Myth Buster - DACA Recipients Actually Do Pay Taxes

posted by on 06 September, 2017
Myth Buster - DACA Recipients Actually Do Pay Taxes

Earlier this week, Attorney General Jeff Sessions announced that the Trump administration will “wind down,” and in six months, end Deferred Action for Childhood Arrivals (DACA).

DACA, a Department of Homeland Security initiative put in place in 2012 by then President Barack Obama, temporarily deferred the deportation of approximately 800,000 young immigrants who were brought to the United States as children, under the age of 16.

The young immigrants who met the requirements and passed the necessary background checks for DACA received a two-year work permit, as long as they kept applying to renew, kept a clean criminal record, and were either enrolled in school or graduated, or serving in the military or honorably discharged, and continuously resided here since 2007.

DACA recipients can’t vote and it’s not a path to citizenship, just a work visa and deportation reprieve.  Yet they speak English, grew up steeped in American culture and have roots here as deep as many native-born Americans.  And despite the myths that circulate in some circles, a 2016 study by the Institute on Taxation and Economic Policy found that undocumented immigrants pay nearly $12 billion a year in state and local taxes.

Some other key findings of that study are:

1. Undocumented immigrants collectively pay an estimated $11.64 billion a year.  Contributions range from almost $2.2 million in Montana with an estimated undocumented population of 4,000 to more than $3.1 billion in California, home to more than 3 million undocumented immigrants.

2. 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). To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent.

3. Granting legal status to all undocumented immigrants in the United States as part of a comprehensive immigration reform and allowing them to work legally would increase their state and local tax contributions by an estimated $2.1 billion a year. Their nationwide effective state and local tax rate would increase to 8.6 percent.

Plainly put, according to this and other recent studies, DACA recipients pay their own way.  They can’t collect welfare benefits but they have to pay taxes. All in all, according to the NY Post, recipients will pay about $60 billion more in federal taxes than they’ll consume in benefits over the next decade.

Although what will happen with DACA remains uncertain, the team at Waterman Realty and Tax Pro is here to answer all of your tax related questions.  Contact us today.