The Wrong Incentive for Undocumented Immigrants


By Rashmi Shah

By Rashmi Shah

“Happy Holidays from the House of Representatives.  Please leave the tax credit for your children at the door.”

While we are busy buying our last stocking stuffers and planning our holiday feast, the House is planning to move four million U.S. children closer to poverty.

The payroll tax package, likely to pass the House this week, includes a provision prohibiting immigrant taxpayers from receiving a refundable Child Tax Credit.  The Child Tax Credit’s purpose is to keep children out of poverty.  It is one of the most effective ways to alleviate the tax burden imposed on low-income workers raising families, helping put food on the table.

The proposed provision denies taxpayers who file their taxes using an Individual Taxpayer Identification Number (ITIN) the ability to claim the Additional Child Tax Credit for their U.S. Citizen children. Undocumented immigrants are required to pay taxes and do so using an ITIN.   According to Immigration Impact, this provision will affect approximately 2 million families and up to 4 million U.S. citizen children.

Despite paying taxes, undocumented immigrants are not eligible for the vast majority of benefits their tax dollars support.  In 2010, ITIN tax filers contributed an estimated 9.2 billion dollars in payroll taxes. In other words, 10 times the amount that would be saved by eliminating the child tax credit away from the U.S. children of ITIN tax filers.

We constantly hear from the anti-immigration lobby that undocumented immigrants don’t pay taxes.  Although that is not factually true, it’s going to become a self-fulfilling prophecy if we allow policies like this to be signed into law.  When approximately 47% of the ‘legal’ U.S. population doesn’t pay Federal Income taxes, do we really need to punish those that do?

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