Information
ARCHIVES
Thursday, March 30, 2006
By Steven L. Taylor

As noted in the previous post, the overall interaction between illegal immigrants and the national economy is far more complex than the general rhetoric on the subject tends to acknowledge.

From the April 5, 2005 edition of the NYT we have the following, which some of you may recall: Illegal Immigrants Are Bolstering Social Security With Billions

Since illegally crossing the Mexican border into the United States six years ago, Ángel Martínez has done backbreaking work, harvesting asparagus, pruning grapevines and picking the ripe fruit. More recently, he has also washed trucks, often working as much as 70 hours a week, earning $8.50 to $12.75 an hour.

Not surprisingly, Mr. Martínez, 28, has not given much thought to Social Security’s long-term financial problems. But Mr. Martínez – who comes from the state of Oaxaca in southern Mexico and hiked for two days through the desert to enter the United States near Tecate, some 20 miles east of Tijuana – contributes more than most Americans to the solvency of the nation’s public retirement system.

Last year, Mr. Martínez paid about $2,000 toward Social Security and $450 for Medicare through payroll taxes withheld from his wages. Yet unlike most Americans, who will receive some form of a public pension in retirement and will be eligible for Medicare as soon as they turn 65, Mr. Martínez is not entitled to benefits.

He belongs to a big club. As the debate over Social Security heats up, the estimated seven million or so illegal immigrant workers in the United States are now providing the system with a subsidy of as much as $7 billion a year.

While it has been evident for years that illegal immigrants pay a variety of taxes, the extent of their contributions to Social Security is striking: the money added up to about 10 percent of last year’s surplus – the difference between what the system currently receives in payroll taxes and what it doles out in pension benefits. Moreover, the money paid by illegal workers and their employers is factored into all the Social Security Administration’s projections.

[Empahsis mine]

Here’s a graphic of the collection of funds from bad Social Security numbers from the piece and the basic explanation:

Since 1986, when the Immigration Reform and Control Act set penalties for employers who knowingly hire illegal immigrants, most such workers have been forced to buy fake ID’s to get a job.

Currently available for about $150 on street corners in just about any immigrant neighborhood in California, a typical fake ID package includes a green card and a Social Security card. It provides cover for employers, who, if asked, can plausibly assert that they believe all their workers are legal. It also means that workers must be paid by the book – with payroll tax deductions.

[...]

Starting in the late 1980′s, the Social Security Administration received a flood of W-2 earnings reports with incorrect – sometimes simply fictitious – Social Security numbers. It stashed them in what it calls the “earnings suspense file” in the hope that someday it would figure out whom they belonged to.

The file has been mushrooming ever since: $189 billion worth of wages ended up recorded in the suspense file over the 1990′s, two and a half times the amount of the 1980′s.

The percentage of illegals contributing to this fund is remarkably high:

Social Security officials do not know what fraction of the suspense file corresponds to the earnings of illegal immigrants. But they suspect that the portion is significant.

“Our assumption is that about three-quarters of other-than-legal immigrants pay payroll taxes,” said Stephen C. Goss, Social Security’s chief actuary, using the agency’s term for illegal immigration.

All quite interesting, and a little sobering.

Filed under: Uncategorized | Comments/Trackbacks (2)|
The views expressed in the comments are the sole responsibility of the person leaving those comments. They do not reflect the opinion of the author of PoliBlog, nor have they been vetted by the author.

2 Responses to “Speaking of Taxes and Illegal Immigrants”

  1. bryan Says:

    “other-than-legal” – heh.

  2. Mexico Retirement Community Says:

    Mexico Retirement Community

    With new eyes, we encountered a Mexico that mexico city history card conso


blog advertising is good for you

Visitors Since 2/15/03


Blogroll
Wikio - Top of the Blogs - Politics
---


Advertisement

Advertisement


Powered by WordPress