DACA’s Tax Benefits Highlight the Need for Broader Immigration Reform

107 TAX NOTES STATE 955 March 2023

5 Pages Posted: 1 May 2023

Date Written: March 13, 2023

Abstract

America’s aging population and declining birth rates are negatively affecting the nation’s Social Security and Medicare safety nets, reducing tax revenue, and weakening the broader economy. Meanwhile, immigration is increasing workforce participation by expanding the number of young adults in the United States. Despite political setbacks, the Deferred Action for Childhood Arrivals (DACA) program exemplifies the economic and tax benefits of immigration, providing data and impetus for a better way forward. The DACA program has allowed youth who qualified for the program the right to legal employment in the United States, with estimates indicating a 91 percent employment rate. DACA protection has allowed immigrant youth with no other path to legalization the opportunity to work, seek higher education, and pay taxes. This has resulted in direct benefits to Social Security and Medicare. DACA recipients' tax contributions also add to state and local tax receipts, including sales, property, and income taxes. It is estimated that in 2017 more than $2.2 billion in federal taxes were paid by DACA-eligible youth. In 2019, DACA recipients paid a total of $3.1 billion in state and local taxes and $5.7 billion in federal taxes. Despite its myriad benefits, DACA is temporary, intended as a stopgap, and perennially under attack — most recently by nine state attorneys general. This article contrasts DACA’s macroeconomic success and increased opportunities for young immigrants with the seemingly intractable political constraints to larger reform, urging increased innovative approaches to immigration reform.

Suggested Citation

Lainez Flanagan, Jacqueline, DACA’s Tax Benefits Highlight the Need for Broader Immigration Reform (March 13, 2023). 107 TAX NOTES STATE 955 March 2023, Available at SSRN: https://ssrn.com/abstract=4421933

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