For years, the Internal Revenue Service has been paying billions of dollars to illegal aliens, in effect bribing them to come to the United States to claim cash benefits. In 2010 alone, the government agency paid individuals not authorized to work here (i.e., illegal aliens) $4.2 billion in refundable tax credits.
Tax reform gave Republicans a chance to stop this. Unfortunately, for reasons unknown, House and Senate Republicans recently produced bills that would entrench current law: financially rewarding foreign citizens who come to the United States illegally and have children to help them remain here.
How Is This Even Possible?
The IRS makes payments to low-income workers who pay little to no federal income tax but still qualify for “refundable” tax credits. These refundable credits function as tax subsidies, regardless of how much the recipient is taxed. In other words, it’s possible to pay nothing in taxes and get money from U.S. taxpayers.
Two of the most prominent refundable tax credits are the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Under current law, only workers with Social Security numbers valid for employment can collect the EITC—a restriction that bars illegal aliens from accessing the program. But, for some reason, the refundable Child Tax Credit is available to individuals not authorized to work in this country, simply for having children here. As a result, U.S. taxpayers pay billions each year to illegal aliens.
In the past, Congress tried to prevent this from happening. In the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Congress provided that federal public benefits—i.e., welfare—would not be paid to illegal aliens.
Why Did Brady’s Fix Disappear?
Earlier this month, it seemed Republicans planned to fix the problem for good. On November 3, House Ways and Means Chairman Kevin Brady (R-TX) released a substitute amendment—or “chairman’s mark”—to address the problem, making it clear that the refundable CTC would not be available to illegal aliens. Brady’s amendment would require taxpayers to have valid Social Security numbers for work in order to qualify for the CTC.
On November 13, the bill passed the Ways and Means Committee. On November 16, it passed the House of Representatives. But somewhere between the chairman’s mark and the finalized House tax bill, Brady’s crucial amendment was lost.
The bill that passed in the House would provide cash transfers to illegal aliens whose children have Social Security numbers. This would preserve an incentive for foreign nationals to illegally cross into and remain in the United States by handing them thousands of free dollars—simply for being here and reproducing.
On December 2, the Senate passed a bill with very similar wording to that of the House tax bill. Just like the House bill, the Senate bill permits illegal aliens to go on collecting the refundable Child Tax Credit.
It’s not too late for Republicans to amend the bill in conference committee. But as they stand now, the House and Senate bills allow illegal aliens to continue receiving payouts from the government, expanding the potential number of recipients for a program that is already rife with fraud.
The reason for the decision to exclude Brady’s changes to the CTC identification requirements is unclear. If Republicans negotiated the change in wording behind closed doors, they owe their constituents an explanation.