Study finds undocumented immigrants in Maine contributed $15.6 million in taxes

Texas National Guard soldiers stand on patrol near the bank of the Rio Grande on April 2, 2024 in El Paso, Texas. A new study shows that undocumented immigrants paid nearly $100 billion in federal, state, and local tax revenue in 2022. The findings run counter to anti-immigrant rhetoric that immigrants who inter the U.S. illegally hurt social programs. (Photo by Brandon Bell/Getty Images)

Undocumented immigrants in Maine contributed $15.6 million in state and local taxes in 2022. 

A study released Tuesday from the Institute on Taxation and Economic Policy, a left-leaning, nonprofit think tank, found that undocumented immigrants paid nearly $100 billion in federal, state and local tax revenue in 2022 while many are shut out of the programs their taxes fund. The findings run counter to anti-immigrant rhetoric that undocumented immigrants are “destroying” social programs.

“There hasn’t been data that speaks to the value of immigrants so it is so refreshing to see this very timely study and findings coming at the time where there is questioning of the value and the relevance of having immigrants in our state or in our country,” said Mufalo Chitam, executive director of the Maine Immigrants’ Rights Coalition, which represents more than 100 immigrant organizations across the state.

Chitam and other members of MIRC said the findings underscored what they have long understood. As advocacy, communications and policy manager for MIRC Ruben Torres put it, “undocumented immigrants are integral members of our community who contribute substantially to our state’s economy.”

The study, which uses estimates of undocumented immigrants’ tax contributions as of 2022, shows nationally those totaled $96.7 billion that year. 

Undocumented immigrants pay property taxes and sales taxes, and federal payroll taxes taken from their wages, as well as income tax returns using Individual Taxpayer Identification numbers. Tax contributions in Maine come mostly through property taxes, 38%, with sales and excise taxes making up 31% and personal or business income taxes making up 28%. 

Despite payroll taxes funding Medicare, Social Security, and Unemployment Insurance, undocumented immigrants are not eligible to enroll in and receive regular benefits from these social programs. They can also face barriers to getting tax refunds, including getting scammed by unscrupulous tax preparers who target immigrant communities, said Jackie Vimo, senior analyst of economic justice policy at the National Immigration Law Center in a media call on the report. 

“There are tons of laws that prevent undocumented workers from getting benefits,” said Richard C. Auxier, a principal policy associate at the Urban-Brookings Tax Policy Center, a nonpartisan think tank that was not involved in the study. “…They get a lot of political attention. At the end of the day, they’re just normal people paying normal taxes.” 

Addressing the labor shortage

Study authors also found that undocumented immigrants would contribute $40.2 billion more per year in federal, state and local taxes if the undocumented population had access to work authorization. The Institute on Taxation and Economic Policy reasoned that this boost would come from higher wages associated with employment authorization and easier compliance with income tax laws.

In Maine, the tax contributions of undocumented immigrants would increase to $19.8 million if these taxpayers were granted work authorization, according to the study.

An analysis last fall from the progressive Maine Center for Economic Policy found Maine has a plateauing workforce, in part due to an aging population, and suggested immigration as an opportunity to grow the workforce, a point President and CEO Garrett Martin reiterated in light of the latest tax findings. 

“One of the best ways we can ensure employers have the workers they need and Maine has the revenue to fund our needs is to give all New Mainers the legal authority to live and work here as quickly as possible,” Martin said. 

Other policy experts have also pointed to a labor shortage — 8.1 million job openings and 6.8 million unemployed workers — as a reason to embrace the economic contributions of undocumented immigrants. South Dakota, North Dakota, Maryland, Vermont, Maine, and South Carolina are some of the states facing the greatest labor shortages, according to a Washington Post analysis of Bureau of Labor Statistics data.

“Immigrants are already filling that [labor] gap and if we have mass deportations where millions of immigrants are torn from their family members and the country they have made home, we will not only have the human impact of this but we’ll have a severe effect on the economy and available workforce,” said Vimo of the National Immigration Law Center, a group that focuses on racial, economic and social justice for low-income immigrants. 

Immigrant rights groups in Maine have long pushed for the economic integration of immigrants as a critical component to creating a thriving economy, said Chitam, pointing to a report from a decade ago from MIRC and the World Affairs Council of Maine that pointed out as much. 

Recently, Maine’s elected officials and immigrant rights groups have been advocating for expediting the process for immigrants to obtain work permits. Under the Immigration and Nationality Act, asylum seekers have to wait 180 days after filing an asylum claim to begin work.

Chitam and Torres said MIRC will continue to advocate for policies that recognize the value of immigrants and provide them with opportunities to fully participate in the economy, which includes pushing for more efficient work authorization processes. “That would not only increase tax contributions but also empower immigrants to secure better jobs, support their families, and contribute more effectively to our society,” Torres said.

Immigrants face other barriers when trying to integrate into Maine’s economy as well, Chitam added, pointing to language barriers and a general lack of information about available resources and opportunities. The state’s forthcoming Office of New Americans, included in the latest budget, should help with this, Chitam said.  

Disproportionate contributions

In 40 other states, undocumented immigrants paid higher tax rates than the top 1% of the income scale in those states, according to the study.

Alexis Tsoukalas, senior policy analyst at Florida Policy Institute, a nonprofit focused on economic mobility for Floridians, told reporters on Monday that she was struck by how much the state collected from undocumented immigrants in taxes compared to the wealthiest in the state. The current tax rate for undocumented immigrants in Florida is 8% compared to the top 1% of the state at 2.7%.

“This means hundreds of thousands of everyday people are contributing more than their share to public services they cannot even access meanwhile those with the most to give and the most to benefit contribute the least,” Tsoukalas said. 

The national tax study was released in the backdrop of a political climate where states have passed laws to arrest people who they suspect of entering the U.S. illegally, which has been a federal power, the Biden administration announced an executive action to allow for the deportation of many asylum seekers without processing their claims, and the 2024 Republican Party platform promises the “largest deportation operation in American history” if former President Donald Trump is reelected over likely Democratic nominee Kamala Harris. Tax policy will also be front and center for Congress and the White House next year as provisions of Trump’s tax law, passed in 2017, are set to expire. 

Aside from the human cost of deportations on families, policy experts and researchers are making the case that undocumented immigrants are a boon to the economy, making it an economic cost as well. Immigration and economic experts who spoke about the significance of the report on Monday highlighted the Congressional Budget Office’s July report on the rise in immigration and its effects on the economy and budget, which found that this increase in immigration would add $1.2 trillion in federal revenue from 2024 to 2034.

Carl Davis, research director at the Institute on Taxation and Economic Policy, said there are economic ripple effects to consider in the deportation of undocumented immigrants in the U.S. beyond taxes.

“If you deported someone and they’re no longer making taxable purchases in their community, that number would reflect a reduction in their sales tax payments to the community but it wouldn’t capture that second ripple effect of the business has less profits because they have fewer customers,” Davis said in a media call on the study. 

Auxier said that researchers have found children in an undocumented immigrant household are receiving education benefits that could be larger than the tax payments of the lower income working adults, but that this is more of an income issue than a specific immigration issue. The other side of that coin, Auxier notes, is that in the future, undocumented households may in fact give back more than they received. 

“Those same studies tend to note that if the children go to school and they then go get jobs, now the American household is giving more than it got because the parents came here, worked, paid into Social Security, Medicare, and didn’t get any benefits,” he said. “The kid went to school and then they got a job and then they started earning enough money that they were a net contributor.”