Will Obama’s Illegal Alien Amnesty Wreck Social Security and Medicare?
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November 28, 2014 by Daniel Greenfield
Social Security has been on a terrible financial footing for a while. The last thing thing it needed was a dose of Obamnesty. But that’s what it got anyway.
Illegal immigrants who apply for work permits in the U.S. under President Obama’s new executive actions will be eligible for Social Security and Medicare, the White House says.
Under the sweeping actions, immigrants who are spared deportation could obtain work permits and a Social Security number, which would allow them to pay into the Social Security system through payroll taxes.
No such “lawfully present” immigrant, however, would be immediately entitled to the benefits because like all Social Security and Medicare recipients they would have to work 10 years to become eligible for retirement payments and health care. To remain qualified, either Congress or future administrations would have to extend Obama’s actions so that those immigrants would still be considered lawfully present in the country.
Now “paying in” is one of those nice lines you hear a lot from Obama or Paul Ryan. As plenty of people have pointed out, they aren’t actually paying in proportion to what they’re getting. If they were, the same corporations and businesses that want them, wouldn’t want them.
Neither would Obama.
They’re going to be taking, not putting in, which will tip over the system further.
Many policymakers believe that after amnesty, unlawful immigrants will help make Social Security solvent. It is true that unlawful immigrants currently pay FICA taxes and would pay more after amnesty, but with average earnings of $24,800 per year, the typical unlawful immigrant will pay only about $3,700 per year in FICA taxes. After retirement, that individual is likely to draw more than $3.00 in Social Security and Medicare (adjusted for inflation) for every dollar in FICA taxes he has paid.
That’s a hell of an investment.
Given amnesty, the average former unlawful immigrant age 65 or older would receive around $30,500 per year in benefits. Social Security benefits would come to around $10,000 per year; Medicare would add another $9,000. Retirees would receive some $7,600 in means-tested welfare, primarily in Medicaid nursing home benefits, general Medicaid, and SSI. Population-based benefits would add another $3,100 in costs. The average amnesty recipient would pay around $7,800 in taxes, resulting in an average annual fiscal deficit of roughly $22,700 per retireeBut that’s still basically optimistic. Because the reality is something for nothing.
These individuals pay almost nothing in federal taxes. “Households in the lowest income quintile,” writes the CBO, “paid less than 1 percent of all federal taxes,” but are eligible for substantial tax credits under the Earned Income Tax Credit program.
But it’s okay. They’re getting earned income tax credits already.
Two programs, the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) provide cash payments to low-income parents who pay no income tax and fail to have a valid Social Security number.
Most ITINs are issued to illegal immigrants living in the country. Many do not work. Many more do not even have children. They file federal income-tax returns often with the help of tax-filing services solely to receive a child tax-credit refund.
The IRS knowingly allows illegal aliens who claim children to get Earned Income Tax Credit cash payments of up to $5,891 per household. This is one reason why these cash payments are expected to exceed $52 billion in fiscal year 2012 alone. The General Accountability Office (GAO) estimates that roughly a quarter of all Earned Income Tax Credit payments are issued improperly.
Compounding the problem is the Additional Child Tax Credit, which was added to the older Child Tax Credit program that became law in 1997. The Child Tax Credit reduces the tax low-income families pay by $1,000 for each child under 17. If the tax filer claims five children for a credit of $5,000 but owes only $2,000 in taxes, under the Additional Child Tax Credit the IRS sends the filer a check for the difference, or $3,000.
Amnesty will only make the situation worse. Even under Obama’s limited amnesty, these people will never pay in, in proportion to what they take out.
The illegals will get work-permits and Social Security cards, and will be required to pay taxes, according to Cecilia Munoz, the former immigration lobbyist who is now a top Obama aide.
That means they’re part of the tax system, she said, when she was asked if the illegals would get annual payments under the Earned Income Tax Credit program.
“They are subject to our tax law,” she said, carefully.
And the party is just getting started because we’ll be paying them retroactive welfare benefits.
On June 9, 2000, a “Chief Counsel Advice” was published in the name of “Mary Oppenheimer, Acting Assistant Chief Counsel (Employee Benefits)”, though it was signed by “Mark Schwimmer, Senior Technician Reviewer”. This document advises IRS employees that illegal aliens who are disqualified from receiving the EITC can retroactively receive EITC benefits for years worked without a valid Social Security number if, after receiving a valid Social Security number, they file an amended return for the previous years worked.
Thus, illegal aliens who obtain legal work authorization, either by qualifying for a work visa or by dispensation granted by Congress or the immigration authorities, and who then obtain a valid Social Security number, can claim the EITC for previous years worked without a Social Security number as long as such claims are not barred by a statute of limitations, generally within three years.
As we’ve seen “worked” should be in quotation marks because the only people working in this scheme are the American taxpayers who will be cheated of their retirement by Obama’s latest wealth transfer welfare program dressed up as amnesty.
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