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Click for more articlesUNDOCUMENTED WORKERS PAY MILLIONS IN FEDERAL TAXES

An investigation by the Washington Post shows that undocumented workers pay billions of dollars each year in taxes from which they receive no substantial benefit, including Social Security taxes they will never be able to collect.  While some may not pay taxes, most do so, and some do so gladly, feeling that they are benefiting from living and working in the US, even if in an undocumented status.  The Internal Revenue Service does not report possible undocumented workers to the INS, in part because of privacy rules and in part because the agency wants to collect as much tax revenue as possible.

When most people think of undocumented workers, they think of people driving down wages; they do not consider the impact of the tremendous amount of money they pay in Social Security taxes, money that is essential to the program’s functioning.  While many undocumented workers are paid in cash, just as many, and maybe more, are on payrolls and have taxes automatically deducted from their wages.

Because the Social Security numbers undocumented workers use are often false, there is no way to know exactly how much in taxes they pay.  However, Social Security Administration records show that undocumented workers are paying millions in Social Security taxes.  Examination of the agency’s “suspension file,” records that are rejected by computers, shows that while some are the result of simple errors, many are the result of false Social Security numbers used by undocumented workers.  In recent years the suspension file has grown rapidly.  In a January report, the IRS inspector general released a report concluding that most of the growth was attributable to undocumented workers.

One reason for this conclusion, along with the common use of false Social Security numbers used by undocumented workers, is that almost half of the records in the suspension file are filed by workers in industries known to employ large numbers of undocumented workers.

A review of returns from 1990 shows 3.6 million entries into the suspension file, representing $ 1.2 billion in Social Security payments.  In 1998, the most recent year for which figures are available, the number jumped to about 7 million, representing almost billion in payments.  Over those eight years, suspension file payments accounted for more than $ 20 billion in payments to Social Security.  These payments have helped to create the current Social Security surplus, which is estimated to reach $ 2.5 trillion by 2011.

Undocumented immigrants pay other taxes as well, such as sales taxes and property taxes, which are factored into the cost of rent.  Economists, however, believe that they use more in government services than they contribute in taxes.  The conclusions drawn from this, however, are not uniform.  While some believe undocumented immigrants are a financial burden on the government, others believe that they play an important part in the long-term economy of the US.

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