This conversation is closed.

Do we need to reform our immigrant taxes before we attempt to reform immigration?

There are several reasons why we need to change our immigrant taxes.

1. IRS and Congress made a grave error during the 1986 Amnesty by allowing maids, gardeners and other cash economy workers to file tax returns as Independent Contractors (without W-2 forms) and estimate their own incomes. This has predictable results for about 25% of our undocumented working immigrants—with little or no income tax revenue being collected. Worse than that, it created a pool of tax felons which could increase by nearly 2 million under a program of mass citizenship. “Line up and pay taxes” is a myth.

2. The government’s Income Tax Identification Number system (ITIN), which was designed to be a way for some individuals without Social Security numbers to pay taxes--it is now used by immigrants without Social Security numbers to bilk the American taxpayers by over $4.2 billion annually by declaring excessive exemptions. The is tax revenue collected and wasted from 600,000 taxpayers, this is not good tax policy.

3. Our Self-employment taxes are not in tune with Social Security and Medicare benefit payments which means that even if a person works only 10 years, whether or not they declare enough earnings to pay income taxes, if they are of retirement age, taxpayers will subsidize each immigrant during their retirement years in excess of $217,000 for Social Security and Medicare.

5. About 10,000 Individuals retire in this country every day and many of them are undocumented immigrants who have used someone else’s Social Security number. The IRS spends thousands of man-hours and millions of dollars sorting out the correct person to receive retirement benefits.

Point of Interest: About 75% of our working undocumented immigrants or roughly 6.5 million already pay withholding taxes. However, they are not eligible to collect benefits and over a 10 year period, about $224 billion from this resource replenishes our Social Security and Medicare funds.

Closing Statement from Mark Jason

It's disappointing that there was a lack of interest in our solution for Immigration Reform. If anyone wants to continue the conversation or need additional information, I will be happy to answer any questions submitted to mjason@immigranttaxgroup.org

  • Apr 16 2014: Whether there are 12 million or 20 million undocumented immigrants isn't relevant as to the concept ITIG is recommending. We need to adjust the tax by not encouraging mass citizenship but rather have employers pay their share of the responsibility for their workers. Immigrants will benefit the most with funding for their health, education, etc.
  • Apr 13 2014: We need to reform our immigrant taxes first before we discuss reforming immigration. There is only one way to do this effectively is to require employers pay taxes for some of the public services of their undocumented immigrants such as medical care and educational expenses.

    We (former IRS Agents and Budget Analysts) have developed an enforceable Fiscal and Social Model for Immigration Reform that will be a means to integrate our immigrants into our society. In our plan, employers are given an opportunity to sponsor their help by paying a small tax. Because of the amount of undocumented immigrants the new revenue would be over $100 Billion. On page 9 and 10 of the report we lay out our Vision.

    www.immigranttaxgroup.org (click on read report, note Q&A's)
    • Apr 14 2014: A tax on employers? For what purpose? To discourage the hiring of immigrants?
      • Apr 16 2014: Darell,

        Employers hire undocumented immigrants most often because they are good hardworking people who work for less money because they are desperate. Employers by making a small contribution, can make a difference. Where else can we get $100 Billion to help immigration problems? Check out page 9 of the report, you will see 26 areas that could be helped.
  • Apr 13 2014: Your right, from what I’ve read, waiters give the highest tips and some of the wealthiest give the least but Karma often has a way of leveling the playing field.
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    Apr 10 2014: I say Yes to reform, but also know that prejudice, arrogance and rampant selfishness will still result in those with wealth and influence abusing immigrant workers.
    • Apr 13 2014: There are uncaring selfish people everywhere, we need to give the security and power to the immigrants so they can command respect and we can do this by fixing our broken taxes
  • Apr 5 2014: Mark

    Not quite sure of the point you are trying to make or if there is a question to be answered.
    I am of the understanding that Social Security is not being replenished and by 2030 or 2035 only about 25 to 30 cents , on the earned dollar, will be paid out to recipients.
    I find it doubtful that 75% of illegals pay a Fed tax, as the majority that I have had contact with work under the table. Also, that wages earned by many are below the poverty line and no Fed tax.
    Social Security is and always has been a slush fund for government to expend money without accountability. Medicare. also verges on insolvency. Some reports contradict this, but most do not.
    • Apr 5 2014: His point is that before we make them citizens, we need to make sure they will be paying taxes. He wrongfully sees taxes as only a way to fund the government, and not as a way to damage or improve the economy. He doesn't realize that taxing the poor damages the economy by talking money from people would spent it, or that a tax code designed to keep money moving instead of allowing it to pool into the hands of a few very rich, is what created the American Middle Class.

      Social Security continues to bring in more money that it pays out. Yes, that will change in a few years as the Boomers hit max retirement. However, 30 years from now when the bulk of the Boomers are gone, SS should be in fine shape again. There is no reason that SS can not go into debt, or even be funded out of general funds, for a few years.

      The number 25-30 cents on the dollar is ridiculously low.

      Federal Income tax is not the only federal tax. It is true that almost half of American's pay no federal income tax. However, the bulk of those are elderly retired, just starting out, and the number falls to like 20% if you include payroll and other federal taxes.

      Besides, if we really want to make more people pay some federal income tax, the best way to do it is to promote more economic equality, by getting the rich to spend more, creating demand for goods and services and jobs.

