“Illegal Aliens” = Taxpayers

24 Mar

By Tina Kosikowski @ MATT.org

My favorite undocumented immigrant myth of all time: they don’t pay taxes.

Bottom line: statistics prove undocumented workers contribute more to government coffers than they consume services. Good luck getting nativists to stick to the facts on this topic…

Did you know, according to the Social Security Administration, approximately two thirds of all undocumented workers in the U.S. pay the same federal taxes as citizens do (Social Security, Medicare, and personal income) by means of an individual taxpayer identification number (ITIN)?

Did you know the only services undocumented immigrants can legally access from means-tested government programs is K-12 public education and emergency medical care?

According to the Internal Revenue Service (IRS),

“…an Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service… ITINs are for federal tax reporting only, and are not intended to serve any other purpose. IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs).

An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit… ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.”

Why would “illegal aliens” want to file taxes? It makes perfect sense- potential beneficiaries of immigration reform are eager to create a paper trail for themselves documenting their contributions to the U.S. In other words, paying taxes (toward services they will most likely never benefit from) is in their best interest!

The Embassy of Mexico recently contributed to an article released by Hispanically Speaking News titled, “Myths and Realities Associated with Undocumented Immigrants.” In the next week and a half, MATT will review a total of six myths revealing what the Embassy of Mexico and authoritative information sources have to say about each…

MYTH #2. Undocumented workers do not pay any taxes. (My personal favorite.)

Reality: They do, and in several different ways. According to the Internal Revenue Service (IRS), the majority of undocumented immigrants pays income tax using, among other mechanisms, Individual Taxpayer Identification Numbers (ITIN’s), while most employers withhold federal, state and local taxes from such workers. In fact, between one-half and three-quarters of undocumented immigrants pay federal and state income taxes, Social Security, and Medicare taxes. Undocumented immigrants pay the same real estate taxes—whether they own homes or taxes are passed on to them through rents—and the same sales and other consumption taxes as everyone else. The majority of state and local costs for schooling and other services is funded by these taxes.

Additionally, the U.S. Social Security Administration has estimated that three quarters of undocumented immigrants pay payroll taxes, and that they contribute US$6-7 billion in Social Security funds that they will be unable to claim (Porter 2005). This amount, moreover, keeps accumulating, generating US$6 to US$7 billion in Social Security annual tax revenue, and an additional US$1.5 billion in Medicare taxes. This money, according to the 2008 annual report of the Social Security Board of Trustees, will help reduce the SSA’s projected longterm deficit by 15%, which is equivalent to a 0.3% rise in the pay roll tax.

Agree? Beg to differ? Feel free to share or start the debate here. Stay tuned for myth #3 later this week…


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