On May 23 the Trump administration unveiled a more detailed version of its budget proposal. The New York Times noted that in addition to increasing funding for the detention and deportation of undocumented immigrants,
[t]he proposal also calls for new steps to bar undocumented immigrants from receiving tax credits, including adding a new requirement that those claiming the child tax credit provide a verifiable Social Security Number valid for employment, and tightening current rules that mandate that a Social Security number be furnished to claim the earned-income tax credit….
White House budget director Mick Mulvaney claims that it's wrong “to give the earned-income tax credit, which is designed to help folks who work, to give it to somebody who is in the country and working illegally. That’s just not fair.” Whether it's fair or not, under current law undocumented immigrants aren't eligible for the earned-income credit. But what about the child tax credit? This is only for citizen children or children with legal residence, not for the parents. In other words, the administration is planning to punish citizen children for having parents who are undocumented.
We explain the child tax credit in Chapter 6, “Do immigrants pay taxes” and “Do immigrants collect welfare?”
The Social Security Administration estimated in 2013 that about 44 percent of this country’s 8.1 million out-of-status workers were employed in the formal economy, working “on the books,” generally using false Social Security numbers (SSN) or an individual tax identification number (ITIN). These workers paid federal, state, and local taxes the same way citizens and immigrants with legal status did, and Social Security and Medicare payments were deducted from their paychecks…..
Some out-of-status immigrants do seek benefits for their U.S.-born children, who are entitled to the same services as other U.S. citizens. For example, undocumented immigrants who file their federal income taxes are eligible, under the same rules as other taxpayers, for credits for their dependent children who are U.S. citizens or legal residents. These child tax credits are capped at $1,000 per child, and if the total amount of the credits is greater than what the taxpayer owes, the government may refund the difference.
This is a benefit for the children, not the immigrant parent, and it’s lower than benefits in many European child allowance programs, which often pay more than $100 a month per child. Some politicians attacked the program after a 2011 Treasury Department investigation found that $4.2 billion had been paid out to accounts of unauthorized immigrants, but tax experts noted that the only real problem was with some fraud by a small number of taxpayers and tax preparers, not with the credit itself.
[We’re occasionally posting excerpts from the new edition of The Politics of Immigration: Questions and Answers. You can order here or from your favorite bookseller.]