A new study by the Institute on Taxation and Economic Policy (ITEP) finds that undocumented immigrants who live and work in the United States pay billions of dollars in taxes every year to state and local governments. Given the chance to earn legal status, they would pay even more. According to ITEP, undocumented immigrants paid an estimated total of $10.6 billion in state and local taxes in 2010. ITEP also notes that allowing undocumented immigrants to work in the U.S. legally would increase their state and local tax contributions by an estimated $2 billion a year. Simply stated, legalization pays.