Policy

Letting Undocumented Immigrants Work Could Be Worth Billions to the IRS


Letting Undocumented Immigrants Work Could Be Worth Billions to the IRS

Photograph by Andrew Harrer/Bloomberg

Giving undocumented immigrants who are already in the U.S. temporary authorization to work could net the government as much as $6 billion in new annual payroll tax revenue, according to a new study.

The report (PDF), released on Thursday by the liberal Center for American Progress, estimates how various moves under consideration by the White House would impact federal payroll tax revenue. CAP policy analyst Patrick Oakford argues that expanding a 2012 program that grants undocumented immigrants temporary work authorization would expand revenue by increasing the number of people who who have payroll taxes withheld on their wages, and by increasing immigrants’ ability to secure higher-paying jobs. “Ultimately,” writes Oakford, “extending a work permit to undocumented immigrants will create a path for those already working in the United States to come forward and pay taxes.”

CAP calculates that extending work authorization to all undocumented immigrants with at least five years of U.S. residency—a more dramatic move than most expect the White House would make—would bring in $6.08 billion in additional payroll taxes in its first year, and $44.96 billion over five years. Doing so for those with 10 years in the U.S. would bring in $33.44 billion over five years; relief just for those undocumented immigrants with a minor child in the U.S. would bring in $21.24 billion. Oakford projects that the wages of those immigrants benefiting from deferred action would increase about 8.5 percent.

The CAP report comes on the heels of a letter (PDF) to the president released on Wednesday by more than 100 immigration law professors arguing that the White House would be on firm legal ground in expanding a 2012 program that offers people who came to the U.S. as children temporary relief from deportation and authorization to work.

Obama said in June that he would seek “to fix as much of our immigration system as I can on my own” by the end of the summer, but he’s has faced opposition from Republicans and anxiety from congressional Democrats ahead of the midterm elections. The New York Times and the Los Angeles Times reported last week that the White House is now considering holding off any action until after the November vote.

Eidelson is a reporter for Bloomberg Businessweek in Washington.

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