September 15, 2014

Immigrants account for 4.5 percent of state’s economic output

An analysis by an Iowa City-based think tank concludes undocumented immigrants in Iowa pay $64 million in state and local taxes each year. Peter Fisher, research director for the Iowa Policy Project, says that counters the conventional wisdom that illegal immigrants are getting a variety of state and federal government benefits, but aren’t paying anything.

“Actually, they’re paying almost as much as everybody else and they don’t benefit from everything,” Fisher says.

There are about 75,000 undocumented immigrants living in Iowa and another 45,000 Iowan were born outside the country, but have become legal U.S. citizens or have a work permit. Those immigrants account for about 4.3 percent of the state’s population, but Fisher’s research indicates the group accounts for 4.5 percent of the state’s economic output. That’s because immigrants tend to be younger.

“What the immigrant population does is, in a sense, help the demographics of the state which are trending older,” Fisher says, “so that there’s more people in that prime working age population who are earning money, paying taxes to pay for the services that the young people and the old people need.”

Fisher concludes granting legal status to undocumented immigrants would boost the state’s economy.

“If they were granted provisional work status…in essence, then, they’re working here legally and if previously undocumented immigrants are working legally there’s much more of an incentive for them and for employers to invest in skills, so they’ll be earning more,” Fisher says. “Knowing that their future here is secure, they can afford to get a better education and it’ll pay off.”

And Fisher says they would be far less at risk of workplace abuses or wage theft.

Fisher and a research associate used government data as well as formulas from the Institute on Taxation and Economic Policy to determine how much undocumented immigrants pay in Iowa sales taxes, property taxes and income taxes. Fisher says undocumented immigrants often have state and federal taxes withheld from their paychecks.