A New IRS-ICE Agreement Could Reduce Tax Revenue by $300 Billion Over the Next Decade
Earlier this month, the IRS and the Department of Homeland Security (DHS) forged an agreement to share taxpayer data with federal immigration officials. According to a partially redacted memorandum of understanding, Immigration and Customs Enforcement (ICE) “will come to the IRS with the names and address[es] of taxpayers that they believe have violated federal immigration laws,” reported CNN.
The government has long encouraged undocumented immigrants who work in the United States to file their taxes. But the new agreement means that someone who pays his taxes in good faith could attract unwanted scrutiny and be at greater risk of deportation.
Between 50 percent and 75 percent of undocumented immigrants pay taxes via federal income and/or payroll taxes, the Congressional Budget Office found in 2007. Undocumented immigrants are required to pay taxes, and doing so can help in their immigration cases down the line. The IRS has long “sought to keep information submitted by undocumented immigrants confidential,” so the IRS-ICE agreement marks “a fundamental departure from decades of practice at the tax collector,” reported The New York Times.
If the agreement between ICE and the IRS discourages undocumented immigrants from paying their taxes, the U.S. could lose billions in tax revenue. In 2022, undocumented immigrants paid $96.7 billion in federal, state, and local taxes, according to the Institute on Taxation and Economic Policy (ITEP), a left-leaning economic think tank. Over one-third of those tax dollars “go toward payroll taxes dedicated to funding programs that these workers are barred from accessing,” including Social Security and Medicare, reported ITEP.
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