Report: Immigration Reform Could Boost Arkansas Revenues

Jul 10, 2013

A recent analysis by a liberal-leaning think tank estimates that undocumented immigrants pay $72.4 million a year in state and local taxes in Arkansas.

Supporters of immigration reform efforts in the U.S. hold a rally in Washington, D.C. and urge Congress to pass legislation.
Credit Nicholas Neufeld / iStock

The report from the Institute on Taxation and Economic Policy also suggests that immigration reform would positively impact Arkansas’s economy.

The study suggests that the state could gain $16.4 million in increased revenue if undocumented immigrants currently in Arkansas are allowed to work in the country legally.

Rich Huddleston, executive director of Arkansas Advocates for Children and Families, says undocumented immigrants a more likely to fully comply with income tax laws if Congress passes a comprehensive reform proposal.

“Undocumented immigrants already contribute significantly to state and local governments through the taxes they already pay,” Huddleston said. “They pay sales taxes when they purchase goods and services, but many of them already pay property taxes and at least half of undocumented immigrants are paying income taxes even though they lack legal status.” 

Huddleston noted undocumented immigrants already pay over eight percent of their income in state and local taxes, and immigration reform could increase the effective tax rate among the undocumented to 9.8 percent.

The analysis from the Institute on Taxation and Economic Policy is based on an assumption that a newly legalized immigrant population of 55,000 in Arkansas would fully participate in the federal, state, and local tax systems.

Click here to read the full report.