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Illegal Immigrants Pay Social Security Tax, Won't Benefit
by John Lantigua, The Seattle Times
December
28, 2011
WEST PALM BEACH, Fla. — While many Americans
believe illegal immigrants don't pay taxes, billions of dollars
deducted from paychecks issued to undocumented workers flow to the
Social Security Administration (SSA) every year. Those workers almost
certainly will never see that money again.
Social Security officials keep a record of wages that do not match up
with real names and numbers in their system. The record is called the
earnings suspense file.
In 2009, the last year for which figures are available, employers
reported wages of $72.8 billion for 7.7 million workers who could not
be matched to legal Social Security numbers.
That total hit a record $90.4 billion, earned by 10.8 million workers,
in 2007, just before the recession. Some of those were legal workers
who simply made paperwork mistakes, but the majority are believed to be
illegal immigrants.
Because those wages were reported by employers and not paid under the
table, Social Security and Medicare deductions had to be made. A total
of 12.4 percent of those wages went into the SSA system — 6.2 percent
paid each by the worker and the employer. An additional 2.9 percent was
paid into Medicare, half by the worker and half by the employer.
That means about $11.2 billion went into the Social Security Trust Fund
in 2007, and $2.6 billion went into Medicare. While that money will be
used to pay retirees and health-care beneficiaries, it most likely will
never be claimed by the illegal immigrants who contributed it.
Since the 2010 passage of a payroll-tax cut — which Congress on Friday
extended through February — workers have paid 4.2 percent to Social
Security instead of 6.2 percent.
"When you hear people voicing anti-immigrant sentiments, one of the
first things they say is, 'They don't pay any taxes, and they just take
money out of the system,' " said Jeannie Economos of the Farmworker
Association Florida, based in Apopka, Fla. "But that just isn't true.
Yes, some are paid under the table, but the majority are paid by check,
and they pay taxes out of those checks."
For many employers, the move away from paying undocumented workers
under the table came in 1986. That was the year President Reagan signed
an amnesty that legalized the status of about 2.8 million illegal
immigrants. But part of that law — the Immigration Reform and Control
Act — requires that employers demand proof that a worker has a legal
right to work in the U.S.
Employers are obligated to ask for a Social Security number, but they
don't have to confirm it is real. That has led to the printing of
millions of false Social Security cards sold to newly arrived illegal
immigrants.
The SSA notifies employers every year of Social Security numbers and
workers that don't match up. Employers tell employees they have to get
new cards.
"And they simply do it all over again the next year with a new number,"
said attorney Greg Schell of the Migrant Farmworker Justice Project in
Lake Worth, Fla.
A false SSA card, accompanied by a phony alien registration card —
known as a green card — can be had for about $200 in Florida, Economos
said.
Some immigrant advocates encourage illegal immigrants to save their
check stubs in the hope that they one day might be able to claim their
Social Security benefits, but Schell sees that as unlikely.
"Many of these workers have used lots of different names and numbers so
that it would be quite a project to go back," he said. "They almost
certainly will never get back the money they are paying, and so they
are helping keep Social Security solvent."
Ira Mehlman, spokesman for the Federation for American Immigration
Reform, a leading voice for stricter immigration enforcement, concedes
illegal immigrants put billions of dollars into Social Security. He
says the figure he has heard is about $7 billion per year in FICA
(Federal Insurance Contributions Act) contributions — Social Security
plus Medicare.
"But that $7 billion figure pales when compared to the cost of having
illegal aliens here," Mehlman said.
His federation estimates local, state and federal spending on illegal
immigrants — mainly for education and health care — costs about $100
billion per year.
Immigrant advocates dispute that figure. They argue that illegal
immigrants also pay sales tax, some income taxes and rent, part of
which landlords use to pay property taxes, in addition to Social
Security and Medicare taxes.
But Mehlman contends illegal immigrants still don't pay their way. He
also says he does not believe a significant majority are paid by check
and pay taxes.
"I'd say it's more like half who get paid by check and the rest are
paid under the table," he said. "If U.S. workers were doing those jobs,
they would all pay taxes and they would also be making higher wages and
paying more into Social Security and Medicare than is being paid now."
When it comes to withholding tax, the amount taken out of the checks of
illegal immigrants differs. Because most never will file a tax return
and have no chance of receiving a refund, some workers claim many
dependents so they don't pay much in the first place. Schell said some
employers also deduct nothing, or only a "nominal amount, like a
dollar, to give the workers a break."
Most illegal immigrants, however, are accustomed to seeing the Social
Security and Medicare taxes taken out and understand they probably will
never see it again.
Yesica, 28, an illegal immigrant who declined to give her last name,
came to the United States from Mexico 11 years ago. She has worked in
plant nurseries, a factory that made doors, and a recycling center, all
in Florida.
"I've always been paid by check and I've always had those taxes taken
out," she said, referring to Social Security and Medicare. She said her
husband, also Mexican, has been paid by payroll check for all but one
of his 14 years in the country.
She said they have paid thousands of dollars in FICA taxes. "That money
is lost," Yesica said. "I don't really think about it. I'm just happy
we've had work."
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