Illegal Immigrants and Taxes. A Question

[maxrandb]

If I'm not politically correct, we can refer to the subjects as Undocumented Workers, or whatever.

My wife asked a question that I can't answer (not the first time that has happened). One of the arguments I hear is that immigrants are in this country illegally and that they don't pay taxes and use our social safety nets at the expense of the American taxpayer.

Can someone with a lot more knowledge than I (probably 79,000 of the 80,000 registered on DU) answer a couple of simple questions for me.

1. Is it that there are 12,000,000 immigrants that are being paid "under the table" and are not paying income tax. We all know that they are paying sales tax.

and

2. If the answer to question 1 is "no, not all illegal immigrants are paid 'under the table'", then how do "illegal immigrants" pay income tax?

If they are "illegal", how do they pay income tax. My guess is that somehow they do pay income taxes, and I would like to point this out to my wing-nut co-workers.

[bryant69]

1. Unless we go to the "fair" tax, sales tax is a drop in the bucket

compared to income tax.

My guess is that some of them do have money withheld from their paychecks for income tax, but they aren't eligable to file - i don't know what happens with that aftewords.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[400Years]

3. also, they can't file and yet would be eligible for a return

and they never get that back either. another way of paying in without getting it back out.

[bryant69]

12. Yeah, but if they are illegal aliens

I don't give a damn about them getting cheated by a system they are cheating to break into.

Bryant

[endarkenment]

25. So basically you will use the 'tax burden' argument

until confronted with the fact that illegal workers might very well be a net tax benefit, and then you will fall back to 'but they are illegal'. Don't you find your position here somewhat dishonest?

[bryant69]

29. Well my actual position

As opposed to the position you have charted for me, is less blatantly hypocritical. However, I can't blame you for jumping to that conclusion based on the brevity of my remarks.

First of all, I don't think Illegal aliens should come to the United States. I think it's dangerous to us and to them. I also think the United States needs to take actions to slow the flow of illegal aliens.

Secondly, if you are looking for the real villian in our immigration story, look at the corporations who employ and, in almost all cases, exploit illegal aliens.

Third, The tax burdern argument is a non-starter with me - I understand it, and repeated it somewaht uncritically earlier, but the fact is that indigent people of all sorts are going to be taken care of to a certain extent by the state. That will include some illegal aliens. That's not a problem, it's already assumed that the wealthy and middle class will pay for these services that many of them will never use. So what's the difference between helping some guy who paid a tiny fraction of the service and a guy who paid a slightly smaller fraction?

Finally, I think we should reevalute how difficult we make it for people to immigrate to the United States legally. I think that in many cases those maximums are set based on racist criteria and could be revised so as to allow more mexicans and other latin americans to come to America legally.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[endarkenment]

36. fair enough

and sorry for putting words in your mouth. I am a bit weary of the hate mongering masquerading as reasoned opinion on this subject. I over reacted.

[400Years]

2. many pay into social security and will never use it

there are many who use bogus SS numbers and pay into the SS system but they will never be eligible to get that money back out, thus they are augmenting the SS system in a very real way.

Anyway, bogus SS numbers are commonly used in order to get those jobs that are on the books.

[NMDemDist2]

4. correct! HOWEVER there was talk with Vincente Fox to send a lot

of that SS $$ down to Mexico a few years ago. Here's a WaPo article from '02

Pushed by the Mexican government, the Bush administration is working on a Social Security accord that would put tens of thousands of Mexicans onto the Social Security roster and send hundreds of millions of dollars in benefits south of the border.

White House and Mexican government officials say discussions on an agreement to align the Social Security systems of the two countries are informal and preliminary. But excerpts from an internal Social Security Administration memo obtained this month say the agreement "is expected to move forward at an accelerated pace," with the support of both governments, and could be in force by next October.

