Additional Child Tax Credits May Be a Contributing Factor to the US Deficit

A dozen members of the Senate Finance Committee are upping the pressure on the IRS over the use of refundable tax credits by unauthorized workers. 

The lawmakers on the tax-writing panel are pressing the agency and the Treasury Department over their reading of the law, after the IRS said it did not believe it had the authority to deny tax credit claims from workers not allowed to be in the U.S.

The senators’ push comes after a federal audit found that the IRS had disbursed $4.2 billion in Additional Child Tax Credits in 2010 to workers using individual taxpayer identification numbers (ITIN). The agency hands out the tax ID number to ensure that it collects from workers who can’t or don’t have Social Security numbers.

The audit found that workers with ITINs were putting in for the child tax credit at a much faster clip in recent years, with those taxpayers claiming $924 billion worth of the ACTC in 2005. 

 The Social Security Administration estimates that 75% of undocumented immigrants are actually on formal payrolls and are paid by check just like anyone else. They get on the payroll by using fake social security numbers or social security numbers of the deceased, which are easily available from counterfeiters for a couple hundred dollars.

My solution:  Lower taxes for everyone in general and do away with the additional child tax credit.  The total of Collections before Refunds by Type of Return for the Fiscal Year 2007 was $2,691,538,000,000.  The ACTC given to workers with ITINs in 2005 cost the US a little less than 1/3 of the collections before refunds (if the amount collected for 2005 was the same as 2007).  It is impossible to sustain the rest of the government programs and lower the US deficit whilst giving such a large portion of tax payer money away.  How do we even know those using ITINs are real individuals?  What if an undocumented worker were to file for 2 sets of ITINs (there most likely isn’t a way to check since undocumented workers don’t have documents)?  Is there any way to check that those using ITINs are actually undocumented workers (since they are undocumented right)?

Sources:

http://roygermano.wordpress.com/2011/02/28/do-illegal-immigrants-pay-taxes/

http://thehill.com/blogs/on-the-money/domestic-taxes/180713-senators-press-irs-for-answers-on-tax-credits-unauthorized-workers?utm_campaign=hillsonthemoney&utm_source=twitterfeed&utm_medium=twitter