Lipman '93 on Taxing Undocumented Immigrants
Alum Francine J. Lipman '93, Professor of Law at Chapman University School of Law, has a paper on taxing undocumented immigrants posted on the Social Science Research Network. "Taxing Undocumented Immigrants: Separate, Unequal and Without Representation" was also published in Tax Lawyer (2006) and Harvard Latino Law Review (2006).
Abstract:
Americans believe that undocumented immigrants are exploiting the United States' economy. The widespread belief is that illegal aliens cost more in government services than they contribute to the economy. This belief is undeniably false. [E]very empirical study of illegals' economic impact demonstrates the opposite . . .: undocumenteds actually contribute more to public coffers in taxes than they cost in social services. Moreover, undocumented immigrants contribute to the U.S. economy through their investments and consumption of goods and services; filling of millions of essential worker positions resulting in subsidiary job creation, increased productivity and lower costs of goods and services; and unrequited contributions to Social Security, Medicare and unemployment insurance programs. Eighty-five percent of eminent economists surveyed have concluded that undocumented immigrants have had a positive (seventy-four percent) or neutral (eleven percent) impact on the U.S. economy.
Undocumented immigrants, like all U.S. citizens and residents, are required to pay taxes. Despite the historic and strong American opposition to taxation without representation, undocumented immigrants (except in rare and unusual 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.
Undocumented immigrants living in the United States are subject to the same income tax laws as documented immigrants and U.S. citizens. However, because of their status most unauthorized workers pay a higher effective tax rate than similarly situated documented or U.S. citizens. Yet, these workers and their families use fewer government services than similarly situated documented immigrants or U.S. citizens. Moreover, unauthorized workers have been denied remedies by the U.S. Supreme Court under the National Labor Relations Act and may be challenged to receive protection under wage and hour, anti-discrimination and workers' compensation laws. As a result, undocumented immigrants provide a fiscal windfall and may be the most fiscally beneficial of all immigrants.
Despite their net positive contribution to public coffers, hundreds of thousands of immigrants enter the U.S. each year without documents because of impracticable quota and labor certification requirements. These immigration restrictions combined with the additional tax or tariff on undocumented immigrants are inconsistent with economically efficient immigration policy. Moreover, the high effective tax rate imposed on the poorest undocumented working families relative to their less unfortunate friends and neighbors is inconsistent with fundamental tax policy. This Article describes and analyzes the separate, unequal and unrepresented federal taxation of undocumented immigrants.
SSRN (reg. required.)
Lipman joined the faculty of Chapman's George L. Argyros School of Business and Economics in 2001, where she has taught tax and graduate level accounting courses, has received awards for excellence in scholarship, teaching and research, and has been responsible for a substantial Volunteer Income Tax Assistance Program. Lipman moved to the School of Law in 2003, while continuing to do some teaching in the School of Business and Economics. Lipman graduated from N.Y.U. School of Law with an LL.M. in Taxation where she served as a graduate editor on the Tax Law Review and received her J.D. from UC Davis School of Law where she served as Editor in Chief of the UC Davis Law Review and was a member of the Order of the Coif.
Lipman also has an M.B.A. Prior to entering academia, she practiced as a C.P.A. with Arthur Young & Company and as an attorney with the law firms of O'Melveny & Myers LLP and Irell & Manella LLP. She has written extensively on tax and accounting topics for legal and accounting periodicals, including Wisconsin Law Review, Virginia Tax Review, Harvard Environmental Law Review, Taxes, Harvard Journal of Legislation, The Practical Tax Lawyer, and Tax Notes. Lipman teaches a variety of tax courses, including Federal Income Taxation and Corporate Tax.
Abstract:
Americans believe that undocumented immigrants are exploiting the United States' economy. The widespread belief is that illegal aliens cost more in government services than they contribute to the economy. This belief is undeniably false. [E]very empirical study of illegals' economic impact demonstrates the opposite . . .: undocumenteds actually contribute more to public coffers in taxes than they cost in social services. Moreover, undocumented immigrants contribute to the U.S. economy through their investments and consumption of goods and services; filling of millions of essential worker positions resulting in subsidiary job creation, increased productivity and lower costs of goods and services; and unrequited contributions to Social Security, Medicare and unemployment insurance programs. Eighty-five percent of eminent economists surveyed have concluded that undocumented immigrants have had a positive (seventy-four percent) or neutral (eleven percent) impact on the U.S. economy.
Undocumented immigrants, like all U.S. citizens and residents, are required to pay taxes. Despite the historic and strong American opposition to taxation without representation, undocumented immigrants (except in rare and unusual 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.
Undocumented immigrants living in the United States are subject to the same income tax laws as documented immigrants and U.S. citizens. However, because of their status most unauthorized workers pay a higher effective tax rate than similarly situated documented or U.S. citizens. Yet, these workers and their families use fewer government services than similarly situated documented immigrants or U.S. citizens. Moreover, unauthorized workers have been denied remedies by the U.S. Supreme Court under the National Labor Relations Act and may be challenged to receive protection under wage and hour, anti-discrimination and workers' compensation laws. As a result, undocumented immigrants provide a fiscal windfall and may be the most fiscally beneficial of all immigrants.
Despite their net positive contribution to public coffers, hundreds of thousands of immigrants enter the U.S. each year without documents because of impracticable quota and labor certification requirements. These immigration restrictions combined with the additional tax or tariff on undocumented immigrants are inconsistent with economically efficient immigration policy. Moreover, the high effective tax rate imposed on the poorest undocumented working families relative to their less unfortunate friends and neighbors is inconsistent with fundamental tax policy. This Article describes and analyzes the separate, unequal and unrepresented federal taxation of undocumented immigrants.
SSRN (reg. required.)
Lipman joined the faculty of Chapman's George L. Argyros School of Business and Economics in 2001, where she has taught tax and graduate level accounting courses, has received awards for excellence in scholarship, teaching and research, and has been responsible for a substantial Volunteer Income Tax Assistance Program. Lipman moved to the School of Law in 2003, while continuing to do some teaching in the School of Business and Economics. Lipman graduated from N.Y.U. School of Law with an LL.M. in Taxation where she served as a graduate editor on the Tax Law Review and received her J.D. from UC Davis School of Law where she served as Editor in Chief of the UC Davis Law Review and was a member of the Order of the Coif.
Lipman also has an M.B.A. Prior to entering academia, she practiced as a C.P.A. with Arthur Young & Company and as an attorney with the law firms of O'Melveny & Myers LLP and Irell & Manella LLP. She has written extensively on tax and accounting topics for legal and accounting periodicals, including Wisconsin Law Review, Virginia Tax Review, Harvard Environmental Law Review, Taxes, Harvard Journal of Legislation, The Practical Tax Lawyer, and Tax Notes. Lipman teaches a variety of tax courses, including Federal Income Taxation and Corporate Tax.