Tax day 2018: Celebrating the contributions of all Michiganders

We at the League make no secret of the fact that we celebrate what tax dollars can do for our state. Schools, parks, bridges, safety services, roads and other important community resources are funded by taxes, so we certainly had plenty of reasons to cheer for taxpayers on April 17 (and April 18) and every day of the year. Among these taxpayers are thousands of undocumented Michiganders who filed their tax returns just as they do every year. As we celebrate all the good things taxes provide, we also honor our immigrant neighbors and community members whose invaluable contributions to Michigan’s culture and economy have helped revive our state in more ways than one.

tax day 2018 325x736Current rhetoric on immigration often overlooks the important contributions undocumented immigrants make to our communities as neighbors, workers and taxpayers. Research from the Institute on Taxation and Economic Policy highlights the significant contributions that undocumented immigrants make to our state and local economies by paying taxes. According to the report, undocumented immigrants across the United States collectively contribute $11.74 billion in state and local taxes. In the Great Lakes state, which is home to more than half a million foreign-born residents, about 130,000 undocumented immigrant residents contributed an estimated $86.6 million in state and local taxes in 2014 (the latest year for which data is available).

What are some of the ways undocumented Michiganders contribute to the tax base, you ask? Just like their fellow residents, undocumented Michiganders pay sales and excise taxes on things such as utilities, clothing and gasoline. They also pay property taxes, either directly on their homes or indirectly as renters. Furthermore, undocumented immigrants also pay state income taxes that help grow state investments in schools, infrastructure, healthcare and other important services.

Among residents who help strengthen our state are Dreamers—young undocumented immigrants whose futures continue to hang in the balance as Congress stalls action on the Dream Act. Dreamers contribute to our communities every single day, and they also contribute to our local and state economies as working professionals, consumers and entrepreneurs. As taxpayers, they contributed an estimated $13 million in Michigan in 2014. Yet, if Dreamers lose their DACA status, they will also lose their temporary work permits that enable them to work in good-paying jobs with benefits. The loss in tax revenue from this shift is equivalent to the cost of 220 teacher salaries in Michigan.1

Looking at the contributions of our immigrant neighbors in Michigan brings up an important question about fairness. Michigan’s tax system is upside down—it’s regressive. This means that Michiganders who have low and middle incomes pay a larger portion of their income in taxes than the top 20% of taxpayers. Unfortunately, undocumented taxpayers aren’t left out of this unbalanced system. When it comes to state and local taxes, the average effective tax rate (a measure of the share of total income paid in taxes) for undocumented immigrants is 8%, and 8.9% for Dreamers (young undocumented immigrants). This is striking when compared to the average nationwide effective tax rate among the richest taxpayers: 5.4%.

Policymakers can and must make wise choices that strengthen our communities and recognize the substantial contributions made by our immigrant neighbors. When it comes to immigration, state and national leaders have an opportunity to explore and enact sound public policies that promote economic growth and immigrant integration based on facts and reality rather than playing out the politics of fear and division.

  1. Fiscal Policy Institute (FIP) analysis of Institute on Taxation and Economic Policy (ITEP) tax revenue data and National Education Association (NEA) data on teacher salaries.

— Victoria Crouse

Holding on to the dream

As families come together to celebrate the holidays, on the minds of many immigrant families is the worry that this may be their last holiday season with their loved ones. This is because the recent termination of the federal Deferred Action for Childhood Arrivals (DACA) program threatens the ability for thousands of young immigrants—often called “Dreamers”—to remain in the country. In Michigan, 5,400 undocumented immigrants currently enrolled in DACA stand to lose their ability to work and go to school without fear of deportation.

A new report from the Michigan League for Public Policy focuses on the positive impact that DACA has had on the lives of thousands of Michigan’s immigrants, and the many ways these young Dreamers contribute to our state.

Advocates are calling on Congress to address this crisis before the end of the year by passing the DREAM Act, a bipartisan bill that would create a pathway to citizenship for young undocumented immigrants whose futures hang in the balance. Every day that Congress stalls the passage of the DREAM Act, 122 individuals across the country lose their DACA status and become at risk of deportation.

DACA was established in 2012 by President Barack Obama in an effort to address the needs of young undocumented immigrants who arrived to the country as minors. DACA provides temporary protection from deportation and work authorization (applicants must apply for renewal after two years). On Sept. 5, 2017, the U.S. Attorney General announced the end of the program via a six-month phasing out period. With the end of the program, Dreamers now have numbered days with their DACA status, and thousands have already seen their status expire since the announcement.

DACA graph 1Since its inception, more than 790,000 immigrant youth across the country have been able to achieve better opportunities through the DACA program. In Michigan, DACA beneficiaries work hard, go to school and give back to their communities and local economies. Here are some important characteristics of DACA participants:

  • The majority (53%) of DACA beneficiaries across the country are women, and two-thirds of them are 25 years of age or younger.
  • Across the country, DACA program participants are largely concentrated in densely populated urban areas. Detroit, for example, is one of 20 metro areas across the country where three-quarters of all DACA beneficiaries reside.
  • Collectively, DACA participants make up 382,400 workers in our country’s labor force. Meanwhile, a large majority (62%, 154,108) of those not in the labor force were enrolled in school.

Despite the many different ways Dreamers contribute to our culture and our economy, lawmakers continue to drag their feet when it comes to passing a permanent solution. The consequences of ending DACA and the dreams of thousands of young immigrants will be immediately felt. Among other losses, researchers estimate that Michigan will lose $13 million in state and local tax revenue and $418 million in annual economic activity if all DACA beneficiaries are deported. The loss in tax revenue is equivalent to the cost of 220 teacher salaries in Michigan.1 This loss would prevent our state leaders from being financially able to make important investments in our schools, our hospitals and our communities.

The introduction of the DACA program was a good first step in modernizing our immigration system. Its loss means countless lost opportunities for immigrant youth and for our communities. For these reasons, investing in this generation of immigrant youth should be a key priority for our state and federal governments. Dreamers and their families have waited long enough. Lawmakers should act now to pass the DREAM Act.

— Victoria Crouse

1. Fiscal Policy Institute (FIP) analysis of Institute on Taxation and Economic Policy (ITEP) tax revenue data and National Education Association (NEA) data on teacher salaries.