It was a brief, but remarkable moment. Two Democratic presidential candidates acknowledged that undocumented immigrants pay taxes. That they pump billions of tax dollars into Social Security, Medicare, and Medicaid. That they pay billions in sales taxes and property taxes.
South Bend, Indiana, Mayor Pete Buttigieg and former Vice President Joe Biden were responding to moderator Savannah Guthrie, who asked them why they would extend subsidized health care to undocumented immigrants.
“We are talking about something people are given a chance to buy into,” Buttigieg responded. “In the same way there are undocumented immigrants in my community who pay sales taxes and pay property taxes directly or indirectly. This is not about a handout. This is an insurance program.”
Guthrie posed the same question to Biden.
“Number one, they contribute to the well-being of the country and also, for example, increased the lifespan of Social Security. That’s what they’re doing,” he said.
Both exchanges lasted less than three minutes during the two-hour presidential debate, but they signaled an important shift in the public narrative about the impact of undocumented immigrants on American society. For far too long, public officials have been pushing the myth that the 11 million immigrants without legal status are a “burden,” or a “drain” on American taxpayers.
And no one has pushed that false narrative more than President Donald Trump.
The “immigrant burden” myth has thrived under Trump
In his first address to Congress in 2017, President Donald Trump set the tone for his immigration agenda when he said immigration costs the government “billions of dollars a year.”
Two years later, he is still repeating that lie. In his State of the Union speech earlier this year, he once again suggested that unauthorized immigrants are a burden to US taxpayers.
“Working-class Americans are left to pay the price for mass illegal immigration,” Trump said, suggesting that undocumented immigrants are using government services and programs they don’t pay for.
That’s not true. Contrary to this persistent myth, undocumented immigrants do in fact pay taxes. Millions of undocumented immigrants file tax returns each year, and they are paying taxes for many benefits they can’t even use.
The best estimates come from research by the Institute of Taxation and Economic Policy, a left-leaning Washington, DC, think tank, which suggests that about half of undocumented workers in the United States file income tax returns.
The most recent IRS data, from 2015, shows that the agency received 4.4 million income tax returns from workers who don’t have Social Security numbers, which includes a large number of undocumented immigrants. That year, they paid $23.6 billion in income taxes. That doesn’t even include workers who paid taxes with fake Social Security numbers on their W-2 forms, which is also common.
These undocumented workers pay taxes for benefits they can’t even use, like Social Security and Medicare. They also aren’t eligible for benefits like the earned income tax credit. But the IRS still expects unauthorized immigrants to file their taxes, and many of them do so.
Filing taxes helps immigrants create a paper trail to show when they entered the country and how long they’ve been contributing tax dollars. Many are hoping it will help them get legal status one day. That has happened in past reform efforts, and one of the first requirements is usually to prove that a person has been paying taxes. That was the case for the undocumented youth granted temporary work permits under President Barack Obama’s Deferred Action for Childhood Arrivals deportation relief program.
Unauthorized immigrants boost funding for the Social Security system
It’s true that not all undocumented immigrants pay federal income taxes, because the government has no way to keep track of their under-the-table earnings. The IRS can withhold taxes from those hired with fake Social Security numbers, but workers who get paid in cash could simply choose not to report it, unless they voluntarily file a return with an ITIN number.
Still, all undocumented workers fund public schools and local government services by paying sales and property taxes like everyone else. The Institute on Taxation and Economic Policy estimates that they pay about $11.7 billion a year in state and local taxes.
And workers who get a paycheck still have payroll taxes for Medicare and Social Security withheld from their paycheck, even if they put a fake Social Security number on their W-2 form. The IRS estimates that unauthorized workers pay about $9 billion in payroll taxes annually.
A portion of the payroll tax withheld from undocumented immigrants — like all workers — goes to the retirement trust fund at the Social Security Administration. In 2013, the agency reviewed how much money undocumented workers contributed to the retirement trust fund. The number was astonishing: $13 billion in one year.
The chief actuary of the Social Security Administration, Stephen Goss, estimates that about 1.8 million immigrants were working with fake or stolen Social Security cards in 2010, and he expects that number to reach 3.4 million by 2040.
“We estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally,” Goss concluded in the 2013 review.
These numbers are a stark contrast to the often repeated rhetoric that undocumented immigrants are a drain on the US economy. For a long time, most Americans seemed to think so — in a 2014 Reuters poll, 63 percent of people surveyed said they believe undocumented immigrants burden the economy.
That narrative, as proven on the debate stage Thursday night, is finally starting to shift.