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End tax credit for illegal workers' kids?

A proposal would make illegal immigrants ineligible for the child tax credit and use that money for the payroll tax cut. Opponents say that's not fair to the children, who are often US citizens.

By MSN Money Partner Feb 9, 2012 1:32PM

This post is by Andrew Taylor of The Associated Press.


Republicans are looking to deny child tax credits to illegal immigrants -- refund checks averaging $1,800 a family -- in an effort that has roused anger among Hispanics and some Democratic lawmakers.


The proposal, which would require people who claim the federal credit to have Social Security numbers to prove they're legal workers, is being offered as a way to help pay for extending the Social Security tax cut for most U.S. wage-earners. It would trim federal spending by about $10 billion over a decade.


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 are in 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." (Post continues below video.)

Illegal immigrants have been barred from other refundable tax credits -- in which low-income workers not only don't owe income taxes but receive payments from the government -- such as the earned income tax credit. Such credits are a popular anti-poverty tool in part because a recipient has to hold a job to receive the benefit.


But a 1997 law enacting a $500-per-child tax credit doesn't specifically exclude illegal immigrants from collecting. It was significantly expanded in 2001 to gradually reach $1,000, and rules were eased so that many more people could get it on a refundable basis. It was further expanded in 2009 so that more taxpayers could claim the credit or claim a larger amount. The credit increase is slated to expire at the end of the year along with other Bush-era tax cuts and return to $500 per child, though it's commonly assumed that it will remain up to $1,000 per child.


"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 situation has Democrats in a box. If they fight the GOP effort to cut back payments of the tax credit, they'll be favoring the delivery of refunds to people who not only don't owe income taxes but aren't supposed to be in the country in the first place.


What's more, closing the loophole would raise real money -- an estimated $10 billion over 10 years under the approach favored by House Republicans.


The Treasury Department says that in the 2010 filing year more than $4 billion in child credit refunds 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.


On the other side are politically influential Hispanic groups, a key Democratic-friendly constituency. Opponents of tightening eligibility for the child tax credit point out that six of every seven affected families are Hispanic, with an average household income of about $21,000. Tax credits of up to $1,000 per child make a huge difference at such income levels.


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 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.


"I just think the child tax credit is working just fine and there's no need to punish children," Reid said last week. "We're supposed to try to be helping them."


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 possesses 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.


Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


More from MSN Money:


Feb 9, 2012 5:56PM
Republicans are looking to deny child tax credits to illegal immigrants



Harry Reid,


So what he's saying is that in order to keep his senate seat he will fight against what is in the best interest of the citizens of Nevada, not the United States of America. That's about as un- American and unpatriotic to his own country as I've heard in a long time.


ALL Illegal immigrants should not be able to file for any tax credits until they're legal period. Not just Hispanic workers as Senator Reid specifies.  


Feb 10, 2012 12:50AM
I thought we passed a law back in the 80's stating that illegals having children in the U.S. have illegal children.  I guess the left-wing put a stop to that.  But isn't it back in the spotlight?  No more anchor babies?  Make it constitutional...  illegal has illegal, period.  And you do gooders, go to any heavily Hispanic school in the L.A. area and you tell me we are creating good citizens.  I for one am sick and tired of paying year after year to support people that are here BREAKING THE LAW.  Hurrah for Arizona and the other states that have the courage to stand up to the feds and say "if you won't enforce the immigration laws we will!"  ENOUGH IS ENOUGH.
Feb 10, 2012 6:20AM
It's time again to open your eye's.  This country can no longer continue its policy of making law's and not enforcing them.  Politicians consistently say only what will get them reelected.  If you truly want change then vote them out of office.  We cannot as a country reward illegal behavior.  If the american public new the truth about the volume of fraudulent tax returns filed not only by illegal's but by american citizens as well maybe change would come.  Look at what the IRS has already had to establish just so real american citizens can file their tax returns.  Look at the volume of identity theft nation wide and the real cost of enforcement or lack there of.  Ask yourself the simple question of how you want your tax dollars spent.  If you are honest with yourself then you will know that providing money to illegal's prevents those legally entitled to the benefits that they deserve.
Feb 10, 2012 1:42PM

My "grandparents" (great-great) were all dirt poor LEGAL immigrants from Europe in the latter 1800's.  So they weren't illegals - nor did they steal land from Mexico, the Indians, or own slaves, or the other multitude of "sins" placed at the feet of "rich white people".  They just learned the language, worked their tails off as sharecroppers, raised their families and tried to save a penny for their own piece of dirt. 100 years later some of their decendants were able to start graduating from college.


And they didn't get an income tax refund either.

Feb 10, 2012 10:21AM
Just eliminate all the stinking refundable tax credits for everyone - problem solved.  No credit or deduction should reduce a tax bill below $0.
Feb 10, 2012 10:11PM

Great comments people (especially abcd99).


I work 40 hours a week for the government and make $30,032 a year BEFORE taxes and medical are taken out.  And my part of medical is going UP AGAIN this year.

How on gods green earth does somebody living off hand outs make $32,748.  This is CRAZY.

I loath the fact that illegal's are rewarded for illegal behavior.


Can I sell drugs or break other laws and be rewarded?   NO  - They would collect more money from me or any other legal citizen.


 The non profits that help these illegal's get more money than you realize to help these citizens.  This needs to stop too.   Some of these non profit leaders are getting salaries over $100,000 a year - THIS IS NOT "non profit" in my books.


Feb 11, 2012 5:21PM



I immigrated from Europe some thirty years ago when the language was English. I came as a legal immigrant and worked my A__ off to get where I am today as a business owner.

