Currently there are about 41 million immigrants living in the United States; the total U.S. 
population numbers about 321 million, so immigrants make up about 12% of U.S. residence. The cultural identity of the United States has historically been made up of immigrant populations, first chiefly from Europe due to quotas. Since reforms were implemented in 1965 to remove race-based quotas and implement quotas distributed evenly across countries from different regions of the globe, mostly from China, India, and Latin America, particularly Mexico, on account of its bordering the U.S.
In 2012, they collectively paid more than $11.4 billion in local and state taxes alone. The U.S. view of immigrant populations is split, though populations that entered the U.S. in the 1900s are usually viewed more favorably than recent immigrants. Similarly, U.S. residents view documented immigrants and those who apply for citizenship more favorably than undocumented immigrants, in particular in the realm of taxation. Research says that undocumented immigrants already pay billions of taxes to both local and state governments, and if allowed to work legally, there would be a significant increase in their contribution.
The heated political climate around questions of national identity and immigration has unfortunately resulted in the spread of much misinformation about, in particular, the relationship between immigrants, documented and undocumented, revenue, and taxation.
Here are 5 of the most commonly attested myths relating to this question:
- “Immigrants don’t pay taxes.”
Yes, they do. Regardless of documentation, all immigrants pay property and sales taxes, and naturalized immigrants of course pay income tax. Sources do vary when it comes to income tax payments – however a range of studies suggests that they pay billions of dollar in local, state and federal taxes.
- “Immigrants come to US for welfare.”
They come to unite with their family, actually 66% of immigrants to the U.S. come on account of family ties. While the average undocumented immigrant worker is likely to receive more in state benefits over their lifetime than they pay in taxes, the same is true of 60% of the U.S. population, including those born in the U.S., because the progressive tax structure that exists in the U.S. as in most developed countries means that 37% of government revenue from income tax comes from the top 1% of earners (none of whom pay a 37% income tax individually.) And the average immigrant and their children, legally naturalized, will actually pay $80,000 more in taxes over their lifetimes than they receive in government benefits.
- “Immigrants send most of their money back to their countries of origin.”
Immigrants and their businesses pay $162 billion/year in tax revenue to the US local, state and federal government, in addition to their consumer spending. Yes, they do send money back to their homes – however, this is one of the most effective and targeted forms of direct foreign investment, and leads to a favorable trade relationship with the immigrants’ countries of origin, particularly in consumer goods.
- “Immigrants take away job opportunities from native citizens”
The largest immigration wave in U.S. history, which occurred in the early 1900s, coincided with the lowest national unemployment rate, and also with the fastest economic growth. There are 26.1 million employed immigrants in the U.S. as of June 2015, and only 8.3 million unemployed residents, which means that immigrants are creating or finding jobs that otherwise wouldn’t exist—if all immigrant workers left the U.S. tomorrow and were replaced by currently unemployed U.S. natives, there would be 17.8 million jobs with no workers to do them. Per capita, immigrants are more likely to be entrepreneurs who create various jobs for US workers, and foreign born students also allow many US graduate programs to keep their doors open.
- “Immigrants are a net drain on the US economy.”
The early 1900s saw the new foreign born workers filling up jobs native-born US citizens wouldn’t or couldn’t do. Even today, immigrants are filling up jobs in key sectors, firing up startups and contributing to the growth of the economy. $10 billion is the net benefit reaped by US economy per year from immigrants, according to the “New Americans” study from the NRC.
These are the big ones, but many other myths are spread about taxes and immigration, even in tax professional circles. Taxation expert Stuart Sobel has spoken in-depth in this webinar to explain common misconceptions about immigrants and immigrant status, the differences between resident aliens, nonresident aliens, and dual-status aliens, and how filing tax forms 1040 and 1040NR are impacted by major immigration issues of resident and non-resident aliens. Also, if you want to learn more about attending our expert-led taxation conferences, visit AudioSolutionz.