Denying the Child Tax Credit to Undocumented Children

AP Photo/Bebeto Matthews

Rosa, second from right, an undocumented immigrant who wants her family's last name withheld, is surrounded by her son Edgar, far right, daughter Olga, far left, and grandson Logan at their home in New York

This article appears in the Summer 2018 issue of The American Prospect magazine. Subscribe here

Whether it’s being ripped from their parents at the border or being forcibly withheld from joining their relatives in the United States, undocumented children have become casualties in the Republican crusade against immigrants deemed undesirable. The Republican Tax Act is the newest assault. The new tax bill increases the Child Tax Credit from $1,000 to $2,000 per child under age 17 for U.S. citizens, but denies the credit to immigrant children without a valid Social Security number. The bill’s authors estimate that the provision will save more than $20 billion over the next ten years—an indirect transfer from poor immigrants to the wealthy, the primary beneficiaries of the cut.

Currently, unauthorized immigrants are able to claim the credit by applying for a nine-digit Individual Taxpayer Identification Number, or ITIN, which allows them to file state and federal tax returns, even without a Social Security number. The new requirement, which will go into effect next year, will render ineligible roughly one million undocumented children, according to a Center on Budget and Policy Priorities analysis of data from the Pew Hispanic Center.

The change threatens to inflict greater poverty on a mostly low-income working population that depends heavily on such credits. In 2013 alone, some 4.4 million tax returns were filed using ITINs, claiming child tax credits worth $6 billion, according to a report on refundable tax credits by the Government Accountability Office (GAO). Almost a third of ITIN filers claiming child tax credits that year had incomes of less than $40,000. Most ITIN-filers are undocumented.

The restriction could also harm children who are American citizens. At least nine million people live in mixed-status households in which one member is legally present and others are not. When an undocumented sibling loses access to tax benefits, the entire family suffers.

Undocumented immigrant workers, like all other workers, are subject to sales taxes and property taxes. The majority of undocumented immigrants pay state and federal income taxes as well as Social Security and Medicare taxes. In 2010, the Social Security Administration estimated that unauthorized workers contributed $13 billion in taxes that year. (The agency has not released more recent figures.)

Undocumented immigrants, taxpaying or otherwise, are barred from receiving most benefits offered by the federal government (including health insurance, Social Security, food stamps, welfare, and disability benefits). They are eligible, however, for benefits like public schooling, emergency medical care, the Special Supplemental Nutrition Program for Women, Infants and Children—and until now, the Child Tax Credit. (The American Opportunity Tax Credit, which allows individuals to deduct up to $2,500 in “college-level educational expenses” from their federal taxes, is also still available to ITIN-filers.)

Immigrant-advocacy groups like UnidosUS and the National Immigration Law Center have begun releasing guidance for undocumented immigrants, suggesting possible tax alternatives. The Tax Act created a new non-refundable $500 “family credit” for dependents that don’t qualify for the CTC. That credit, though far less generous than the CTC, at least doesn’t require a SSN to be claimed. Still, it’s a small wonder that any of these remaining tax benefits made its way into the final legislation at all. In the far more draconian House version of the Tax Act, the CTC would not have been claimable if the taxpayer did not include their own valid SSN, regardless of the status of their children—a change that would have excluded about 82 percent of current ITIN-filers, according to the GAO. It would have also stipulated that the college tax credit be made available only to individuals with valid Social Security numbers.

Eliminating all access to tax benefits for undocumented immigrants has long sat atop the wish list of many conservatives, who have vilified undocumented immigrants and accused them of large-scale tax fraud. But the Republicans have displayed a studied disinterest in the large-scale tax frauds by the rich, which will only be intensified by the Tax Act. To compound the damage, the underfunding of the IRS persists, despite a tax code that is more complex than ever (see piece by David Cay Johnston, page 45).

The illegal-immigrant-as-menacing-abstraction has been Trump’s go-to rhetorical device both on the campaign trail and during his time in office. The Tax Act, with its punishment of children, is a startling showcase of such callousness.

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