The Taxing Saga Of Undocumented Immigrants

Risky working conditions, poor housing and mounting medical bills- this is what undocumented immigrants are left with after they pay taxes.

While this may come a surprise to many, a report released by The Institute on Taxation and Economic Policy (ITEP) in February 2016, breaks the myth that undocumented immigrants don’t pay taxes.untitled

The report reveals that an estimated 11 million undocumented immigrants pay an estimated $11.64 billion per year in taxes. In Massachusetts alone, undocumented immigrants pay $200 million in taxes.

A stark comparison is shown in the report suggesting that America’s top income taxpayers pay much less in taxes than undocumented immigrants.

“Undocumented immigrants nationwide pay on average an estimated 8 percent of their incomes in state and local taxes (this is their effective state and local tax rate),” the report says. “To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent.”

An Immigrant Story

But out of all the taxpayer’s benefits, they get none. Smeralda, a pseudonym under which she lives and works in Chelsea, Massachusetts, came to the United States in 2005. She has been working in a cleaning company since 2015. This is her third job.

“Smeralda” agreed to give an interview only if her identity was masked. Therefore, her face is not shown.

Smeralda is only one of the 210,000 undocumented immigrants living in Massachusetts. Within the state, the city of Chelsea consists of 63 percent of undocumented Latino immigrants from Central America, according to Gladys Vega of the Chelsea Collaborative. The organization works with undocumented immigrants on a day to day basis and helps them attain their rights.

According to Vega, the undocumented immigrants in Chelsea work mainly in the construction industry, painting, janitorial services, home care, and in the restaurant business. According to a Pew Research Centre Study, these are the major industries that are dominated by undocumented immigrants in the U.S.

But even after getting multiple jobs and paying taxes, their condition at work and at home can be below average as depicted by Cecilia Alvarado’s story.

Another Immigrant Story
Alvarado (left), 62, came to the United States from El Salvador in 2002 to find a better life for herself.

Alvarado (left), 62, came to the United States from El Salvador in 2002 to find a better life for herself. Her interview was conducted in Spanish with a translator present.

Battling with diabetes, high cholesterol and high blood pressure, Cecilia Alvarado* is undocumented and unemployed.

Alvarado came to the United States fourteen years ago. Before she ended up working in National Fish and Seafood in Gloucester, she worked at two other fisheries.
Alvarado’s condition is worsened now because of unemployment. She was fired from a fish company on September 17, 2016, because she “didn’t have a Green Card.” To add to her misery, she was let go without any notice.

Even though Alvarado paid her taxes from her salary, she does not receive any benefits from the government because she has no form of identification. She spends $500 on rent and $150 per week on food but “that is not enough,” she says. Because she did not have a set number of hours, her pay fluctuated every week and she could almost never buy medicine for her illness.

Alvarado’s husband passed away in 2015 and since then she has been trying to navigate the IRS system to get a tax refund.

The state and federal agencies owe her $4,345 in back taxes but so far, she has only got $700 from the state.

With no source of income, she is terrified about her survival in the United States. If she doesn’t get her refund from the IRS, she will go back to El Salvador.

But what worries her more is the status of her children and grandchildren, who are also undocumented and might be deported because of the new presidency. Her only wish is to now get back what the government owes her.

The Two-way Benefit Street

The conditions of these immigrants can be greatly improved if they are allowed to become citizens and receiving tax refunds is an important part of this. The benefits of being documented can strengthen their position with their employers, and the state may benefit as well.  According to ITEP’s report, the increase in state and federal taxes is estimated to be $2.1 billion a year.

“Tax contributions are expected to increase if undocumented immigrants are granted legal status due to better job opportunities made available to legal workers and higher-level skills and better trainings. Empirical research shows that gaining legal status can boost wages between 6 and 15 percent,” said Lisa Christensen Gee, one of the three authors of the report by ITEP.

“Higher wages means more income taxes paid. It also contributes to slightly higher sales and property taxes paid. Currently, roughly 50 percent of undocumented immigrants pay income taxes,” said Gee. “With legal status, this percentage is estimated to go up significantly, resulting in higher income tax receipts received by state and local governments.”




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