A Message from Don Francisco on Your Retirement

The U.S. Social Security Administration is celebrating Hispanic Heritage Month this year with some informational retirement resources for Latinos in both English and Spanish.

It’s never too early to start saving for retirement, yet as a group, Latinos have historically low participation in retirement savings plans. Hispanics overall tend to have less access to employer-sponsored retirement plans; in fact, about two-thirds of Latinos work for companies that do not offer a retirement plan.

Saving for retirement from an early age helps retirees put themselves in a stronger financial position, and because it’s never too early to start saving for retirement, the new retirement estimator from the Social Security Administration provides an estimate of your Social Security retirement benefits to help you plan.

The Social Security Administration also teamed up with Don Francisco from Sábado Gigante to help spread the word about the importance of saving for retirement and the Spanish-language resources the Social Security Administration has for Latinos.

This Hispanic Heritage Month, do the smart thing and start planning for your retirement!

What Trump Gets All Wrong About Immigration and Taxes

(Cross-posted from the Citizens for Tax Justice Blog)

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Photo: Gage Skidmore.

Donald Trump’s recently released framework for immigration reform includes misleading statements about “illegal immigrants” claiming refundable tax credits. Trump claims that “illegal immigrants” received $4.2 billion in “free” tax credits in 2011 and proposes to pay for part of his immigration proposal by accepting the Treasury Inspector General for Tax Administration (TIGTA)’s “recommendation” to eliminate tax credit payments to these individuals. It’s hard to know where to start in deconstructing the inaccuracies in Trump’s statement.

First, the use of the word “free” is highly misleading, as undocumented immigrants do pay a significant amount in local, state, and federal taxes.  An analysis by the Institute on Taxation and Economic Policy (ITEP) estimated that in 2012, undocumented immigrants paid $11.8 billion in state and local taxes (including about $7 billion in sales and excise taxes, $3.6 billion in property taxes, and $1.1 billion in income taxes). On top of this, the Social Security Administration’s Office of the Chief Actuary estimated that in 2010, unauthorized workers (who may be undocumented or in the country legally but without permission to work) paid $12 billion in Social Security payroll taxes net of benefits received. Since most unauthorized workers are not eligible for Social Security benefits, this group only received approximately $1 billion in benefits for the $13 billion paid in.

Second, the $4.2 billion figure that Trump references is from a 2011 TIGTA report that actually states that families with an unauthorized worker received $4.2 billion in 2009 (not 2011) through the refundable portion of the Child Tax Credit (known as the Additional Child Tax Credit). While this may sound the same on the surface, there are a few things that should be noted. As the report explains, these credits were claimed by taxpayers using an Individual Taxpayer Identification Number (ITIN), which the IRS issues to individuals not eligible for a Social Security Number. ITINs are issued without regard to immigration status to people not authorized to work in the United States, so this group includes not just undocumented immigrants but also individuals who have immigrated legally but aren’t legally able to work.

Labor-Day-Banner-Photo-4Taxpayers using an ITIN are prohibited from receiving the Earned Income Tax Credit (EITC) but are allowed to claim the Child Tax Credit (CTC). Worth up to $1,000 per qualifying child, the CTC is intended to offset the costs of raising children. Families who owe less in taxes than their eligible Child Tax Credit amount can receive the difference through the Additional Child Tax Credit, which is paid out with their tax refund. Since the CTC is intended primarily to benefit children, it makes sense that it is the children’s immigration status, not the parents’, that qualifies a family to receive the credit, and a qualifying child can be a citizen, a U.S. national, or a resident alien. And although some portion of the $4.2 billion in Additional Child Tax Credits could be going to families with undocumented parents, nearly 80 percent of the children of undocumented immigrants are U.S. citizens.

It is also worth noting that the refundable tax credits like the EITC and CTC have immense benefits for the children in the families that receive them. There is a growing body of research showing that these credits improve educational and health outcomes for children and result in them working hard and having higher earnings as adults.

Third, while Trump says that his plan would “accept the recommendation” of TIGTA to eliminate tax credit payments to illegal immigrants, the 2012 TIGTA report that he references makes no such recommendation. In actuality, the report recommends that the IRS implement procedures to reduce the number of fraudulent ITIN applications that it approves. TIGTA’s main concern here is that people are using fraudulent documents to obtain an ITIN and using it to file fraudulent tax returns (e.g. claiming tax refunds for non-existent persons), not the use of ITINs by undocumented immigrants.

GuardRailWorkers_12_2_2014Finally, if the concern is the $4.2 billion revenue loss, Trump should look to comprehensive immigration reform that allows a path to citizenship for undocumented immigrants, which would actually increase revenues at the federal, state, and local levels. The Congressional Budget Office (CBO) estimated that the 2013 Senate comprehensive immigration reform bill would have decreased the deficit by $197 billion over ten years, as newly legal immigrants would pay $459 billion in additional taxes, while the increased government expenditures for benefits would only increase by $262 billion. Additionally, ITEP estimated that granting citizenship to all undocumented immigrants would raise more than $2.2 billion annually in state and local revenues. These revenue increases would occur because more immigrants would then be paying taxes on their income and because citizenship is likely to boost wages and therefore increase income, sales and property taxes. Trump might want to consider these benefits instead of spending all his time planning for that wall.

