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With Immigration Reform Looming, Undocumented Save Money, Pay Taxes

April 1, 2013 5:02 pm 1 Comment By  | Via  
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Oscar and Marcella are saving money to pay any back taxes and fees that may be required down the line. (Photo by Aurora Almendral via Feet on 2 Worlds)

Many believe that immigration reform will add more tax dollars to the national kitty. But Aurora Almendral says in a report in Feet in 2 Worlds that while many undocumented immigrants are saving money for the fees and back taxes that they may have to pay, many more are already paying their dues to the IRS.

Cecilia Huerta, who sells “coquitos,” a sweet coconut snack, from a cart in the Bronx, is one such undocumented immigrant.

While her annual income is below the $11,490 federal poverty line, Huerta is still required to pay taxes.  And like many undocumented workers, she pays them. In fact, she has to pay federal, state and city income taxes out of pocket, as well as self-employment tax. But because she is in the U.S. without legal papers Huerta doesn’t qualify for the Earned Income Tax Credit, a program devised to help the working poor.

Despite not being eligible for the credit, many undocumented immigrants, such as Huerta, who arrived in the U.S. 10 years ago, don’t mind paying their taxes.

“It’s something we have to do, so to keep with the laws, we do it.” Using an individual taxpayer identification number (ITIN ) Huerta has been paying about $200 a year in income taxes – more than she makes in an average week.

According to the Immigration Policy Center, in the 2010 tax year, undocumented immigrants paid $11 billion dollars in combined taxes, $1.2 billion of which was from personal income tax. But not all undocumented immigrants with finances similar to Huerta, especially low-wage cash earners, pay taxes.

Different immigration reform proposals making the rounds, including the ones originating in the U.S. Senate and President Obama’s Earned Citizenship, if passed into law, would require immigrants to pay back taxes before getting on the path to legalization, as well as additional penalties and fees.

But the expected cost of the process is making some immigration reform advocates uncomfortable, including Valeria Treves, executive director of New Immigrant Community Empowerment, a day laborers and domestic workers rights organization.

Treves says that people are already starting to prepare for the cost, but adds that there’s, “concern that a lot of people are not going to be able to pull together everything they need in order to enter into legalization.”

The expected costs are not denting support among advocates such as Lynn Tramonte, deputy director of America’s Voice, a liberal immigration advocacy group.

But she says the success of reform depends on the details, “It comes down to program design elements that can make it so reform will cover all the people that it’s meant to cover,” adding that if it is “too rigid, then it’s not going to work and we’ll be back here in a few years’ time.”

America’s Voice opposes the payment of back taxes saying it will be hard to document work history of applicants.

“It would be an administrative nightmare,” says Tramonte, “and likely to cost the government more money than it brings in.”

While pro-immigrant groups are worried about whether the details of reform will leave people out, the Federation for American Immigration Reform is against the bipartisan proposal entirely, and considers earned citizenship to be amnesty by another name.

Oscar and Marcella, a Mexican couple with two children who file their taxes to comply with the existing laws, are saving money for the anticipated back taxes.

Marcella says in Spanish, that she hopes “the senators legislate a simpler way for us, as immigrants, to become legal. We can’t live like this, illegal forever.”

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