Study finds immigration reform would bring Massachusetts over $60 million in new taxes
In January, Gov. Charlie Baker cut $49 million from Massachusetts’ state budget.
But a study Wednesday found state and local governments could recoup well more than that amount, in the event that current undocumented immigrants in the state are granted full legal status.
Massachusetts would bring in more than $60 million a year in new tax revenue, the Institute on Taxation and Economic Policy estimated. According to the group’s study, the estimated 185,000 undocumented immigrants in the state would see their state and local tax contributions increase from $201,369,000 to $262,080,000, if granted full legal status.
For the average Bay State undocumented immigrant family, estimated to earn $34,800, full legal status would raise their effective tax rate from 7.2 percent to 8.5 percent. The study makes a point to note that the effective tax rate of the top 1 percent on income earners in Massachusetts is 4.9 percent.
Passing such an immigration overhaul any time soon is a far cry for sure, but the figures are striking nonetheless.
According to ITEP — a self-described “non-profit, non-partisan research organization that works on federal, state, and local tax policy issues’’ — the United States as a whole would add more than $805 million to the current $3.3 trillion in annual state and local tax revenue.
Due to the 2012 and 2014 executive orders by President Barack Obama, the amount undocumented immigrants have contributed in state and local taxes has already increased by millions, the study said. According to ITEP, under full implementation of the executive actions, the increase in state and local tax contributions from undocumented immigrants in Massachusetts would increase from roughly $70 million to nearly $90 million.
Those executive orders, however, have yet to be fully implemented. A legal challenge to Obama’s 2014 order to give temporary legal status to parents of citizens or of lawful permanent residents will be heard by the Supreme Court this year.
“Regardless of the politically contentious nature of immigration reform, the data show undocumented immigrants greatly contribute to our nation’s economy, not just in labor but also with tax dollars,’’ Meg Wiehe, ITEP’s state tax policy director, said in a statement.
The study accounted for local sales and excise taxes, property taxes, and incomes taxes, as well as the estimated potential wage boost and personal income tax compliance of undocumented immigrants.
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