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Child Tax Break For Illegal Immigrants

Published February 8, 2012 |


WASHINGTON - Republicans are pushing a proposal that would halt what amounts to an IRS-administered entitlement that provides "free-funds" to low-income illegal immigrant filers who take advantage of a child tax credit to receive government payments that average about $1,800.

The proposal would require people filing tax returns to prove they're legal workers. The effort has roused anger among Hispanics and some Democratic lawmakers. But it's being offered as a way to help pay for extending the payroll tax cut and is projected to trim federal spending by about $10 billion over a decade. The IRS checks average about $1,800.

The debate addresses a quirk in U.S. law. Even people who are not authorized to work in the U.S. are supposed to file returns with the IRS. Many of those people cannot obtain a Social Security number, so to facilitate this the IRS hands out what are known as Individual Taxpayer Identification Numbers -- so illegal workers can file returns.

However, in doing so many of those workers are claiming tax benefits. For some, it's a way of making even more money. The IRS pays the tax filers, which for some amounts to an IRS-administered welfare program.

Senate Majority Leader Harry Reid of Nevada says the proposal unfairly goes after the children of poor Hispanic workers. Such kids often are U.S. citizens, even when their parents aren't, because they were born in this country.

Says Leticia Miranda, senior policy adviser of the National Council of La Raza: "People who are making close to the minimum wage and are raising children in this country -- and we're asking them to pay for the payroll tax cut?" She says, "It's outrageous and it's crazy."

On the other side, Republicans and some Democrats say what's crazy is even having a debate over whether the government should be cutting checks to people who have sneaked into the country illegally. It's hard to imagine there isn't a healthy majority, even in the Democratic-controlled Senate, to stop the practice -- if it's actually brought to a vote.

"We have rules about tax credits and benefits, and it seems to me they need to be applied fairly and across the board," said Democrat Sen. Claire McCaskill, who is facing a difficult re-election bid in Missouri. "If there are rules, they need to be enforced. I think it's just that simple. I don't think it's complicated."

Illegal immigrants have been barred from other cash-paying tax credits, such as the earned income tax credit for lower-income workers. But a 1997 law enacting the child tax credit doesn't specifically exclude them from collecting that separate benefit. It was significantly expanded in 2001 and 2009 so that many more people are eligible for the credits, though the expanded credit is slated to expire at the end of the year along with other Bush-era tax cuts.

"Although the law prohibits aliens residing without authorization in the United States from receiving most federal public benefits, an increasing number of these individuals are filing tax returns claiming this refundable credit," Rep. Sam Johnson, R-Texas, said when the House debated the payroll tax cut measure in December. "Illegal immigrants bilked $4.2 billion from the U.S. taxpayers (in 2010). I think that it's time that we fixed it."

The Treasury Department says that in the 2010 filing year more than $4 billion in child credit payments went to 2.3 million people who filed tax returns but didn't have Social Security numbers proving they were citizens or legal workers. That's a four-fold increase over five years earlier.

Hispanics point out that in many instances the tax credit goes to workers who aren't citizens but whose children are -- because they've been born in the country and therefore can have Social Security numbers of their own. They say such children should reap the benefit of the tax credit just like other children in comparable economic circumstances.

One option under consideration is to require tax filers to supply a Social Security number for the child when claiming the tax credit instead of requiring that at least one of the parents possess one.

That would respond to criticism that the GOP proposal is unfair to the citizen children of illegal immigrants.

"We're not in favor of fraudulent payments or payments that shouldn't be made, but we don't want to create obstacles to supporting low-income families who are trying to care for their children," said Sen. Dick Durbin, D-Ill. "Even though the parent doesn't have a Social Security number, they could still be entitled under their tax return, for a child tax credit."

Congress needs to find about $160 billion between now and the end of the month to cover the costs of extending through Dec. 31 a Social Security tax cut averaging about $20 a week for 160 million workers, federal unemployment benefits for the long-term jobless and unreduced Medicare fees for doctors. All are now due to expire Feb. 29.

The Associated Press contributed to this report.