit research organization that the Southern Poverty Law Center has classified as an anti-immigrant “hate group” – has cast doubts on the tax figures cited by groups such as the ITEP.

While FAIR acknowledged that undocumented immigrants do pay some state and local taxes in a previous position statement, the group claimed that the total annual state and local tax collections come to less than $4 billion.

Writing about a similar study conducted by the ITEP in 2011, FAIR stated:

“The credibility of the data… is immediately suspect when they include estimated sales tax collections from Delaware, New Hampshire, and Oregon — states that do not have sales taxes. While New Hampshire does provide for tax collection on restaurant meals, hotel rooms and car rentals, those are not expenditures that are likely to be made by illegal aliens. The tax collection data does not include detailed tax collection estimates for eight states that have illegal alien populations... Those states include another two other states that have no state sales tax: Alaska and Montana.”

In addition, the contributions of undocumented immigrants must be weighed against other factors, FAIR alleges. A 2013 report from the group estimated the annual cost of illegal immigration at the federal, state and local level to be about $113 billion.

Read the FAIR statement here.

Photo: Flickr Commons

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