The Corner

Most Legalized Illegals Will Have No Net Income-Tax Liabilities

President Obama says that his executive order will ensure that currently illegal immigrants will have to “pay their fair share of taxes.” But the vast majority of undocumented aliens don’t make enough in income to have a net income-tax liability. As I note in Forbes, a 2006 analysis by the Century Foundation, a progressive think tank, concludes that “we can be virtually certain that illegal immigrants earned less than $24,000 per year, on average, probably much less.” That amounts to around $29,000 in 2014 dollars, well below the threshold where an American has a net income-tax liability.

Legalizing this population is unlikely to result in significantly higher payroll-tax revenue, because many illegals have fake Social Security numbers that their employers use to pay payroll taxes on their behalf. Century estimates that “about $6 billion in annual payroll taxes are allocated to non-existent Social Security accounts. . . . This sum is certainly more than any income taxes that would be owed on the earnings involved.”

Century concludes that “it is likely that the undocumented workers will end up receiving rather than paying the Treasury money.” (Emphasis in the original.)

Avik Roy is the President of the Foundation for Research on Equal Opportunity (FREOPP.org), a non-partisan, non-profit think tank.

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