Study: Undocumented immigrants paid $222 million in Minnesota taxes in 2022

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Undocumented workers contributed $97 billion in federal, state and local taxes in 2022, according to a study released on Tuesday by the left-leaning Institute on Taxation and Economic Policy.

In Minnesota, undocumented immigrants contributed nearly $222 million in state and local taxes in 2022. The report’s authors estimate these workers’ tax contributions would grow to more than $294 million if given legal work authorization because their wages would likely increase and there would likely be a higher rate of tax compliance.

“This study is the most comprehensive look at how much undocumented immigrants pay in taxes. And what it shows is that they pay quite a lot, to the tune of nearly $100 billion a year,” said Marco Guzman, ITEP Senior Policy Analyst and co-author of the study, in a statement.

The study rebuts a central message of the campaign of former President Donald Trump, who portrays undocumented immigrants as a drag on the American economy.

According to the study, more than a third of the taxes undocumented workers pay go toward public programs they’re ineligible to benefit from like Social Security, unemployment insurance and Medicare. (Minnesota Democrats passed a law in 2023 that will make undocumented immigrants eligible for state-subsidized health insurance as soon as next year.)

Undocumented immigrants often pay higher income taxes than workers with similar incomes because they are unable to claim tax credits like the Child Tax Credit, the Earned Income Tax Credit or Minnesota’s Working Family Credit.

Undocumented immigrants are also ineligible for most public benefit programs including cash assistance and food stamps, although they are not excluded from WIC, which provides nutrition assistance to low-income pregnant women, infants and children up to 5 years old.

In 40 states, undocumented immigrants pay a higher tax rate than the top 1% of earners, although not in Minnesota. Undocumented immigrants in Minnesota pay an estimated 7.4% in income taxes compared to the 10.5% tax rate for top earners. The report’s authors estimate the tax rate for undocumented immigrants in Minnesota would rise to 9.4% if they were given legal work authorization.

State and local government coffers are also boosted by undocumented immigrants through sales and excise taxes, property taxes and business income taxes. On average, undocumented immigrants paid $8,889 in federal, state and local taxes in 2022, according to the analysis.

The number of undocumented residents in Minnesota is relatively small — roughly 82,000 people in a state of 5.7 million — and so the $222 million in state and local taxes they pay is also relatively small: about .5% of the $45 billion the state collected in state and local taxes in 2022.

The crisis-level surge of illegal immigration at the southern border in recent years has focused political attention on stopping new arrivals, with Congress nearly passing a bill that would have provided $20 billion to expand detention capacity, speed up asylum claims and help local governments respond to an influx of migrants. The bill collapsed under the weight of opposition by Trump, who said it would be a political gift to Democrats as he seeks reelection.

The focus on illegal immigration at the southern border has obscured the fact that most of the roughly 11 million undocumented immigrants in the United States have been in the country for a very long time: About 60% of undocumented immigrants have lived in the United States for a decade or more, according to the Congressional Research Service.

Trump and his running mate JD Vance, who have hammered Biden and Vice President Kamala Harris for allowing the surge in illegal immigration, promise they’ll go beyond increasing border security and create a mass deportation program.

“I have a message, a very simple message to the millions of illegal aliens who are in this country and shouldn’t be… Start packing your bags right now because Donald J. Trump is coming back,” Vance said to roaring applause at a rally in St. Cloud on Saturday, where attendees held signs reading “Deport Illegals Now.”

Deporting the millions of undocumented immigrants in the United States, while a popular idea with many Republicans, would be a nearly impossible feat, requiring billions of dollars in new government appropriations while leading the economy to shrink, Laura Collins, an expert at the George W. Bush institute, told the New York Times.

A mass deportation program would also threaten to divide millions of families. Forty-one percent of married undocumented immigrants have a spouse who is a U.S. citizen or a lawful permanent resident. An estimated 5.2 million children — 7% of the total U.S. child population — live with at least one undocumented immigrant parent.

The Biden administration, while cracking down on new immigration at the border, has taken steps to protect undocumented families from deportation. Last month, Biden announced protections for undocumented immigrants married to U.S. citizens deemed not to be a security threat.