Thread: Illegal Immigrants Are Unlikely To Claim SS Tax $$

Jul 28, 2007 12:52 pm US/Mountain

Illegal Immigrants Are Unlikely To Claim SS Tax $$
Good Question: What Happens To The Social Security Taxes Paid By Illegal Immigrants?

Alan Gionet
Reporting

(CBS4) LARIMER COUNTY, Colo. The federal government gets billions of dollars every year that it can't track to anyone. At the end of the tax year when most Americans are filing taxes and seeking returns, illegal immigrants are letting that money go. It's the price of working in a country illegally.

"We fill out the I-9s and the W2s and all that," says the boss of a work crew of immigrants in the fields of Larimer County.

"I don't know," says one young immigrants when we asked about Social Security taxes. He told us the pay is under the table while the boss says withholding taxes are sent to the government.

The federal government gets billions every years that it can't track to anyone. At the end of the tax year when most Americans are filing taxes and seeking returns, illegal immigrants are letting that money go. It's the price of working in a country illegally.

Some of the withholding taxes are social security and Medicare taxes. In principle, Social Security money is held by the government until retirement, and then paid out as a benefit; you get out after paying in.

But the fact is, those benefits are unlikely ever to go back to the people who paid in and the government is collecting a windfall.

"Well you're breaking the law, but you're helping us as a country," says Polly Baca, a former state senator and current executive director of the non-profit Latin American Research and Service Agency.

The money the Social Security Administration can't associate with anyone goes into what's called the "Earnings suspense file." The Government Accounting Office told us its most recent figures show about seven billion dollars a year end up in the Earnings Suspense file. Not all of it is from illegal immigrants. In fact, no one knows.

There has been a steady increase in contributions that the government can't identify in recent years. The file has ramped up along with an increase in illegal immigrants in the country. But there's also money in the file from simple mistakes. Social Security now has computer programs to match up people and filings under incorrect social security numbers.

Social Security believes it is doing a better job at establishing the connection between faulty work records and individual labor. But there are also the cases of false social security numbers and work done on stolen identities. The GAO tells us it found higher proportions of money in the suspense file earned from the restaurant and construction fields -- two areas in which illegal immigrants are known to work.

So does the money just sit there? "Oh, I don't see that there's any way that it's not being used," says Baca.

We're into government accounting here, but basically yes. The earnings suspense file is part of the pool of social security trust fund money held -- and borrowed from -- by the government. The government borrows from trust fund money then repays it (again on paper) in things like treasury bonds. So the money goes right back out the door and gets used for all the things the federal government does; fights war, pays for social programs, builds roads, etc. But the money has to be re-paid to the file, lest it not be there when someone comes to claim it. But when money from illegal immigrants comes in under false or stolen identities, they're not likely to come back and claim it.

"There's no way it can, no way it can," says Baca. Since the 1930s when Social Security began, the government has collected social security taxes on a half trillion dollars in wages that it cannot identify.

Rich Jones, the Bell Policy Center's director of policy and research says, "It works out to be about $10 to $12 million paid in from undocumented workers in Colorado, depending on the numbers."

The number of those workers ranges in estimates from $225,000 to $275,000.

Experts like Jones believe the federal government comes out ahead when it comes to illegal immigrants. "For the most part the federal government gets more in the form of tax payments from undocumented workers than they pay out in the form of benefits." It's the states, like Colorado which pay the price of emergency medical services and education mandated by the federal government. (See our Tough Question pieces on immigration from last year.)

Baca believes it's a way immigrants pay the price for living in the shadows.

"They are being taxed as a result of being in the United States without the appropriate documents."

With Social Security looking at insolvency in the decades ahead, expect debate about the earnings suspense file and whether that money should be held -- on paper -- for people who are unlikely ever to claim it.

http://cbs4denver.com/local/local_story_209145251.html

Since they take out $3.00 for every dollar they pay in, at least something is gotten back. They want to pay absolutely nothing and feel like they are being cheated for not getting SS back. Sheesh!