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Press Release

Young Undocumented Immigrants in Kentucky Contributing More than $9 million in State and Local Taxes

Kenny Colston | April 25, 2017

With uncertainty around how the Trump administration will treat policies that currently offer protection to undocumented immigrants brought here as children, a new report from the Institute on Taxation and Economic Policy (ITEP) shows these young immigrants pay a higher state and local tax rate in Kentucky than the wealthiest people in the state do.

The report estimates the 6,000 young undocumented immigrants in Kentucky who are either eligible for or currently receiving temporary protection from deportation under Deferred Action for Childhood Arrivals (DACA) pay more than $9 million in state and local taxes. Known as “DREAMers,” they pay an effective state and local tax rate of 9.1 percent of their income, higher than the wealthiest one percent in Kentucky who pay just 6 percent.

Because the work authorization component of DACA not only increases employment and wages, but provides immigrants with channels for full income tax compliance, the program increases their tax contributions. The report also finds that in Kentucky:

  • If all those eligible for DACA were enrolled, their tax contributions would increase by $3 million, raising their effective tax rate to 9.7 percent. Currently in Kentucky, about 56 percent of those who are eligible for DACA are enrolled.
  • If all DACA-eligible immigrants were given a path to citizenship, an additional $400,000 would be contributed through taxes (for $3.4 million total above current tax contributions).
  • Though DREAMers would still pay taxes – income, sales and property – in Kentucky if their DACA protections were lost, their tax contributions would fall by an estimated $3.9 million.

“DREAMers are productive members of our communities, going to school, working and contributing taxes through their jobs and on the things they buy and own, just like Kentuckians who were born here,” said Anna Baumann, a research and policy associate with the Kentucky Center for Economic Policy. “This report, and others like it, support the idea that we should move forward, not backward, on legal status for DACA-eligible and other undocumented immigrants.”

A recent report from ITEP puts the total amount of taxes undocumented immigrants of all ages contribute to Kentucky in state and local taxes at $37 million annually.

For more information, contact Kenny Colston at kcolston@kypolicy.org or 502-938-1817.

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