Editorials | Issues | June 2007
|Illegal Immigrants Pay Taxes|
“We want your money whether you are here legally or not,” stated recently Mark W. Everson, the commissioner of the I.R.S.
|One reason why Social Security is benefiting so much from the work of undocumented workers is that they come to the U.S. to work. And they do work.|
The myth is that undocumented workers don’t pay taxes, but in fact they do so, voluntarily and sometimes involuntarily.
Of course, some undocumented workers are paid under the table and, like the company they work for, probably don’t pay taxes. But a dirty little secret is that undocumented workers not only pay taxes but also contribute to Social Security – and will never collect a dime.
Most companies require documents before hiring workers. However, undocumented workers often provide phony papers including fake social security numbers. Both the company and the workers contribute to these fake accounts, which end up in the coffers of the Social Security Administration.
The money contributed by undocumented workers goes into the “Earning Suspense File (ESF)” since it cannot be determined who sent it in.
Some undocumented workers pay as much as $2,000 or even more every year to Social Security and Medicare.
Since there are an estimated 12 million undocumented workers in the United States, their contributions reach more than $7 billion a year. This amount is about 10% of last year’s surplus for Social Security, the difference between what the system receives in contributions and what it pays out in benefits. The total ESF fund is $519 billion and growing.
One reason why Social Security is benefiting so much from the work of undocumented workers is that they come to the U.S. to work. And they do work.
Most undocumented workers have no idea why money from their paychecks is withheld. But they don’t care. They’re not here for benefits, but rather for jobs. They are not planning for retirement; they need to work now.
But many other undocumented workers pay taxes through a Taxpayer Identification Number (ITIN). This is a number assigned by the IRS to anyone in the U.S. who does not have a Social Security number so they can pay taxes legally. The ITIN numbers were introduced in 1996 to encourage noncitizens with United States incomes, including foreign investors, to file returns.
In 2005 nearly 2 million people filed tax returns using ITINs and analysts believe these were primarily undocumented workers.
Why would people pay taxes voluntarily? Some of the people believe that they should. But many others feel that it will help them establish a paper trail that will get them ready if Congress passes a comprehensive immigration reform. One of the likely requirements to legalize immigration status will be to pay back taxes.
Some other people file tax returns because they have paid too much and will get a refund. This is particularly true for individuals who have dependents in the U.S. or even abroad. International cooperation among the U.S., Canada, and Mexico means that holders of ITINs may claim dependents even if they live outside of the U.S.
But then there are others who are afraid to file returns because they believe the information will end up with immigration officials. That does not happen because the IRS does not share it with other agencies. The IRS is concerned only with collecting the money people owe the government.
Fear of filing may mean losing a refund particularly for people whose salaries are low and who have dependents. In these cases not filing may mean losing as much as several thousand dollars a year.
Some Americans claim that accepting taxes from people who may be in the country illegally helps legitimize the undocumented workers’ presence in the U.S. That’s true. But it also explains the reason why both the country and the workers benefit from the relationship. Working for money is the reason why people made the difficult journey to the U.S. Accepting their taxes is a way of saying that what they did is OK.
Domenico Maceri, PhD, UC Santa Barbara, teaches foreign languages at Allan Hancock College in Santa Maria, CA. He is the author of a book on Pirandello, one on Spanish grammar, and another on Italian grammar. He has also published a number of articles in newspapers and magazines around the world, some of which have won awards from the National Association of Hispanic Publications.
Click HERE for more articles by Domenico Maceri.