Denying the Earned Income Tax Credit to Aspiring Citizens Harms Us All

By Leticia Miranda, Senior Policy Advisor, Economic Security Policy, NCLR

Child Tax Credit AdvocatesFor three days now, the Senate Judiciary Committee has been reviewing numerous amendments to S. 744, the Gang of 8’s immigration bill.  Amid the slew of 300 amendments is one that should concern all Americans: Sen. Jeff Sessions’ (R-Ala.) amendment 31 . The Alabama senator’s amendment would deny the Earned Income Tax Credit (EITC) to legally present taxpayers who have earned Resident Provisional Immigrant status, as outlined in S. 744.  These hardworking taxpayers could not claim the EITC for at least ten years until they become Legal Permanent Residents.  Ten years is a lifetime to a growing child.  This exclusion is unjust and will have negative consequences for America’s future.

Workers with legal status should be treated like all other Americans: responsible for paying taxes and eligible for any tax credits due.  The Sessions #31 would create a two-tiered tax system with one group of legal workers required to pay significantly higher tax rates than other workers with the exact same income. It would hurt over four million Latino children of aspiring citizens by eliminating their eligibility for this important tax credit.

The EITC is designed to offset regressive taxes that can push low-income working families into poverty.  For example, a working family of four earning $25,000, just slightly above the federal poverty line, would owe $1,913 in payroll taxes that support Social Security and Medicare.  In addition, many Latino immigrants—such as domestic workers with multiple clients—are self-employed and would pay twice that amount, or $3,826, in payroll tax from their own earnings. We should not forget that families in this income category pay approximately $2,925 (11.4 percent) in state and local taxes.  Without the EITC, the prohibitive tax burden placed on these families would reduce their incomes to below the poverty line.

Sessions #31 would also punish these low and moderate-income families by significantly raising their effective tax rates. Let’s look at another example. Without the EITC, the effective tax rate for self-employed low-income workers—such as many domestic workers—would be 27 percent, far higher than the 15 percent tax rate millionaire hedge fund managers enjoy.

Dia de los Ninos 2The EITC is one of our nation’s strongest anti-poverty tools and keeps 3 million children out of poverty each year.  In addition, the EITC has long-term positive effects on children’s success:  they do better in school; they are likelier to attend college; and they earn more as adults.  Hispanic children of immigrants—the vast majority being U.S. citizens—are an important part of America’s future workforce and would be hurt by this amendment.  In the long-run it is unwise to limit their success and ability to contribute to our economy by making it harder for their families to pull themselves out of poverty.

The EITC also powerfully stimulates local economies by putting more money in people’s pockets.  This extra income is spent in local businesses, creating more jobs and expanding the tax base.  In addition, the EITC helps families address the consequences of a declining minimum wage, which has lost 20 percent of its value since the 1960s.  Denying EITC to minimum wage earners under these circumstances will make basic necessities even more unaffordable to those on their path citizenship.

There are many reasons why Sessions 31, but perhaps the most important one is that it would hurt our children. Sessions #31 may receive a vote as soon as Monday May 20, 2013.  Take action now to let the Senate know you don’t support Sessions #31

One thought on “Denying the Earned Income Tax Credit to Aspiring Citizens Harms Us All

  1. Pingback: Don’t Let the Senate Price Immigrants Out of Citizenship: Amendments Will Block the Road to Citizenship for Millions | NCLR BlogNCLR Blog

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