The pact would be the latest, but by far the largest, of a series of treaties designed to ensure that people from one country working in another aren't taxed by both nations' social security systems. In its first year, the agreement is projected to trigger 37,000 new claims from Mexicans who worked in the United States legally and paid Social Security taxes but have been unable to claim their checks, according to a memo prepared by Ted Girdner, the Social Security Administration's assistant associate commissioner for international operations.

http://www.washingtonpost.com/ac2/wp-dyn/A9342-2002Dec18?language=printer

[maxrandb]

5. How in the world does that happen

In this day and age, with all the technology, and the money we spend on technology, how is it possible to use a "fake SSN"???

Isn't that kind of scary? Don't we have a regulatory agency that is supposed to ensure SSN's are valid?, or like all other "regulation" under Republican rule, has it been underfunded and allowed to be drowned in the bathtub. Remember, if you're a Republican, regulation is wrong, unless it's the regulation of sex toys.

Someone stop the world, I want to get off!

[Debau2005]

10. I was a welfare social worker

for a number of years. The social security computer systems were not the latest and greatest. It took months, sometimes years for us to get hits back that a social security number was invalid. And don't let the Repigs talking points throw you off, a lot of American citizens use bogus numbers, to either hide income, claim benefits, throw off spouses from their tracks, etc. It is not hard to do, and not limited to undocumented workers.

Is it getting harder to do? yes, it is impossible? no

[endarkenment]

13. Either you use a SSN that is not in active use.

or you just make one up. Either way the taxes get paid. The government has its money, so what motivation does it have to investigate this particular fraud? The only person getting screwed is the illegal who is paying taxes and getting no benefits.

[Finder]

34. Many deadbeat dads do this too...

to avoid garnishing of wages.

[bluethruandthru]

18. I heard an IRS agent on Ed Schultz say

that they had a great computer program that could weed out bogus SSN numbers...but when shrub took office he got rid of it and sold the software. The program was put in place by Clinton and was uncovering about a million fake SSN's a year.

[jedicord]

20. It simply doesn't pay to investigate a bogus SSN.

Look at it this way, #1) it would cost dollars to find the guy, #2) the government is collecting money they don't have to give back.

It's win-win for the government.

[Debau2005]

6. I know of an undocumented worker

that has paid income taxes the last few years. The IRS could care less where the money comes from as long as they receive a check! He filed his tax return, wrote them a check for what he owed and went on with his life. Just like everyone else. I don't know where he got a social security number, my guess is that with the IRS you can make one up and they would not care. And to answer question 1, this man is not paid under the table.

[maxrandb]

15. I made a mistake on my tax return

and failed to put my childrens SSN in the block. They figured my return as if I didn't have kids. I had to call and give them the SSN's over the phone so they could re-compute my return. I find it hard to believe that the IRS would just accept a fake SSN.

Oh, by-the-way, I had a lower tax burden under President Clinton. How could that be with the "low tax" crowd in office? Nevermind, I know the answer, they're a bunch of "effing" liars.

[Debau2005]

26. I don't know how

he does it. I have always been curious! I'll ask the next time I see him.

You must be like me, and not in the top tier of income, so our tax has had to be reconfigured to lighten the burden on the upper crust!!

[Starbucks Anarchist]

7. I'll try:

Keep in mind I'm not an expert, but here's my take:

I don't think they pay income tax because of the danger of INS finding them. However, they do pay Social Security taxes and can't collect on the benefits for obvious reasons, thus actually bolstering the general SS fund:

http://www.truthout.org/cgi-bin/artman/exec/view.cgi/37/10128

Also, they work for less money (obviously), so in a way, it's as if taxes are already taken out, even though they're not, if that makes sense.

Here's another relevant article. Hope this helps.

http://news.minnesota.publicradio.org/features/2005/04/11_tonessb_illegal/

[endarkenment]

17. Income tax and SS are automatically withheld from wages.

What illegals don't do is FILE an income tax form. If they did they would most likely get a freaking REFUND.

[Starbucks Anarchist]

19. That's the part I was missing.

The filing part. Thanks.

[displacedtexan]

8. Remember "Coneheads"?

Documents are always "available"... for a price.

Coneheads

[mmonk]

9. Don't forget the sales taxes, user fees, etc.

they pay all around the country.

