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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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