Nevadans not legally living in the country contributed over half a billion dollars in state and local taxes in 2022, yet remain barred from accessing many of the social services their taxes fund, according to a new study from the left-leaning Institute on Taxation and Economic Policy.
The study found that Nevada’s undocumented population of nearly 170,000 people paid more in taxes than the state’s top 1 percent of household incomes. Nationwide, the report estimated that undocumented immigrants paid almost $100 billion in taxes in 2022.
Determining the exact costs and tax contributions of undocumented immigrants is inherently difficult given that much of the population operates in the shadows. It’s estimated that a large percentage of undocumented workers pay into Social Security, but are not eligible to receive benefits from the retirement program. Undocumented immigrants are not eligible for Social Security and most taxpayer-funded welfare programs such as food stamps and cash assistance.
With no personal income tax in Nevada, the majority of undocumented peoples’ tax payments came from property or sales tax on things such utilities, household products and gasoline.
Their tax contributions, however, are often held back by low wages and challenges that come with employment restrictions. Without legal status, unauthorized workers face barriers to comply with existing income tax laws — the report says that if granted access to legal employment, undocumented immigrants in Nevada would contribute an additional $585 million a year in state and local taxes, according to the study.
Notably, the study didn’t include the contributions of Nevada’s 11,000 Deferred Action For Childhood Arrivals recipients, meaning that the undocumented population’s tax contributions are likely understated.
Studies by other conservative nonprofits have pegged the overall cost of illegal immigration to be much higher. A Heritage Foundation researcher pegged the net fiscal cost of illegal immigration to be between $84 billion and $94 billion a year, and the Center for Immigration Studies projected a “lifetime fiscal drain” (taxes paid minus costs) of $68,000 for every undocumented individual — though that cost is largely attributed to the cost of public education.
UNLV Boyd School of Law professor Francine Lipman says that current tax laws can be deeply damaging to immigrant families’ economic stability and have disruptive intergenerational effects. She says that she’s seen some senior citizens who have worked in the U.S. for decades, but have been pressured to continue working because they don’t qualify for retirement or health care benefits.
“They have to keep working, and they work in jobs that are physically demanding,” said Lipman. “If they don’t, then a lot of the caregiving depends upon the parents and the kids. It can put a real burden on them.”
In Nevada, an effort in the 2023 Legislature to expand Medicaid coverage to undocumented people in Nevada was introduced, significantly scaled back and then ultimately vetoed by Gov. Joe Lombardo, a Republican, who cited increased costs to the state as a reason for rejecting the bill.
Most undocumented immigrants live in families with mixed legal status, which often creates additional challenges to receiving benefits. In Nevada, it’s estimated that there are nearly 136,000 U.S. citizens with at least one family member who is undocumented.
U.S. citizens have been denied credit because of the legal status of their spouse or parents. In 2017, former President Donald Trump added a Social Security number requirement for the child tax credit, barring many immigrant families from getting the tax break linked to their dependents, even if their children were born in the U.S..
Lipman said she is worried that immigrants will face even stricter tax laws under a new Trump administration. Trump has suggested ending birthright citizenship and, in 2019, his administration finalized a controversial rule that denied legal U.S. residency to immigrants who accepted tax deductions or any form of welfare or public benefit. The Biden administration reversed the policy in 2022.
Despite tightening border control, immigrants’ contributions to the economy are only expected to grow. Unauthorized immigrants make up 4.4 percent of the U.S workforce, higher than their share of the population. Earlier this year, the nonpartisan Congressional Budget Office projected that authorized and undocumented immigrant workers will add $7 trillion to the nation’s gross domestic product by 2034.
“They’ve been here for decades,” said Lipman. “They’re opening bank accounts, they’re buying homes, they’re consumers and they’re taxpayers.”
