U.S. Treasury Secretary General Russell George offered his own take on the issue. “The magnitude of the problem has grown exponentially,” he said, further revealing that his agency has also told the IRS–repeatedly–of the abuse. Audit reports buttress that claim, and one issued in 2011 by the Inspector General (IG) illuminates the trajectory: in 2005, the IRS paid out $924 million on ACTC claims. Currently that number has mushroomed to $4.2 billion per year. The increase is attributable to expansions of the ATCT resulting from both the 2001 Bush tax cuts and The American Recovery and Reinvestment Act of 2009, aka the stimulus package. Prior to 2001, tax filers needed three or more children to qualify for ACTC, along with owing more Social Security taxes than earned income credits. Both of those requirements were eliminated, making refunds much easier to get.
The report also reveals a stunning level of bureaucratic naivete regarding such moves. “The payment of federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts federal law and policy to remove such incentives,” it reads. Thus, as it is with so many government efforts, the triumph of ill-conceived “good intentions” remains the status quo even as the destructiveness of actual results is revealed.
Unsurprisingly, the IRS disputed the findings. “Any suggestion that the IRS shouldn’t be paying out these credits under current law to ITIN holders is simply incorrect,” IRS spokesperson Michelle Eldridge told The Fiscal Times in a statement. “The IRS administers the law impartially and applies it as written. If the law were changed, the IRS would change its programs accordingly.” According to the Washington Post, the IRS claims they have “no legal authority to demand that filers prove their legal status when the tax agency processes returns.”
Which brings us to Congress and all the attendant immigration politics attached to the issue. After the 2011 IG report was issued, Republicans in Congress attempted to address the problem. Rep. Sam Johnson (R-TX) introduced HR 1956: Refundable Child Tax Credit Eligibility Verification Reform Act. The bill would require individuals to produce a Social Security number in order to claim “the refundable portion of their child tax credit.” As of May 10th, the bill had 60 co-sponsors. A similar provision was put before the House Ways and Means Committee on April 18, where it was approved in 22-12 vote, with every Republican voting in favor, and every Democrat voting against it. Hence, the gridlock part of the equation.
Rep. John Lewis (D-GA) encapsulated the progressive opposition. “The benefits go to the United States citizen children,” he contended. “My God! Listen!…the question must be raised, where is our concern? Where is our compassion? Where is our heart? Where is our soul?” Rep. Bill Pascrell (D-NJ) contended the measure would save only “a very small amount of money” compared with the entire federal budget. Senate Majority Leader Harry Reid (D-NV) piled on as well. “I just think the child tax credit is working just fine and there’s no need to punish children.”
In other words, as long as it’s “for the children” — the majority of whom, despite Mr. Lewis’ erroneous contention, live in Mexico – ripping off taxpayers for $4.2 billion is a reasonable tradeoff.
The IRS is also enchanted by progressive politics regarding the issue. “I think you actually have a lot of people in this country who pay taxes who aren’t here legally,” said IRS Comissioner Douglas Shulman at a National Press Club meeting on April 5th. “[They] file returns so they can show a track record of being good citizens…The people who are being good members of society, the people who do that, obviously, are contributing to the national defense, they’re contributing to our roads, they’re contributing to our schools, and that’s just what we want. And so we try to run the system in a really fair way that allows everybody to pay taxes who needs to pay taxes,” he added. Translation: if you pay taxes, citizenship or lack thereof is irrelevant.
That’s utter nonsense. In 2006, Deputy Social Security Commissioner James Lockhart testified that, in 2003 alone, 8.8 million W-2 forms had been filed with non-matching Social Security Numbers and names. Subsequent investigation by the government could not attribute the W-2 to a known taxpayer. The IRS’s response? They claim the Internal Revenue Code does not allow the Social Security Administration to inform the Department of Homeland Security about employers filing W-2s with non-matching Social Security Numbers and names. In other words, if the IRS doesn’t look for a problem, no problem exists.
More leftist rationale for wholesale law-breaking? “Undocumented immigrants are undoubtedly positive for the fiscal health of this country,” says Leticia Miranda, associate director of the Economic Policy Project at National Council of La Raza, who adds that the fraud is offset by the fact that illegals pay Social Security taxes they can’t collect. 8.8 million “non-matching” SSNs and names in one year alone suggests otherwise. So does identity theft as revealed by the Social Security Administration Actuary. Those estimates show that 75 percent of illegal immigrants obtain and use a fraudulent Social Security number.
Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a group which advocates securing U.S. borders, cuts through the nonsense. “The IRS doesn’t seem to think its job is to make sure people who are claiming these credits are entitled to them,” he says. “The children may or may not be living abroad–or even exist. It’s absurd, almost a joke.”
Unfortunately the joke is on the American taxpayer. And despite the large number of Americans who will be angered by abuse documented here, it is virtually certain that greater public awareness of this issue comes with a price: the more people who know about this scam, the greater the number of people willing to partake in it — enabled by a see-no-evil IRS, feckless congressional Democrats, and a phalanx of open border advocates determined to convince Americans that national sovereignty and xenophobia are interchangeable terms, and that political expediency is a viable substitute for the rule of law.
Nothing could be further from the truth.
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