[old_techie]

28. bogus SSN's

Why isn't the use of a bogus social security number a case of either identity fraud or tax fraud that has nothing whatsoever to do with immigration law? After all the IRS and government in general has no idea what the motive may be in a particular case without a specific investigation. How many crimes of all kinds are being covered up just for the sake of providing a blanket cover for illegal immigration? Could this also be a cover for doctors without licenses to practice or teachers with a history of sex offenses and so on and so on, not to mention terrorists of course?

[endarkenment]

37. No benefit to the revenuers.

SSN fraud is of no benefit to the revenue agency bottom line. It is consequently a way low priority.

[Minnesota Libra]

11. From what I've been told by illegal aliens themselves, they may...........

....pay income tax IF they are using someone else's SS number that is legal. Otherwise, they pay into SS and of course pay sales taxes and that's it.

[oneold1-4u]

14. Truths of lying and cheating

The people who hire the illegals are the ones who really gain. They don't have to keep any records, pay for any insurance, pay any SS, and can move them wherever they need them or just dump them!
Of course the illegals will work for whatever they can get and that is so minimal that unless they are in the drug trade, they have not even enough for 2 good meals a week. Their conditions of existing causes them to turn to crime and they have it better if they do go to jail, where they get medical care and food and shoes.

[BlackVelvet04]

16. Lots of illegals are paid under the table

and many are not. The ones who aren't pay taxes out of their paychecks just as we do. However, the amount paid in income tax often is quite small given the low paying wages many are paid and the income tax does not adequately compensate the state that is picking up the cost of more school and health care costs.

[endarkenment]

22. If the school system is funded via property taxes

then like any renter, the property tax is paid by the landlord and indirectly by the (illegal) tenant. If the state uses an income tax then once again either the illegal is paying through automatic deductions (and not getting a refund because he cannot file) or is being paid 'under the table' with no taxes paid at all - or a combination of the two where the employer invents some number of fictitious employees to keep the IRS happy and pays taxes on these 'workers' and hires some other number of illegals (presumably greater than the number of fictitious workers) and pays them in cash. Many states use a combination of sales, income and property taxes to fund services, so at best (or worst) the illegal worker might not be paying his fair share of income tax. The analysis of the public cost/benefit of illegals is as complicated as the rest of the situation.

[BlackVelvet04]

27. But when you have 10 people in one house, do you really think

the property tax collected from the landlord covers the cost of the services to those 10 people? The Mexicans have no problem living 10 to an apartment....beats where they live in Mexico.


And yes, it is complicated, but I know that the states who bear the burden are sinking under the burden.

[endarkenment]

35. Gee golly that is the way property taxes work illegal or not.

In my town we have the endless debate over whether we would be better off just buying up the rest of the undeveloped land at market value or allowing it to be built out - property taxes may or may not pay for the services associated with the residents. Oh well, that is the nature of property taxes, it is a tax on property based on property value.

[maxrandb]

24. Then why don't we go after the companies

that are the "real culprits" here? They are the ones that hire these folks at low wages, and provide no medical or insurance coverage. The companies are the ones that are making out like a "punk at a catholic school for girls".

Seems to me that if the jobs were not offered to illegals, they wouldn't come here for jobs. Maybe we don't go after the companies because they're writing check to the right politicians.

My solution?

1. We have a massive nation-wide swearing in ceremony and make all that are currently here American citizens ASAP.

2. We make the process for gaining entry for work easier.

3. We make the process for citizenship easier.

4. We push for stricter enforcement at the boarder (and not just the Mexican boarder, but also all the French, Irish and German immigrants that come here by plane to work at Disney, Busch Gardens, etc.

5. We make it a mandatory 6 months in jail and a $40,000 fine for every illegal immigrant hired by a company. (hey, the Repukes seem to love "mandatory" sentencing). Could you imagine Sam Walton's kids having to spend 6 months in jail and pay $40,000 for every undoceumented worker at Walmart?

I know it's not that simple, but we need to strike a ballance between helping those that wich to live the American Dream, and National Security. Neither of which I'm willing to surrender.

[BlackVelvet04]

32. Going after the companies is exactly

what I've been advocating for years.

