End Refundable Tax Credits for Illegals

Link to article on Red Statehttp://www.redstate.com/dhorowitz3/2012/01/30/end-refundable-tax-credits-for-illegals/

Much ink has been poured over the fact that 51% of tax filers paid no federal income taxes in 2009.  There is less attention directed towards the more outrageous statistic; 30% of tax filers had a negative tax liability that year.  In other words, they made money off the tax system.

Those who won the jackpot on tax day benefited primarily from refundable tax credits; the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC, the refundable portion of child tax credit), and the now-expired Making Work Pay Credit.  In 2011, refundable credits cost the treasury about $94.4 billion.   Keep in mind that this is just one small portion of the burgeoning welfare empire, approaching $1 trillion in total federal, state, and local expenditures.   While it would be nice to get rid of these redistributive “tax expenditures” for everyone, we could start with illegal aliens.

Last July, the Treasury Inspector General for Tax Collection released a shocking report detailing how illegal aliens are able to utilize a filing loophole to obtain billions in ACTC funds.  While EITC appropriations are protected from illegals (those who don’t engage in identity theft) because they are only awarded to those who provide a valid Social Security number, the same cannot be said for the ACTC.  Illegals can receive the ACTC by merely providing an Individual Taxpayer Identification Number (ITIN) on their 1040 form, which is blithely issued by the IRS.  In 2010, according to the report, illegals received $4.2 billion in ACTC payouts.  That accounts for roughly 15% of all outlays for that refundable credit.

During the December imbroglio over the payroll tax cut, the House inserted a provision to require a valid Social Security number in order to collect the ACTC.  Republicans planned to use the savings as part of the offset package.  Now that the bill, HR 3630, is pending before the conference committee, we must ensure that the ACTC provision is part of a legitimate proposal to offset the cost of the extenders package.

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