The Revenue Loss Due to Undocumented Alien Earnings: Estimates for 1980

Abstract

This paper presents estimates of the income of undocumented aliens working in the continental United States in 1980. It reviews existing studies of the number of undocumented aliens in the United States, their occupational status, earnings, and tax compliance levels. Estimates of total undocumented alien income, total unreported income, incomes not subject to filing requirements, and the tax consequences resulting from undocumented alien incomes are provided. It is estimated the undocumented aliens earned $9.5 billion in 1980. Of this, $.9 billion was earned by agricultural workers who are presumed to be below the filing threshold; $2.6 billion was earned by nonfilers who do not have income withheld; and $2.9 billion was earned by undocumented aliens who had income tax withheld but who did not file returns. Although the unreported income of undocumented aliens was significant, $5.3 billion, it does not appear to have resulted in a significant tax loss due to the low tax liability of undocumented aliens and the contributions of nominal nonfilers. The tax loss is estimated to be $121 million in 1980.