Interesting op-ed in the Wall Street Journal:  The Illegal Immigrant Tax Payer, by Bruce Bartlett:

As the problem of illegal immigration becomes more heated, the experiences of the states provide lessons on how it can be minimized. Tax policy is one area where governments can help reduce the burden of illegal immigration.

Illegal aliens are almost by definition members of the underground economy . . . .

This being the case, one cannot realistically tax them the way citizens are taxed. Workers in the underground economy are usually paid cash off the books. Such wages are unreported to the tax authorities and those receiving them are highly unlikely to file income tax returns. Therefore, the income tax is never going to raise much revenue from illegal aliens. Steve Camarota of the Center for Immigration Studies estimates that illegal-alien households pay only 20% as much income tax as non-illegal immigrant households….

Payroll taxes have broader coverage because there are no exemptions or offsets. So it is not surprising that illegal aliens pay more of these—about 40% of what citizens and legal aliens pay.However, when it comes to federal excise taxes, such as those for gasoline or tobacco, illegal aliens pay close to the same amount of tax as the rest of us. Mr. Camarota estimates that they pay 70% as much of such taxes as all households do….

[I]t is reasonable to assume that when it comes to state taxes, the same sort of pattern holds. Illegal aliens probably pay very little state income taxes, but close to their share of sales taxes. Therefore, states that rely more heavily on sales taxes than income taxes are going to get more revenue out of their illegal aliens to pay for the expenses they incur. This helps explain why California is burdened much more by illegal aliens than Texas….

Liberals always condemn sales taxes as regressive—taking more in percentage terms from the poor than the rich. However, realistically, such taxes are the only ones that really get revenue from the illegal-alien population to offset the large and growing cost they impose for health care, education and other government services.

For more on tax policy and immigration, see Francine J. Lipman, Taxing Undocumented Immigrants: Separate, Unequal and Without Representation, 59 Tax Law. ___ (2006).