I worked the farm fields and had my paper route, worked my way through College and served this country as a legal immigrant.

Do you know anything about defending this country and the constitution it was founded on? We as Veterans defend the freedom and the liberty for all, but that means for anyone that is American or a legal American.


It's about Illegal versus Legal period.

I'm not part of the 1% and never will be, but I'll be d____d if I'm going allow to have my fortune, that I remind you worked my A__ off for, to be redistributed to people who are Illegal or unwilling to provide for themselves.


omg47, I totally agree, STOP THE FREE HANDOUTS to illegal's






Feb 9, 2012 10:32PM

The correct number is $14B last year for children of illegals via this tax credit.


Get a brain.

Feb 9, 2012 10:49PM
Government dependency jumped 8.1 percent in the past year, with the most assistance going toward housing, health and welfare, and retirement.

The federal government spent more taxpayer dollars than ever before in 2011 to subsidize Americans. The average individual who relies on Washington could receive benefits valued at $32,748, more than the nation's average disposable personal income ($32,446).

At the same time, nearly half of the U.S. population (49.5 percent) does not pay any federal income taxes.

In the next 25 years, more than 77 million baby boomers will retire. They will begin collecting checks from Social Security, drawing benefits from Medicare, and relying on Medicaid for long-term care.

As of now, 70 percent of the federal government's budget goes to individual assistance programs, up dramatically in just the past few years. However, research shows that private, community, and charitable aid helps individuals rise from their difficulties with better success than federal government handouts. Plus, local and private aid is often more effectively distributed
Feb 10, 2012 7:48PM
Let the mexicans into this country to do the farm work that Americans arent willing to do....I as a white american have no problem with that......I have a problem when they come over and start taking good paying american jobs you know 50-100k construction job...(YES they are out there)...(I dont want to here they dont exist I have one and am only a craftsman)...and sending all the money to Mexico....It should be a law if your an immigrant...what you make here in the States STAYS HERE IN THE STATES.....That is the true problem....not that they are taking jobs but they are sending the money else where and it is doing just as much damage as manufacturing jobs being shipped overseas.....MAKE IT HERE SPEND IT HERE....Please this country needs it....
Feb 13, 2012 5:59PM
If you do not pay any income tax you are not entitled to a refund. A "refund" means you paid someone too much. I am sick and tired of paying income, sales, use, property tax etc to benefit the illegals, the lazy and the un-willing.
Feb 12, 2012 5:07PM
How about we legalize and tax drugs as in Switzerland... Result is No market for drugs, for cartels coming into the USA, no need to commit a crime to buy drugs and help to get off the drug? 
Feb 13, 2012 2:49PM
My relatives are legal residents of what is now known as the USA .They were here when all of the other immigrates got here.My people were treated like dirt.The liberals would let animals have welfare,if they could vote..
Feb 14, 2012 2:05AM

Simple solution here, If you are a liberal, YOU  pay for all the little illegal bastards.


You could set up a fund for these kids for all liberals to dump thier millions into. Funny thing is, not a dime would be deposited as we all know the liberal agenda is to get everyone else to pay for thier entitlement programs.

Feb 12, 2012 5:00PM
So... how about companies that moved to Mexico and took US jobs which located on the US border loose their NAFT protection... maybe NAFTA  should only apply to locations 250 miles from the US BORDER.
Feb 14, 2012 8:41AM
Our Govt. don't understand english. Example, they don't understand the word ILLEGAL!!
Feb 9, 2012 5:58PM
OK Republicans want to talk about another non issue. Yesterday it was contraception, today it was guns, now were going to pick on "illegal children" who through no fault of there own are in the situation they are in. I bet all of the Republicans who support this call themselves Christians. Well,  Jesus said to welcome the stranger into your land! Look it up!!! Educating children will help the USA who ever they are and where ever they came from!!!  WHEN ARE WE GOING TO TALK ABOUT TAX POLICY IE the 12% rate FOR BILLIONAIRES, 12% EFFECTIVE RATES FOR CORPORATIONS...GIVE AWAYS TO CORPORATIONS!!   I really think the 1 % wants to keep people distracted!!
Feb 10, 2012 5:32AM

If the government is taking tax money from illegal aliens, and it most certainly is, then they should be entitled to the same tax benefits (and penalties) as anyone else who pays taxes. And the amount of money the government takes in from illegals is FAR greater than the child care benefit. 


The illegals are here and they're not going to be shipped back to where they came from because if that happened half the hotels in the country would go out of business and nobody could get his lawn mowed. As long as we're going to perpetuate this underclass that we really DON'T want to do without, the least we can do is honor our rhetoric about hard work and afford to the hardest working people in America the same tax structure that we give to any trust fund twit. And get tax money from people who can well afford it and get privileges which not even American citizens enjoy -- like the carried interest leeches.



Feb 10, 2012 11:08AM
The "illegals" pay sales tax, they pay gasoline tax, they pay license fees..etc... 
They pick the onions  you it, the tomatoes, grapes, etc.  at low cost to the farmer which keeps you food cost down! Their children are playful and loving and deserve at least as much care as you give you provide to your family pet. Providing education to them benefits all of us.... and guess what... at some point in history your grandparents were "Illegals" !!!  JUST ANOTHER CULTURE WAR TOPIC  FROM THE REPUBLICANS TO TAKE YOUR EYE OFF THE BALL THAT THE TAX CODES ARE RE-DISTRIBUTING WEALTH TO THE TOP 1%!  GET YOUR HEADS OUT OF THE SAND!!!!
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