Larry Jordan

Everyone is related, and everything is connected.

Income Taxes Part II: Immigrants

Jul 18, 2022 by Larry Jordan, in Taxes
I spent most of my career funding infrastructure projects in South Texas, including international bridges, private prisons, and public schools, so I  understand the challenges along the border.

Despite these challenges, the border is a special place, and the American dream is alive and well there. Many friends tell me how their parents had been migrant workers, how they themselves became merchants or teachers, and how their children are now becoming doctors or lawyers.

At one site where I file taxes, about one in four taxpayers are undocumented immigrants. According to the IRS, an estimated 50% of undocumented immigrants file federal income tax returns. Also, they contribute $13 billion annually to social security, although they cannot receive benefits, and they pay $12 billion annually in state and local taxes. Some pay tuition at public colleges.

There are around 1.5 million undocumented immigrants in Texas, about one in every twenty of us. According to a recent poll of Texans, 62% believe that immigration is more helpful than harmful. Further, 62% oppose the border wall, and 61% oppose deportations of immigrants.

Many immigrants send money to members of their extended families in their countries of origin. When you hear people talk about taxing remittances to pay for a border wall, they are talking about taking money that immigrants (and U.S. citizens) send to support their families.

Many undocumented immigrants are married to U.S. citizens or have children who are U.S. citizens. Also, many undocumented couples have children who are U.S. citizens. Less than 200,000 children in Texas are undocumented, so when we deport undocumented immigrants, the children who are losing their parents are likely to be U.S. citizens.

(Some studies, such as the FAIR study, report that undocumented immigrants are costly to taxpayers, but these studies count the costs of providing education and healthcare to the children of immigrants, although these children are likely to be U.S. citizens.)

You might be wondering how undocumented immigrants can file federal tax returns. Actually, the IRS makes this easy, by assigning Individual Taxpayer Identification Numbers (ITINs.) Taxpayers with ITINs report their numbers, as well as their fake social security numbers, to the IRS. (That way, no one is hurt when a taxpayer with an ITIN uses a fake number.)

You might be wondering why an undocumented immigrant would expose himself by filing a return. Immigration lawyers encourage them to file, to improve their chances of legal immigration in the future.

At tax time, like all of us, some taxpayers with ITINs make payments, and some receive refunds. Taxpayers with ITINs cannot claim the earned income credits or Obamacare premium tax credits.

You might think that it is a serious crime to cross the river and remain here without permission. Unlawful presence is not a crime, but it is a civil violation, punishable by deportation. Improper entry can be a class B misdemeanor (like petty theft or vandalism) or a civil violation.

You might think that it is a serious crime to use a fake social security number to get a job. Increasingly, the courts distinguish between identity thieves and undocumented immigrants, since fake social security numbers are often used only for employment, not for credit or other purposes.

Most people want to deport bad guys, like murderers and rapists, but how many people want to deport mothers and wives for using fake ID's?

To be continued...