Paying for Tax Cuts for the Wealthy by Blocking Immigrants from Receiving Tax Credits Will Leave Children Living in Poverty

November 21, 2017 by Ellen Hutton in Blog, Budget and Tax, Economic Opportunity, Education

The tax proposal that passed the U.S. House of Representatives would make it harder for families and students from low-income immigrant families to access tax credits they are legally entitled to. The bill would place new restrictions on the Child Tax Credit (CTC) and the American Opportunity Tax Credit (AOTC). These refundable tax credits were created to lift children out of poverty and allow more students to afford the skyrocketing cost of higher education.

Restricting access to the Child Tax Credit could harm 67,000 U.S. citizen children in Maryland

The children of undocumented immigrants, many of whom are U.S. citizens, will suffer the most under the House tax plan’s requirement that individuals claiming the CTC must use a Social Security number, rather than an Individual Taxpayer Identification Number (ITIN). This change would harm the estimated 67,000 U.S. citizen children with undocumented parents living in Maryland. The CTC reduced or ended poverty for 7.6 million children in 2016, and it should continue to be a tool to improve the lives of children, regardless of their parents’ immigration status.

U.S. citizen children of undocumented immigrants are eligible for assistance programs like Supplemental Nutrition Assistance Program (SNAP) and Medicaid, but parents may face immigration enforcement measures if they attempt to access assistance on behalf of their children. The Child Tax Credit is one of few options available to undocumented immigrants to help lift their children out of poverty.

Undocumented immigrants who receive the CTC are not getting a free ride

Most undocumented immigrants pay taxes in some form another, be it taxes on their income, sales tax on the goods that they purchase, or property tax, directly or indirectly, on the homes they own or rent. Those living in Maryland pay about $308 million in state and local taxes per year. Despite paying taxes, undocumented immigrants are ineligible for many of the services that those taxes provide, such as Medicaid and Affordable Care Act health insurance subsidies, SNAP, and Temporary Assistance for Needy Families (TANF). Fear prevents many from accessing services for which they do qualify, like police protection from crime.

Undocumented immigrants who pay taxes on their income also pay into Social Security and Medicare as well, programs that they are unlikely to ever benefit from. It’s estimated that undocumented workers pay about $12 billion into Social Security per year, far outweighing the amount they receive in tax credits for children.

Making it harder for Dreamers to afford college is bad for Maryland

Young immigrants who have legal status to work and go to school under the Deferred Action for Childhood Arrivals program, who are often referred to as “Dreamers,” pay more than $40 million in state and local taxes each year in Maryland and are a valuable addition to our aging workforce. Because Dreamers aren’t eligible for federal loan or grant programs, many rely on the American Opportunity Tax Credit to help them afford the high cost of attending a college or university. The AOTC helps students pay for school by giving them a refundable credit of up to $2,500 on the first $4,000 of education expenses they incur each year during their first four years of college.

The House tax bill would prevent Dreamers from receiving the AOTC by requiring students to file their tax return with a Social Security number, rather than an ITIN, in order to claim the credit. Maryland needs well-educated young workers in order to maintain a workforce that is attractive to businesses, and denying the AOTC to Dreamers will do nothing to help our economy.

Making it more difficult for low-income families and students to access tax credits, while providing large tax cuts to the wealthy, is not an equitable or sustainable way to reform our tax code. Our lawmakers should reject any tax reform measure that disproportionately harms people who are already struggling to get by, regardless of immigration status.