The checks are in the mail - illegal aliens benefit from Earned Income Tax Credit

National Review, April 17, 1995 by Roy Beck

ONCE again it is the season when the Internal Revenue Service takes money sent in by Americans and mails some of it back to illegal aliens as a kind of end-of-the-year bonus through the Earned Income Credit program.

When IRS officials first confirmed this long-standing practice to me last spring, they said they had no other option because Congress had never prohibited it. Senator William Roth requested a study by the General Accounting Office, which reported last fall that illegal aliens can receive direct cash payments of up to $2,528. Foreign nationals who are working illegally in this country can get the checks if they have a dependent child and make less than $23,755 a year.

The GAO report was ignored or overlooked by the news media. But it caught the attention of then Treasury Secretary Lloyd Bentsen, who said the practice should cease. Tucked inside the Clinton Administration's latest recommendations on tax policy is a provision to stop the subsidy for illegal low-wage workers -- but not until next year.

To assume that these bonuses will soon be ended is to underestimate the resilience of a pervasive system of incentives and loopholes that the United States provides for citizens of other nations to violate our immigration laws. It was public cynicism about the government's good faith in ending this system that fueled the overwhelming passage of California's Proposition 187 last fall and spurs imitators today.

The Earned Income Credit program was set up in 1975 as a work incentive for Americans with low-paying jobs. The credit sometimes works like most tax credits, reducing the tax owed. But the program often requires the IRS to send recipients a check for considerably more money than was withheld by their employers (if indeed any was withheld) the previous year. ``We regard EIC as a form of welfare,'' says Mark Mullett, an aide to Senator Roth.

The Federal Government tries to make sure that illegal aliens don't miss out on these payments. David Simcox, a fellow at the Center for Immigration Studies, says federal funds are provided to religious and immigrant-aid groups to persuade and assist immigrants (whether legal or illegal) to file for the EIC checks. Publications for immigration lawyers advise them that immigration status is irrelevant in filing for the benefit.

The IRS does not know for certain which applicants for EIC checks are illegal aliens, but it has a fairly good idea that they account for most of the applications lacking valid Social Security numbers. (Virtually every legal resident over the age of one year has a valid number, according to Social Security spokeswoman Lynn Shiller.) Forms without valid numbers are sent to the ``Unpostable Unit'' at one of the ten IRS service centers, where a bureaucrat assigns them temporary Taxpayer Identification Numbers, which look like Social Security numbers. That enables the IRS to keep its paperwork organized so that it can proceed to send checks to filers who are probably illegal aliens.

Federal law forbids anyone who is not a U.S. citizen to enter the country without government approval and to stay longer than his visa allows. If a foreigner succeeds in violating the law, 1986 legislation makes it a crime for that person to be hired. Nonetheless, if a foreign worker succeeds in violating both laws without getting caught, the IRS will send him a cash bonus.

Even if this practice is halted in a quick display of bipartisanship, at least three troubling issues remain:

1. Resourceful illegal aliens can continue to get the annual EIC bonus if they obtain valid Social Security cards by using fraudulent birth certificates. Dan Stein of the Federation for American Immigration Reform suggests that the only lasting solution is to adopt a form of the proposal of Barbara Jordan and her Immigration Reform Commission: establish a national computer verification system to coordinate birth and death records of all fifty states.

2. Congress should consider changing the presumption that all government programs and benefits are intended to extend to illegal aliens unless otherwise specified. Congress might pass legislation that prohibits illegal aliens from participating in any federal program or benefit unless specifically included.

3. As usual, the cumulative costs from legal immigration tower over those from illegal. Simcox says his studies of IRS records indicate some $250 million in EIC subsidies for illegal aliens in 1990. But he found five times that amount going to legal immigrants. ``EIC has become another case study in the baffling dilemma of operating and funding complex income-transfer programs for poor residents, while the number of these residents is continuously being expanded by mass illegal and legal immigration and refugee policies which import about half a million additional needy people each year,'' Simcox says.

If Congress does focus on the taxpayer-provided bonus checks for illegal aliens, it should also consider a larger question: Why should the government continue to allow legal entry of hundreds of thousands of low-skilled foreign workers when U.S. taxpayers end up subsidizing them (and their employers) because they cannot command high enough wages to pay the taxes that would cover their share of infrastructure and social services? Eliminating future importations of low-wage workers would not only reduce EIC payments that otherwise would go to them but might also reduce EIC expenditures for American laborers who, without competition from immigrants, would be more likely to earn non-poverty wages.