The Politics of Immigration (2nd Edition). David Wilson

headed by immigrants were costing households headed by native-born citizens about $166 to $226 annually. However, the study found that the immigrant households made up for the costs later as the children started working and paying taxes.

      The one thing that the studies usually agree on is that the overall cost or benefit is relatively small, a few billion dollars either way each year in a country with an annual gross domestic product (GDP) that was about $16.8 trillion in 2014.²

      To put those numbers in context, by October 2012 the U.S. government had lent $417 billion to financial firms under the Troubled Asset Relief Program (TARP), the “bailout” for the 2008 financial crisis. Even after all the loans are paid back, the government projects that U.S. taxpayers will have lost between $24 billion and $63 billion. The U.S. invasion of Iraq in 2004 has already cost us more than $2 trillion, according to the Costs of War Project sponsored by the Watson Institute for International Studies at Brown University, and that total will go up as we pay interest on the loans used to finance the war.³ The estimated costs or benefits of immigration are also smaller than the annual cost of the main U.S. immigration enforcement programs, which totaled more than $17.9 billion in 2013.⁴

       Do immigrants pay taxes?

      As of 2013 some 74.4 percent of the country’s 44 million immigrants were naturalized citizens or legal residents and were paying the same taxes as U.S.-born citizens. The other 25.6 percent of immigrants, those who lack legal status, were mostly paying the same taxes, too.⁵ Everyone pays local sales taxes and contributes to property taxes when buying or renting a place to live (landlords include property taxes in the rents they charge). Unauthorized immigrant families paid some $10.6 billion in state and local taxes in 2010, according to estimates by the Institute for Taxation and Economic Policy (ITEP). This comes to about 6.4 percent of their annual income, a rate close to that of other taxpayers with similar incomes, according to the ITEP.⁶

      The Social Security Administration estimated in 2013 that about 44 percent of this country’s 8.1 million out-of-status workers were employed in the formal economy, working “on the books,” generally using false Social Security numbers (SSN) or an individual tax identification number (ITIN).⁷ These workers paid federal, state, and local taxes the same way citizens and immigrants with legal status did, and Social Security and Medicare payments were deducted from their paychecks.

      The other 56 percent of undocumented workers—about 4.5 million—worked off the books in the informal, or “underground,” economy. Their employers didn’t report their income or pay for unemployment insurance, and their taxes weren’t deducted from their paychecks. But these workers are still expected to pay income tax, and a number of them do, filing with an ITIN instead of a Social Security number.⁸ Why would someone file a tax return if they work off the books? Many unauthorized immigrants hope to resolve their status as soon as the rules allow it, so they want to show that they have been following the law.

      How much revenue are the U.S. and state governments losing because of the unauthorized immigrants who aren’t paying income taxes? Workers in the underground economy are mostly paid very low wages; they tend to work irregular hours, if they even have steady work, and their employers often ignore minimum wage laws. Suppose these workers were all working full time in 2013 and were being paid the federal minimum wage; each of them would be making $15,080 a year. Based on the 1040 federal tax form for 2013 and assuming they had no dependents, they would each owe $508 in federal income tax. Even if all 4.5 million undocumented workers in the informal economy were failing to pay their federal income tax, the total loss each year would be about $2.3 billion.⁹