For more on Trump’s tax proposals, click here.

Wondering When to Retire and Begin Collecting Social Security?

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

Quick Answer: Delay the date you choose to collect benefits

USCurrency_Federal_ReserveAs eight million Latino Baby Boomers barrel toward retirement over the next 20 years, a critically important decision they will face is deciding when to retire and begin collecting the Social Security benefits they have earned. As it turns out, when you decide to collect Social Security benefits has a huge impact on your finances as you age. Waiting to collect benefits means higher benefits for life. Given the high poverty rates among Latino seniors, it’s important that we adopt strategies that can help us maximize our benefits.

NCLR recently held a community meeting in Miami with Latino Baby Boomers facing the decision about when to begin collecting benefits.  Participants learned that waiting even one extra year could make a big difference in their benefits for the rest of their lives.  NCLR also released the brochure entitled Latinos and Social Security: It Pays to Wait,” to provide more information (in Spanish here).

Consider, for example, a worker whose monthly benefit would be $750 if they retired at age 62. That worker would get $800 if they delayed one year and $866 if they delayed two years. If that worker delayed until age 66—which is their full retirement age—they would get $1,000 in monthly benefits. If they delayed until 70, they would get $1,320.  These are increases on top of the normal cost-of-living adjustments. The gains from waiting were recently increased by the Social Security Administration.

Heavy dependence on Social Security means that Latinos can benefit from any strategies to increase their Social Security benefits. Over half of Latino seniors (55 percent) depend on Social Security for almost all of their income. In addition, average yearly benefits for Hispanic seniors are just $13,295 for men and $10,500 for women. And Latino seniors are more than twice as likely to live in poverty compared to all American seniors—21 percent versus 9 percent.

ACAdiabetesblog_pic3On top of this, Latinos live longer, which means they will have to rely on their benefits for more years. According to the Social Security Administration, the typical Latina woman will live to age 89 compared 85 for all women, while the typical Latino male will live to age 85 compared to 82 for all men. The decision about when to begin collecting benefits also affects a worker’s spouse and survivors. Because a surviving widow or widower is entitled to 100 percent of their deceased spouse’s benefits, the primary worker can provide more protection to their survivor by delaying when they take benefits. Living spouses can maximize their benefits by waiting until their full retirement age to collect spousal benefits.

NCLR’s efforts to educate the Latino community, is part of a larger campaign by the National Academy of Social Insurance (NASI) called When to Take Social Security: It Pays to Wait. This campaign informs American workers about the benefits of delaying when they claim Social Security. Please see the video they created as part of this campaign:

They also created the video in Spanish in case you want to share it with the Spanish-speakers in your life.

Before we end, let’s answer your key question: will Social Security be there for you when you retire? Yes! Social Security’s finances are much stronger than many people think.  Social Security is fully funded for the next 20 years and 75 percent funded after that.  Congress has amended Social Security many times to meet new needs and serve new generations. Policymakers have many options to adjust revenues, benefits, or both to ensure that all future benefits will be paid in full.

Will the Housing Market Be a Casualty of the Government Shutdown?

Photo: Jeffrey Turner

Photo: Jeffrey Turner

What’s one way to sabotage the already struggling housing market recovery that millions of Americans desperately need?  Why, a government shutdown, of course.

As we head into the second week of the government shutdown, little progress has been made beyond pointless offers to fund specific programs with piecemeal bills. Realistically, this strategy amounts to political posturing and saving face for a group of lawmakers that continue to obstruct progress—with it, we are no closer to finding a solution.  Continue reading

Maintain Social Security’s Compact for All Taxpaying Americans

By Victoria Brenner, Legislative Analyst, and Leticia Miranda, Senior Policy Advisor, NCLR

As part of its mark-up of the comprehensive immigration reform proposal S. 744, the Senate Judiciary Committee has already considered 81 amendments.   On Monday, when the committee reconvenes, it is slated to take up one that would be exceedingly harmful – amendment #24 offered by Sen. Orrin Hatch of Utah (Hatch #24), which denies lawfully present immigrants the Social Security benefits they earned through their work and payroll taxes.  This is particularly unfair because hardworking immigrant taxpayers have contributed billions in payroll taxes to the Social Security Trust Fund, boosting its revenue and prolonging its solvency.

Why is this amendment so bad?  First, reducing access to Social Security for Latino immigrant workers would push millions into poverty later in life.  If aspiring citizens are denied credit for their past contributions, their benefits would be substantially reduced and many would fail to achieve sufficient credits to ever qualify for Social Security.  Moreover, over four million Latino children of immigrants would be would be left without the protection of Social Security in case their working parent died or became disabled.  There are also broader macroeconomic considerations.

Continue reading