Obama`s Executive Order for Immigration Reform Will Unilaterally Kickstart our Financial Recovery
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Obama`s Executive Order for Immigration Reform Will Unilaterally Kickstart our Financial Recovery

September 4, 2014, 8:05 pm
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September 4, 2014 -  Over many years, it has been firmly established that the U.S. government tax collections would get a multi-billion-dollar bump if President Obama followed through on his promised executive order calling for temporary legal status to millions of undocumented residents. That is, if Obama does not take the same posture that he did with Syria, setting a “red line” for Assad not to use his chemical weapons hoard, and then calling off airstrikes.

In a report on Thursday the Center for American Progress said

1. Estimated $21.2 billion in additional payroll taxes would be collected over five years under one situation available to Obama, who has verbally made immigration reform a n alleged priority of his second term.

2. The increase in revenue is based on a setting where 4.7 million undocumented immigrants receive temporary legal status, permitting them to obtain work permits.

3. "Many workers and employers will be able to emerge from the underground economy and pay payroll taxes for the first time," the report said.

Obama, who had stalwart support from the Latino community in his 2012 re-election, had pressed Congress to pass a bill that would provide a pathway to citizenship for some of the 11.7 million undocumented inhabitants in the United States.

That struggle made advancement in the Democratic-led Senate, which passed a comprehensive immigration overhaul last year, but it got stuck in the Republican-controlled House of Representatives, which refused pass the proposed legislation.

The Obama administration has since been analyzing administrative actions it can take on its own.

Of the 8 million illegal immigrants already working in a assortment of industries, about 3 million workers and their employers paid payroll taxes in 2010, the Center for American Progress report said. Granting work permits would mean the other 5 million workers "will go on the books."

The report predicts the wages of previously undocumented workers would grow by about 8.5 percent. Giving them full entry to the U.S. labor market would facilitate them in finding jobs to match their skills and maximize their earnings, it said.


A report issued by the Texas advocacy group, Greater Houston Partnership (GHP), a years ago, verified that legalization of undocumented workers would result in those workers paying more taxes and earning higher wages. The report used data collected by industry, in the Houston area from the Pew Hispanic Center to estimate the number of unauthorized immigrants.

The results where that if all undocumented workers in the Houston region were legalized and they and their employers paid Social Security, Medicare, unemployment insurance, and federal income taxes, the additional tax revenues would exceed $1.4 billion. The report also demonstrates that with even with less than 100% legalization, there are still substantial potential revenues. If only 25% of the undocumented community is legalized, an additional $356.1 million in tax revenues would be generated.

Two-thirds of illegal immigrants currently pay Social Security, Medicare and personal income taxes

Consider this: a surprising two-thirds of illegal immigrants currently pay Social Security, Medicare and personal income taxes. According to the Congressional Budget Office and the Social Security Administration, undocumented immigrants pay many different types of taxes, including sales, property, and social security taxes individual income,

The influx in payment of taxes began in earnest in 1996, when the IRS created nine-digit individual taxpayer identification numbers (ITINs), It was designed to enable the IRS to track the tax returns of those who are ineligible for a Social Security number. It is believed that most taxpayers who use ITINs are illegal immigrants although a small portion of legal residents also has them.

Officially, the Social Security Administration estimates that about seventy five percent (75%) of illegal workers contribute to the overall solvency of Social Security and Medicare by paying taxes.

About $75 billion in wages from people who filed W2 forms with incorrect or mismatched data, about $9 billion in taxes was paid.

In 2005 the agency estimates that on about $75 billion in wages from people who filed W2 forms with incorrect or mismatched data, about $9 billion in taxes was paid.

This amount would include illegal immigrants using fake names and Social Security numbers. Although the influence on Social Security is considerable because most of the money received is never claimed by the illegal immigrant who pays into the system. Instead of the money returning to the rightful owner, it is used to cover the deficit in retirement checks payable to legal workers.

A study conducted by the Social Security Administration from census and Immigration and Customs Enforcement data in 2007 enabled them to project the effects of higher and lower immigration patterns. They concluded that with high immigration the SSA's combined trust fund would be exhausted in 2043 and if the immigration numbers were half the amount, the fund would run out four years earlier.

At a Congressional hearing in 2006 then IRS Commission Mark Everson told Congress "many illegal aliens, utilizing ITINs, have been reporting tax liability to the tune of almost $50 billion from 1996 to 2003."

Even with hard numbers and facts verified by our own government anti-immigrant proponents continue to mislead the public. Illegal immigrants contribute $428 billion dollars to the nation’s $13.6 trillion gross domestic product in 2006.

True, the contributions of illegal immigrants remain contentious. There are those that argue that illegal aliens make no contribution because they are parasites to governmental programs; they do not pay anywhere near the amount they take to make up for it. Another group argues that they pay more than they should because they will not be eligible for the Social Security they are paying for until their immigration status is resolved, if ever. Dr. William F. Ford a professor at Middle Tennessee State University and an expert on immigration and taxes assesses that (illegal immigrants contribute $428 billion dollars to the nation’s $13.6 trillion gross domestic product in 2006.) “If anything we need more immigrants coming into the country, not less, especially with the baby boomers retiring,” said Ford in an Associated Press article

The constantly increasing number of taxpayers parallels the national immigration reform debate.

Francine J. Lipman, a Professor of Law at Chapman University School of Law, in the S Harvard Latino Law Review wrote an article "Taxing Undocumented Immigrants: Separate, Unequal and Without Representation,” In it she wrote: "[U]ndocumenteds actually contribute more to public coffers in taxes than they cost in social services...

[E]ach year undocumented immigrants add billions of dollars in sales, excise, property, income and payroll taxes, including Social Security, Medicare and unemployment taxes, to federal, state and local coffers. Hundreds of thousands of undocumented immigrants go out of their way to file annual federal and state income tax returns.

Yet undocumented immigrants are barred from almost all government benefits...Generally, the only benefits federally required for undocumented immigrants are emergency medical care, subject to financial and category eligibility, and elementary and secondary public education. Many undocumented immigrants will not even access these few critical government services because of their ever-present fear of government officials and deportation.

Undocumented immigrants living in the United States are subject to the same income tax laws as documented immigrants and U.S. citizens. However, because of their status most unauthorized workers pay a higher effective tax rate than similarly situated documented or U.S. citizens. Yet, these workers and their families use fewer government services than similarly situated documented immigrants or U.S. citizens...As a result, undocumented immigrants provide a fiscal windfall and may be the most fiscally beneficial of all immigrants."

In general, though, illegal immigrants get fewer tax breaks. They cannot claim the Earned Income Tax Credit, which can be $4,700 for a family of four earning less than $12,000.

It is not just federal taxes that illegal immigrants pay, All illegal immigrants pay state sales taxes, contributing to the upkeep of public facilities such as roads, police and fire departments, and many pay property taxes that contribute toward the schooling of their children. The non-partisan National Research Council found that they contribute on average $80,000 more to federal treasury than they consume.

One can only imagine, the far-reaching positive effect to our country’s economy the passage of an immigration reform law would have. The 11 million illegal immigrants would become a fully contributing part of American society and the economy would blossom; just what the founders of our constitution envisioned in the first place.

Author: Moises Apsan
Attorney with over 35 years of experience. Past president Federal Bar Association NJ Chapter (1997-2002). Offices in New York, NY, Newark, NJ. Tel: 888-460-1800 http://www.apsanlaw.com and www.drmoises.com
Apsan Law Offices
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Obama`s Executive Order for Immigration Reform Will Unilaterally Kickstart our Financial Recovery
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