The Taxation of Undocumented Immigrants: Separate, Unequal, and Without Representation

Summary

Undocumented immigrants, like all citizens and residents of the United States, are required to pay taxes. Despite the historic and strong American opposition to taxation without representation, undocumented immigrants (except in rare cases) have not enjoyed the right to vote on any local, state, or federal tax or other matter for almost eighty years. Nevertheless, each year undocumented immigrants add billions of dollars in sales, excise, property, income, and payroll taxes, including Social Security, Medicare, and unemployment taxes, to federal, state, and local coffers. Hundreds of thousands of undocumented immigrants go out of their way to file annual federal and state income tax returns.

Yet undocumented immigrants are barred from almost all government benefits, including food stamps, Temporary Assistance for Needy Families, Medicaid, federal housing programs, Supplemental Security Income, Unemployment Insurance, Social Security, Medicare, and the earned income tax credit (EITC). Generally, the only benefits federally required for undocumented immigrants are emergency medical care, subject to financial and category eligibility, and elementary and secondary public education. Many undocumented immigrants will not even access these few critical government services because of their ever-present fear of government officials and deportation.

RESIDENT ALIEN VERSUS NONRESIDENT ALIEN CLASSIFICATION

If a non–U.S. citizen is a U.S. resident, under the Code, she will be characterized as a “resident alien” for tax purposes. A resident alien is subject to the same income [tax], employment tax, and tax withholding laws as a U.S. citizen. Accordingly, a resident alien is subject to federal income tax on her worldwide income regardless of its source.