Skip to content
Back to blog

Taxes & The Undocumented Community

October 2, 2023

by Jay Chotirmal

A core tenant of being part of a community is abiding by a social contract, an agreement among those in a society for the common good. In the United States, central to that contract is paying taxes in order to fund benefits and protections of those who live there. However, there’s a significant portion of society who pays taxes but, due to their immigrant status, can’t access many benefits that their tax dollars contribute to.

There’s a common misconception that undocumented workers don’t pay taxes. Research out of California Lutheran University has shown that undocumented families contribute sizable amounts of federal, state, and local taxes through a variety of taxes, including sales, income, fuel, and property taxes. The tax estimates also include payroll taxes paid by employers – and the workers themselves, if using TIN numbers – and the taxes paid by other members of their households.

Federal and state taxes pay for the benefits and protections we collectively use, such as national security, public safety and transportation, schools, health care, food assistance, and more.

And a significant source of California’s revenue comes from the undocumented community. A recent study out of UC Merced estimated that 6 % of the state’s workers are undocumented. In 2019 alone, those workers paid an estimated $3.7 billion in state and local taxes.

Despite the undocumented community paying taxes, they are barred from many life-saving, social safety benefits and protections that their taxes fund.  Not only can undocumented people not access financial benefits like unemployment insurance, undocumented folks are also barred from voting for the leaders who make the spending decisions of their tax dollars – the exact definition of taxation without representation.

Since 1990, California has made progress by extending benefits and protections to our undocumented neighbors. The state has passed laws for folks to access driver licenses and college scholarships regardless of documentation status, and during the pandemic expanded the Earned Income Tax Credit (or EITC) and Medi-Cal benefits to the community. California was moving in the right direction; although, the budget deficit the state began to experience in 2022 has pumped the brakes on progress. This was evident at the end of the 2022 legislative session when the legislature passed a bill for undocumented folks to access unemployment benefits – which they pay into through their taxes – but the piece of legislation was ultimately vetoed by the governor citing budgetary concerns.

Not having access to a government funded safety net puts our immigrant workers and their families in an extremely precarious position. A large portion of immigrants work in industries that could go without work and pay for weeks or in some cases months due to external factors like climate change. For example, farmworkers up and down the state were out of work for a good portion of this year because of the extreme rains and floods. Without access to unemployment insurance, many struggled to find the income needed to keep their families housed and fed.

During the pandemic, we all understood that essential workers – such as farmworkers – were not just the backbone of our economy but the labor we need to stay healthy and productive. And because of that realization, the state and federal government extended benefits to support these communities and it had a life-changing impact – we witnessed California’s childhood poverty rate drop to 7.5 percent. But as we have transitioned into a “post-pandemic” world we have seen a lot of these benefits be stripped from communities that deserve and need them. Because of the loss of benefits, we have witnessed the childhood poverty rate rise from 7.5 to 16.8 percent in just one year. All working families deserve better.

Undocumented workers are always going to be essential to our economy and our overall well being regardless of if we are living through a pandemic or not. Based on what we collectively experienced over the last three years, we know the government has the ability and means to extend benefits and protections that our communities have a right to. As residents, we must organize, advocate, and follow the lead of communities that are taxed without representation to ensure that everyone who lives and works in California is treated justly and respected as a full human. After all, if we don’t take care of the backbone of our economy it’s only a matter of time before it’s fractured beyond repair.