The fate of the Deferred Action for Childhood Arrivals (DACA) initiative has left 1.3 million undocumented immigrant youth in limbo. President Trump has assured DACA recipients that they can “rest easy,” but his administration has simultaneously detained and/or deported a handful of them.
In addition to the moral conundrum this nation and the Trump administration face with respect to what to do with undocumented youth, a new report from the Institute on Taxation and Economic Policy (ITEP) raises an additional concern: is ending DACA a smart fiscal move?
The administration should pay special attention to the fiscal benefits that flow from DACA—and the negative repercussions of expelling young people who have or are eligible for DACA from the country. This new report quantifies how much is gained from DACA, and how much would be lost in terms of tax revenue without DACA.
Here are six points to consider:
- Undocumented youth who are enrolled in or eligible for DACA pay roughly $2 billion each year in state and local taxes.
- Young people eligible for DACA pay 8.9 percent of their income in state and local taxes—nearly the same as the 9.4 percent paid by the middle 20 percent of taxpayers (and higher than the 5.4 percent paid by the top 1 percent of taxpayers).
- Continuing DACA and ensuring all who are eligible for the program are enrolled would increase estimated state and local revenue by $425 million, bringing the total contribution to $2.45 billion.
- Creating a path to citizenship for DACA-eligible youth would increase their state and local tax payments by $505 million—for a total of $2.53 billion a year.
- Not surprisingly, DACA yields the most tax revenue in the five largest immigrant-receiving states: California, Texas, Florida, New York, and Illinois. However, every state would lose a significant amount of tax revenue if DACA were rescinded.
- Ending DACA would decrease state and local revenue by roughly $800 million per year.
As the ITEP report points out, DACA increases the taxable revenue of its beneficiaries because it facilitates upward mobility, granting them access to new opportunities.
A 2016 national survey of DACA beneficiaries found that more than 40 percent got their first job after receiving DACA, while more than 60 percent got a different job with better pay. DACA also opened up new educational opportunities for 60 percent of beneficiaries.
It is important to keep in mind that the opportunities created by DACA do more than just boost tax revenue for state and local governments. Opportunities for more education and better jobs will, in the long run, increase the productivity, inventiveness, and entrepreneurship of DACA’s beneficiaries. Conversely, ending those opportunities for more than a million people would be a needless waste of human potential.
Photo by Steven Depolo.