A recent report from The Budget Lab at Yale University suggests that the federal government could lose as much as $479 billion in lost income tax revenues over the next 10 years due to the immigration crackdown. Some tax advisors have already reported a 75% drop in tax filings by undocumented workers due to fear over the proposed data sharing between the tax collectors at the IRS and immigration enforcement agencies. In November a federal judge ordered a halt to this data sharing agreement, with a few exceptions for criminal investigations. However, the fear remains. Due to the ICE terror campaign, even legal immigrants fear deportation or trauma to their children, according to a study by the Urban Institute.
In the past, about 50% of undocumented workers routinely filed federal income tax returns hoping that this would show a willingness to work within the U.S. legal system when they apply for legal status. In 2022 alone, undocumented workers paid $96.7 billion in federal, state, and local taxes, according to the Institute on Taxation and Economic Policy. Not only do undocumented workers see more risks of exposure to immigration agencies by filing their tax returns, they see fewer benefits since they do not qualify for most tax deductions.
Even the child tax credit for U.S. citizen children, which was designed to reduce child poverty in America, does not apply when the parents are not lawful permanent residents. There are about 2.7 million U.S. citizen children who suffer from this policy. The U.S. child poverty rates dropped to a record low of 5.2% in 2021, but has nearly tripled since then to an estimated 13% to 16%, according to the Annie E. Casey Foundation.
