Illegal Immigrants and Taxes: The Untold Story

Immigration is one of the most controversial issues nowadays. Illegal immigrants are thought to be a reason of deficit in our economy; they supposedly use public services such as schools, health care, and welfare without paying for them. Every year, millions of public dollars are spent providing services for all those illegal aliens who have sneaked across the border and come to the United States in search of work; however, the idea that all that people working here illegally do not pay taxes is not entirely true: Throughout the years, the vast majority of illegal immigrants have paid sales, property and payroll taxes, as well as social security benefits that are often unclaimed. Illegal immigration is a crime and a social problem with traces of moral downfall for US citizens but it is far from being the economical catastrophe conservative media and every anti-immigrant movement wants us to believe.

Every person who lives in the US pay state sales tax and illegal immigrants are not the exception, state taxes are used to maintain public facilities such as roads and highways as well as school and hospitals. Illegal immigrants also contribute to maintain low income communities by occupying rental properties in those low income areas and at the same time they contribute to the coffers by paying real estate taxes through their rent. A study made by the non-partisan National Research Council in 2006, concluded that illegal immigrant households contributions are higher than their consumption to state coffers (Dalmia, 2006). On the other hand, it has been reported in many counties of Border States that Spanish-speaking uninsured people continuously flood emergency rooms in hospitals with cases of common flu and fever, displacing citizens who pay their insurance and then again they have to wait for hours before they are treated. In many of those counties, we hear of schools with overcrowded classrooms with excessive amounts of children whose parents do not have legal status in this country. The exact number on these cases is unknown, because neither grade schools nor hospitals are required to verify proof legal status to provide their services.

Declaring income and filing tax returns became an option for self employed illegal immigrants after 1996 when the IRS approved the ITIN or Individual Tax Identification Number, a strategy designed to allow every person who does not necessarily have a valid social security number to report their earnings to the government, since then, more and more individuals declare and pay income tax (Gaona, 2004). Illegal individuals, who are not self-employed and work at factories, restaurants, and service industries, depend on the use of forged documents and fake identifications. The use of fake social security numbers enable employers to withhold state and federal income tax, as well as social security fees, in other words, these workers are paid on the books. Withholdings under fake social security numbers are often unclaimed. Studies show that over 6 billion dollars in annual payroll taxes come from non-existent social security numbers (Wasow, 2006). On the downside, the manufacturing and distribution of fake documents have created a new branch of organized crime and this also creates a market for ID thieves. The cost to prosecute and house these criminals counts also against any benefit that real estate taxes paid by illegal immigrants might bring.

The creation of the ITIN program enabled undocumented people not only to report and claim their income tax but also to purchase real estate property. In 2007, the ITIN real estate market reached 80 million, aside from the benefit of the real estate taxes paid by all these new home owners, the stock market began turning ITIN loans into mortgage-backed securities to support pension funds and other investments (Foust, 2007); unfortunately, criminal minds are know for their creativity and the facilitation of mortgage loans to illegal immigrants opened door for possible money laundering operations and fraudulent mortgage transactions.

Illegal immigrants pay state sales tax, from groceries to clothing, gasoline, and even liquor; they pay rent and own homes; therefore, they pay real estate taxes; more and more illegal workers look for ways to report their income if they are not doing so already, they have had social security fees withheld from their paychecks for decades and the vast majority of them are not going to claim a single dime of it, simply because they are illegal. Next time you hear an anti-immigrant activist gasping for air and raising eyebrows, furiously talking about the burden illegal immigrants put on the economy of this country, with the old argument of: I will not allow any illegal to receive any benefits form my tax dollars, just think about the dollars that we, law-abiding citizens, have used and will use from illegal immigrant's contributions. This is not an apology to a flagrant transgression to the United States of America custom laws; illegal immigration is a crime and a social problem with traces of moral downfall for US citizens but it is far from being the economical doom conservative media and every anti-immigrant movement wants us to believe, please stop believing everything you hear and start calling things by their name; remember to always expect the other side of the story.