Dr. Brian L. Rich, Ph.D. Professor of Sociology Transylvania University

Latino Undocumented Immigrants and Taxes: So What’s the Problem?. Dr. Brian L. Rich, Ph.D. Professor of Sociology Transylvania University. Do Latino immigrants, especially the undocumented, pay taxes?. The question is not only complex , but it’s also the wrong one to ask.
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Latino Undocumented Immigrants and Taxes:So What’s the Problem?Dr. Brian L. Rich, Ph.D.Professor of Sociology Transylvania UniversityDo Latino immigrants, especially the undocumented, pay taxes?The question is not only complex, but it’s also the wrong one to ask.There are many taxes all of us pay, including undocumented immigrants.Important Sources of Undocumented Immigrant Tax Revenues
  • Payroll - about 75% of undocumented immigrants pay this.
  • Income – the undocumented either file and get back their paid-in taxes because they don’t earn enough or they don’t file because they have nothing to gain. At least 50% pay income taxes.
  • Property (Housing, rents) – all undocumented immigrants pay for housing, thus indirectly they pay property tax
  • Sales – undocumented immigrants pay 6% tax for all non-food purchases, just like all of us.
  • Excise Taxes – e.g., in KY undocumented immigrants pay about 40 cents tax on every gallon of gasoline, just like the rest of us.
  • Also - Many taxes come out of energy, cable, telephone, electricity bills, etc. that undocumented immigrants also pay.
  • Taxes for what? To pay for government services!Destinations and Purposes of Tax Revenues:
  • Federal Gov’t- Military, Social Security, Health, Debt
  • Social Security is not strictly a tax, but an important federal pension and insurance program. For example, the Social Security Administration, as of 2005, was receiving about $7 billion a year in revenues generated by the use of FALSE SOCIAL SECURITY NUMBERS, the vast majority from undocumented workers. Those workers will never receive any benefit from those contributions. Our senior citizens do and will.
  • State Gov’ts(e.g. Kentucky) – Education, Health, Infrastructure
  • Immigrants contributed more than $30 million in state sales and excise taxes to Kentucky in 2000. (KY LRC 2002)
  • In 2010, unauthorized immigrants contributed over $85 million dollars in Kentucky state and local taxes. (IPC 2011)
  • Local Gov’t(e.g., Lexington-Fayette) – Police/Fire, Education, Infrastructure
  • A better question: Is the tax system fair to all people that contribute?Myths and stereotypes are based on insufficient or distorted information, often used to answer the wrong questions.Because we all pay taxes, the questions of how much? and for what? and by whom? are the better questions.
  • Undocumented immigrants tend to have the lowest incomes, so when they pay flat taxes, like sales and excise taxes, they pay disproportionately more of their income than the rest of us.
  • Further, because undocumented immigrants do not use most government services, they pay for others’ usage.
  • Nonetheless, it seems true that income taxes paid by the undocumented tend to be returned to them with benefits above their tax bills due to tax credits for children.
  • But who benefits most from their tax contributions to government?
  • Non-immigrants (native citizens) benefit more from the current tax system than do immigrants, especially undocumented immigrants, who have no rights to most government services and also have very few legal protections.
  • While immigrants’ children do have a right to public education and immigrants do use emergency medical care, we should ask what are the costs of NOT educating all our children and NOT taking care of people that are sick or injured?
  • Also, federal immigration agents and state and local police also provide tax supported government services, but these are only beneficial to immigrants insofar as they serve to protect the public safety in general. The undocumented hide and suffer from these government agents, which is of no benefit to them at all and may be harmful to us.
  • The idea that undocumented immigrants don’t pay taxes is myth and a form of scapegoating: it blames the least powerful for problems or issues that are not of their making. Scapegoating is useful for the powerful because then we do not have to examine our own contributions to problems related to taxation and government spending.
  • The good news: This problem can be solved!
  • The main problem here is the existence of “illegal” or undocumented immigration.
  • Legalizing or regularizing the status of millions of out-of-status immigrants in the country and thus the thousands in Kentucky would greatly help diminish:
  • the black markets in labor, id’s, and human trafficking;
  • cash economies that avoid taxation;
  • and unethical employers’ hyper-exploitation of undocumented workers (illegal labor practices, avoidance of work rules, etc.).
  • These issues most contribute to the problem by avoiding the rules of the formal economy (and thus tax revenues). Further, the current enforcement approach is very expensive , ineffective overall, and undermines, rather than upholds, the rule of law.Can we remove the immigrant tax stigma?CurrentlyMoving forwardImprove understanding of migration motives, especially undocumented migration – a matter of survival and search for improvement, not based in criminal motives.Grant legal status, improve working conditions, enforce occupational pay, health, and safety laws.Integrate immigrants into formal economy and social life, boost tax revenues, recognize important economic contributions.
  • False stereotype of immigrants as desperate criminals for migrating without papers and tax cheats and consumers of gov’t services.
  • Lack of legal status, little recourse to any protections from unscrupulous employers, landlords, merchants, and real criminals.
  • Minimal contact with formal legal system, including use of cash economy and lack of access to/ avoidance of use of government services.
  • Some Relevant Immigrant Contribution Figures
  • The 2009 purchasing power of Latinos in Kentucky totaled $2.1 billion—an increase of 837% since 1990. (IPC 2011)
  • If all unauthorized immigrants were removed from Kentucky, the state would lose $1.7 billion in economic activity, $756.8 million in gross state product, and approximately 12,059 jobs. (IPC 2011)
  • ReferencesImmigration Policy Center, 2011. New Americans in the Bluegrass State. Policy Center, 2010. Unauthorized Immigrants Pay Taxes, Too. Aviva Chomsky. 2007. “They Take Our Jobs!” and 20 other myths about immigration.Boston: Beacon Press.Eduardo Porter. 2005. “Illegal Immigrants Are Bolstering Social Security with Billions.” The New York Times. April 5.Rick Graycarek, C. Kennedy, and J. Roenker. 2002. Costs of Providing Services toUnauthorized Aliens Can Be Estimated for Some Programs, but Overall Costs and Benefits Are Unknown. Kentucky Legislative Research Commission. Research Report No. 359Stuart Anderson . 2005. The Contribution of Legal Immigration to the Social Security System .National Foundation for American Policy, Arlington, Va.Lipman, Francine J. 2008. “The Undocumented Immigrant Tax: Enriching Americans from Sea to Shining Sea.” Chapman University Law Research Paper No. 2008
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