The Impact of GOP Tax Bills on Undocumented Immigrants

The tax legislation approved by the House and now the Senate features somewhat enhanced benefits for parents. However, this does not extend to their undocumented children.

Currently, non-citizens who file taxes using an Individual Taxpayer Identification Number (ITIN) can claim the child tax credit, which provides up to $1,000 per child under 17 years old. As per the Government Accountability Office, in tax year 2013, 4.4 million ITIN filers claimed child tax credits totaling $6 billion.

Under both the House and Senate proposals of the Republican tax bill, ITIN filers—who are predominantly undocumented—would be required to present Social Security numbers for each child to access the refundable portion of the credit, which is accessible when the credit surpasses the filer’s total tax liability. The Senate version would also necessitate a Social Security number for the standard credit.

Samantha Vargas Poppe from the Latino advocacy organization UnidosUS states that this modification would have a direct effect on approximately one million undocumented children. It could also negatively impact those born in the U.S. with non-citizen siblings who would become ineligible for the credit, resulting in a financial strain on the entire family.

Related: Here’s what’s in the Senate’s tax bill — and how it differs from the House’s

“These credits help keep families out of poverty,” Poppe emphasizes. “Using tax credits to enforce immigration policy is inappropriate, especially regarding children.”

In 2010, undocumented immigrants and their employers contributed nearly $13 billion in payroll taxes, according to the last available data from the Social Security Administration. Many also pay into Social Security, sales taxes, and property taxes, yet remain ineligible for most federal programs such as Social Security, Medicare, Medicaid, or Affordable Care Act subsidies.

For U.S. citizens, the House bill raises the child tax credit from $1,000 to $1,600, while the Senate bill increases it to $2,000. Both proposals also raise the income threshold for claiming the credit.

Furthermore, the House bill revises the rules for the Earned Income Tax Credit, restricting its availability for immigrants under the Deferred Action for Childhood Arrivals program, once their work authorization lapses. The Trump administration declared its intention to end this program in September, meaning these immigrants will likely lose their protected status unless Congress intervenes soon.

The House bill would also mandate a Social Security number for the American Opportunity Tax Credit, valued at $2,500 per year for the first four years of higher education expenses. In 2013, ITIN filers accounted for $204 million in claims through this credit.

The Senate bill, however, does not alter the rules regarding these credits.

Conservatives have long supported these restrictions, citing the necessity to prevent tax fraud. The anti-immigration Center for Immigration Studies has stated that allowing undocumented immigrants to access refundable tax credits contradicts the welfare reforms of 1996, which limit federal benefits for undocumented individuals.

Earlier this year, Republican representative Luke Messer from Indiana proposed legislation aimed at removing child tax credit eligibility for ITIN filers.

“We cannot continue rewarding individuals who enter our country illegally while those who abide by the law struggle to get ahead,” he asserted in an October press release advocating for the bill’s integration into tax reform efforts.

Democrats and numerous immigrant rights organizations have opposed the exclusion of undocumented children from the child tax credit, warning that it would exacerbate child poverty.