Immigration overhaul could boost US states' revenue: Report

WASHINGTON (REUTERS) - Granting citizenship to 11 million undocumented immigrants in the United States could boost state and local government coffers by about US$2 billion (S$2.6 billion) annually, said a liberal-leaning think tank study released on Wednesday.

The findings come as the US House of Representatives debates the move as part of a revamp of immigration law after last month's US Senate approval of legislation granting a pathway to citizenship.

The new state-by-state analysis from the Institute on Taxation and Economic Policy is based on tallies of increased income, sales, excise and property taxes that undocumented immigrants would pay if they gained legal status. They already pay US$10.6 billion annually in taxes to state and local governments.

The analysis assumes newly legalised immigrants would earn higher wages. The biggest tax revenue bump would come from increased income taxes that new citizens would pay, according to the report, which used data from the Pew Hispanic Centre to estimate state immigrant populations and family sizes.

The benefits to states would vary greatly. For example, in 2010, undocumented immigrants paid less than US$2 million in taxes to Montana and more than US$2.2 billion to California.

Illegal immigrant families pay about 6.4 per cent on average of their income in state and local taxes, a figure that would increase to 7 per cent if they won citizenship.

The non-partisan Congressional Budget Office has reported that enactment of the Senate-passed bill would reduce deficits and curb the flow of illegal immigrants into the country.

The Senate bill won the backing of more than a dozen Republicans and calls for increased US-Mexico border security as well as a path to citizenship for 11 million illegal immigrants. The bill's passage in the Republican-controlled House is far from certain.

Opponents of granting undocumented immigrants citizenship cite a study by the conservative Heritage Foundation that estimated legalization would cost US$6.3 trillion over a half century due to increased use of federal services and benefits.

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