Speech #970053602

If the worker owes taxes which are less than the credit. the excess of the credit will be paid to him or her by the Government as an "overpayment." In 1979 about 9 million individuals qualified for the earned income tax credit. which cost the Federal Treasury approximately $2.1 billion. Of this amount. $1.4 billion was attributable to the refundable aspect of the law. There is compelling new evidence that illegal aliens are using the earned income tax credit in order to reduce taxes or to secure refunds from the Government even though they do not pay any taxes. A new study just released by David North. director of the Center for Labor and Migration Studies at the New TransCentury Foundation. concluded that nearly a third of those with refunds secured EITC payments. Furthermore. they had larger average EITC payments and larger refunds than Americans generally. The study states that part of the study group of 17 individuals received EITC payments totaling $19.637 and that this resulted in a mean payment of $302. If we assume a very conservative number of 3 million illegal alien workers in the United States. this would result in EITC payments of about $120 million. The 3 million assumption is conservative. because even the U.S. Bureau of the Census admits that there could be as many as 6 million illegal aliens in the country and other reliable sources believe there could be as many as 12 million. According to a letter from the acting commissioner of IRS. illegal aliens can qualify under the law for the EITC and they use the earned income tax credit. In order to prevent this continued misuse of the EITC. I am introducing a bill today which limits eligibility for the EITC to a citizen of the United States or an alien individual who has been admitted to the United States as a permanent residentIt is ironic that an earned income tax credit primarily meant to encourage lowincome Individuals to work instead serves to limit employment opportunities for them. Even though we have about 8 million unemployed people in the country today. this provision is an added incentive to enter the United States to take jobs from American citizens. In effect. the Federal Government is paying illegal aliens to take American jobs. at a time when the administration is reducing unemployment benefits and jobs programs. To believe that this is not a widespread problem would be to ignore what we have learned in the past about the speed with which illegal aliens catch on to the loopholes in our tax laws. The IRS has established through experience that illegal aliens learn very quickly how to beat the tax collector. Between 1976 and 1978 the IRS conducted a pilot program in which it interviewed apprehended illegal aliens to determine whether they had outstanding tax liabilities. This program was dropped because the illegal aliens quickly learned how to get around it. In a letter to me dated January 4. 1980. the Director of the Collection Division at the IRS stated: An awareness of the program developed within the Mexican illegal alien community which comprised the majority of apprehended Illegals. The Mexican press publicized the fact that Illegals caught with money were subject to being Interviewed by IRS. and the word evidentally spread. Consequently. when Mexican illegals were picked up. they had little or no money. but numerous postal money order stubs from payments they had apparently sent back to their families in Mexico. In essence the Director admitted that even though the IRS found that many of the apprehended illegal aliens did in fact owe Federal income taxes. there was no way to collect. since the illegals learned very quickly to send most of their money out of the country as soon as possible. There is further evidence that illegal aliens learned quickly of other methods of avoiding Federal income taxes. The IRS published a manual which was used by its own agents for the tax collection program aimed at illegal aliens. In this manual was a section entitled "Practices to Avoid Taxes" which stated: (1) Assigned personnel should be aware of practices utilized by some illegal aliens and their employers to avoid their Federal tax obligations. Many aliens also claim excessive exemptions. since they are aware that by doing so they will receive larger takehome amounts. This manual states conclusively that many illegal aliens are deliberately falsifying their tax returns and W4 forms. The result is that if an illegal alien does not bother filing a tax return before he returns home. he in effect takes the uncollected. nonwithheld taxes with him. If he does file a return. he pays little or no taxes because of the excessive number of exemptions. Under the latter method he also increases the amount of the refundable earned income tax credit. Although the amounts involved in each individual case may be relatively small. they are very substantial if several million illegal aliens are in fact manipulating the tax system. The earned income tax credit alone cost the Federal Government over $2 billion in 1979. Further. we should not forget that the Congressional Budget Office has determined that each one percentage point increase in unemployment costs the Federal treasury $29 billion every year. Any program which encourages illegal aliens to take jobs in this country will result in a substantial indirect cost by increasing our unemployment rate. Mr. President. at the present time most Americans are paying more in taxes but are being told they will receive less in benefits for those taxes. In the near future we may be able to reduce this inequity for many taxpayers by passing a substantial tax reduction bill. I think that it would be verv appropriate to pass along hundreds of thousands of dollars of savings now by denying the use of the EITC to illegal aliens. The EITC was intended to encourage Americans to find jobs. not to recruit illegal aliens. I ask unanimous consent that chapter 7 of Mr. Norths study entitled "Government Records: What They Tell Us About The Role of Illegal Immigrants in The Labor Market and In Income Transfer Programs" oe printed in the RECORD.