      This is how the middle class was created. A very steep income tax code, with deductions for almost all spending, designed to get those with high income to spend, to create economic activity, jobs, and reduce inequality. The middle class is dying because we switched from that tax code, to one of flatter taxes with fewer deductions, allowing too much wealth to pool into too few hands.
      • Apr 6 2014: Darrell

        So nice to read your thoughts again. I am sure you are right in your assessment of the authors intentions, however it was him who was asked to articulate.
        I hope that you are right about the SS problem. I would doubt that you are.
        Your position on SS, if I understand correctly, is that if SS does run out of funds the money can be taken from the general account. This only seems fair in that SS money is essentially all ready there and can be invested or used by the Treasury, even invested in Common Stock.
        You are aware, depending on the source, that the US has an immediate debt of $18 trillion, an unfunded debt of around $120-130 trillion and the country has a net worth of around $100 trillion. So, if SS is now insolvent and is funded directly from Fed taxes, for how many years and what does this do to the debt and taxes?
        What would you like the rich to spend their money on?
        The middle class is dying for many reason; the least of which, may or may not be attributed to Corp Tax ,which is now the highest on the planet.
        You blame the rich, please define rich, for not paying their fair share. How much of their money would you like the government to forcibly take to give to someone else. Do you feel that you are one of those people, who have some how been cheated by life's misdeeds. That you are more deserving of someone else s money then they are, even though you have not earned it?
        Corp do not make laws, politicians do. Blame the politicians. If Corp bribe politicians who is to blame, who is the bad guy here, the Corp or the elected official ? The trusted public servant, democrat or republican, who has sworn allegiance and honesty to the people, but whose only allegiance is to a dollar bill?
        Government is a pure exercise in hypocrisy, hyphenated to include greed, deceit and power mongering.
        I do not think that, in todays world, there is much distinction between the major Corps and government here or globally. It is a good cop. bad cop exercise.
        • Apr 7 2014: The Social Security Trust Fund is an accounting gimmick.

          What would change in the US budget if we decided to transfer... say $10 trillion from the general budget into the SS trust fund?

          Answer is: Nothing.

          General fund would have an extra $10T deficit, and the SS an extra $10T surplus, but the reported deficit is the new, so they cancel out.

          Then, assuming 3% interest rate, the government would pay itself an extra $300M a year. $300M deficit to the general, but $300 surplus on SS, and the reported deficit is the net interest, so again, these cancel out.


          The SS Trust Fund is such a fraud that the Federal Reserve, that carefully tracks every $ of debt, ignores the "money" in the trust fund, subtracting it from reported government debt. Don't believe me? Check the federal government debt reported I the Federal Reserve Z.1, table D3, debt outstanding by sector.
      • Apr 8 2014: Darrell

        Reference your last post; we are in agreement than and government is a fraud
        Your numbers tend to the imaginary and a what if. Numbers are, especially when based on the illusion that government is your best friend, not things I enjoy dealing with, as they are like a 38. cal pencil..
        It would seem that your entire premise is based, as you say, on an assumption, which in itself points to an ill conceived argument.
        You want to transfer $10 trillion from the GF to SS. From what hat do we get the $10T? The total Fed annual tax is about $3 T and from that we are running a deficit. Currently we are $17 T in debt by not balancing the budget. Our foreign debt is about $5T, mostly to China and in 2013 paid out $223B in interest.
        If your you bring in $3,000 per year and spend $3,500 and you want to give your friend $10,000 and expect him to pay you interest, but he has to get the money for the interest from you--And you have to borrow the money from China to give to him and pay interest on the money from China--is there a problem here?.
        SS and medicare are now about 42% of the national budget or about $1.2 T. This means that your $10T will last about 7 years and in that short period of time all things will be solvent. This does not include any expansion of these benefits, which is not a real situation.
        There seems to be much we disagree on, perhaps we can find something that we do agree on.
        • Apr 14 2014: "From what hat do we get the $10T? "

          You do not need a hat to provide the $10T. That is the point.

          The US Treasury prints up a single piece of paper that says "$10T dollars" and hands it to the Social Security Trust Fund. Done.

          The treasury now owes itself $10 trillion dollars more than it used to. Total government debt gets reported as $10T higher, but it pays itself interest on the debt, so no net effect on the defect.
      • Apr 13 2014: Charles, Let me know of any figures that need clarification. Most of the figures we used in our study were from Pew Research and your comments are not related to the topic of immigration reform.
        • Apr 16 2014: Mark/Darrell

          I am making the assumption that the 'we' you refer to is you and Darrell, if so, pass this on, as I cannot directly address his last post.
          I first thought that you guys may have some legitimate points, but with Darrell's last post of a $10 trillion piece of paper leaves me less than enthusiastic. This would have to be approved by Congress and it would have to be printed at a cost of about 0.10 per bill.
          The government would simply raise SSI tax--a lot to resolve any shortfall.
          Numbers are numbers and it simply breaks down to what one wants to believe. PEW has no more credibility than most other sources. The numbers and projections I referenced came from Dept of SS'
          Produce an immigration bill that passed and we can discuss it on its merits.
          Point of interest. Illegals may number from 12 to 20 million. No one really knows, so your numbers here have no real foundation. of fact. The government cannot tell us the demographic of the ACA, which it has control of and you rely on its assertion of numbers of illegals that it has no control over.
          You have 100% more trust in government than I do. I have found that whatever the government says, there is reasonable cause to believe the opposite.
      • Apr 17 2014: I have trust in the numbers, most undocumented immigrants want freedom and respect, this plan will them draw out, they will demand a Special Work Permits and their bosses will be willing to contribute less than a tip for them to enjoy their lives.
  • Apr 4 2014: What "should" be the purpose of the income tax?

    Some see it as a way to fund government.

    Income tax could be so, so, so much more.

    Money is the lifeblood of an economy. It only works when it is moving.
    • Apr 13 2014: The purpose and use of any tax should be clearly defined and implemented. In our proposed Model, the revenue goes directly to where it is needed, as indicated on page 9. It's far better to have no tax than a bad one.
  • Apr 3 2014: You grossly overstate the effects of this.