[TechBear_Seattle]

21. They wouldn't be paying income tax at all

Very, very few undocumented workers get paid so much that they would have to pay income tax. The whole issue is a red herring, and a very stinky one at that.

The real issues, as others have pointed out, are the benefits for the employers. When they pay anyone under the table, employers do not pay unemployment, FICA, etc. Because the workers are unlikely to claim these services, the employer can get away with it pretty easily. Also, employers are not likely to pay as much as they would a legal immigrant or citizen, again because most undocumented workers would be unwilling to file a complaint with the government.

[Virginia Dare]

23. This is the crux of our problem..

our politicians are allowing illegal immigration to continue unabated because businesses, especially the ones who depend on manual labor, want it. This is a way for them to get around paying payroll taxes on their employees. It is a way for them to avoid paying workers' compensation. It shifts the burden of the employee from the business to the taxpayer, and the taxpayers' communities.

[maxrandb]

30. Also would like to add

it's a way for "empolyers" to avoid any "messy Union" problems.

Anyone ever look at the rise in illegal immigration and compare it to the decline of Unions.

Repukes want to kill Unions because they want no rules on what employers can do, and no standards. Their argument against Unions is that "the market will set the standards".

Want to see how the "market sets the standard"? Look at illegal immigration.

Repukes made this bed, now we need to strap them to it and thrown it off the bridge.

[Virginia Dare]

40. Absolutely...

no question about it, they aren't very proficient in their historical research. Over the ages, this is where Unions are historically born, among the downtrodden immigrants. It's a runaway train at this point.

:hi:

[jarab]

31. My only experience with the illegal immigrant tax issue ....

A work "crew" of about eight live in the same residence, drive one vehicle, share all expenses of the household. There is usually ONE legal immigrant in this crew.
The payroll checks for all are written to the legal person, who cashes their checks (or his ONE large check which is actually "eight" totalled). He - the legal - deducts all household expenses for the week, including transportation costs, and gives his work crew the remainder. Since, in many cases, the legal immigrant is the only one proficient in our language, there is a good amount of room for "him" to rip off his "friends" as he is the one doing the weekly "figgering".

This allows the employer a tax writeoff for total payroll, but also requires he pay his share of FICA on the entire amount, yet the one "laborer" who is legal - sometimes a moderately skilled carpenter - has a yearly income of about 140K. The employer is actually only responsible to the one to whom the check is written. The others are shadow workers.
In addition, each week the one to whom the check is written must deduct from his friends' net checks a calculated amount of tax which it is obviously going to cost "him" at years end (on that exaggerated 140K income). The legal one must save and prepare for his year-end tax obligations.
Social Security is paid on the entire amount of money which actually represents the labor of eight men - in this scenario - but is assigned to the one person filing taxes. Fed income taxes likewise. Workers' Comp - uncertain. Likely not, since the seven "other" workers are undocumented (non-existent).

IMO this is the best case scenario of contract labor presently existing. I'm convinced many work on a cash basis, and the various benefits the employer receives surpass what he could receive in employer deductions and benefits should the workers have been legal.
jmho
...O...

Edit: To add, in most cases the one legal person receiving compensation is designated a "contract" worker, meaning he is responsible for the entire FICA ... the employer off the hook for FICA as a result.

[BlackVelvet04]

33. And how far do the property taxes go in

covering services for those eight people?

[jarab]

38. The other issues are relevant, of course.

No autos to buy, no auto insurance, property taxes on only one residence, as you query.
I find it somewhat troubling - and I could be wrong - that their monies aren't cycled, as others' are.
As I posted a few days ago, the second largest income for Mexico - after oil - is "money sent home from the US" (Article Lexington KY Herald-Leader Sunday past).
And, technically, the workers may not be covered by Workers Comp in cases of injuries - since they don't exist on paper. A savings again to the bossman.
It's a vicious money circle.

...O...

[BlackVelvet04]

39. It is a vicious cycle.

The reasons for all of the immigration from Mexico is rarely discussed. The Mexican government is corrupt and between it and the Catholic church keeping the Mexicans poor it is a terrible situation in Mexico.