It costs a lot to be poor: There’s the cost of transportation to get to a low-paying job, for instance, or the cost of health care when that low-paying job doesn’t provide benefits. The assistance from the social safety net might help a little, but for the most part those programs don’t meet the need.
Yet it is even more exorbitant to be poor and undocumented. Undocumented immigrants typically work in unstable, low-wage employment, where they face greater threats of wage theft and exploitation—and don’t receive help from the safety net at all. Many, however, are paying taxes that help fund those programs, as Representative Alexandria Ocasio-Cortez pointed out on Tuesday, tweeting: “[F]or the last time: people who are undocumented pay taxes! Public goods aren’t ‘gifts’ to immigrants—they pay for your kids’ schooling too.”
Rosalba, who immigrated to San Diego nearly 17 years ago from Mexico, is undocumented and does not have a Social Security number (SSN). But as she is a worker, she diligently files taxes each year, using an Individual Taxpayer Identification Number (ITIN). ITINs are provided to taxpayers without SSNs, typically immigrant workers who aren’t eligible for SSNs.
“I contribute,” Rosalba tells the Prospect through a translator. “I am a taxpayer.” The labor of undocumented immigrants like Rosalba contributes roughly $180 billion annually to California’s economy, according to California State Controller Betty Yee. These undocumented workers paid approximately $3.2 billion in California state and local taxes in 2014, the earliest data available.
Immigrants filing taxes with an ITIN flies in the face of the conservative talking point that undocumented immigrants receive welfare benefits (not true) without paying taxes. “They’re not hiding,” says Pete Manzo, president and CEO of United Ways of California. “They’ve gone to the federal government and said, ‘Give me a number. I want to file my taxes.’”
The federal government excludes ITIN filers from receiving the Earned Income Tax Credit (EITC), which it provides to low- and middle-income workers and which plays a large role in lifting many families out of poverty. Accordingly, state EITC programs that model themselves after the federal benefit exclude these workers as well. If even one family member files taxes with an ITIN, the entire family is kept from the benefit.
But last month, after two years of advocacy from progressive groups, California almost became the first state to welcome ITIN filers onto the rolls of the state EITC (CalEITC). Democratic Governor Gavin Newsom’s proposed budget, which he dubbed “California for All,” vastly expanded CalEITC. Both the California State Assembly and State Senate budget proposals expanded the program as well, and made hundreds of thousands of ITIN filers eligible for the expansion. Yet after negotiations between the governor and the legislature, the initiative was removed from the budget.
What did pass (California for Most?) was indeed groundbreaking. In July, California expanded the EITC to one million additional workers. The tax credit was also more than doubled, and will also now cover workers receiving up to the new statewide minimum wage of $15 an hour. In all, three million workers will now benefit from the new CalEITC. In addition, a provision delivers an unprecedented de facto $1,000 child allowance annually to nearly all low-income families, a first for the country.
But estimates suggest that the excluded immigrant population is made up of as many as 388,000 families that file taxes, which include about 300,000 children. Approximately 90,000 children (many U.S. citizens) under the age of six will also not benefit from the $1,000 child tax credit.
Yet children in families headed by undocumented immigrants generally live in more dire poverty than children in families headed by U.S. citizens, and Governor Newsom promised to make ending child poverty the “North Star” of his administration.
“If our goal is to reduce child poverty, this is a really important group not to leave out,” says Manzo.
Rosalba’s struggles as an undocumented immigrant with a large family have not ended with losing the EITC expansion fight. The grocery where Rosalba worked for years was raided by ICE in February, and Rosalba was detained. She has since been released, but is now facing deportation and separation from her family of six, including four children, three of whom were born in the U.S. She’s obviously unable to work as her family faces all of the legal fees that accompany her fight to stay in the U.S. Rosalba cannot afford an immigration lawyer. Her family survives in expensive San Diego on less than $40,000 each year—half of that now that Rosalba is out of work.
It seems almost ridiculous to discuss a tax credit when Rosalba’s life in the United States and her family’s well-being are threatened as they are. But their current plight doesn’t negate the smaller indignities routinely inflicted on undocumented immigrants—including, like Rosalba, those who pay taxes and receive no benefits.
If she could receive the credit, Rosalba says she would invest the money in her children. “I can think of needs that they have—their education, clothes for school, things that relate to their everyday quality of life,” she says.
California’s state EITC program is relatively young and is also more generous than any other state’s. In 2015, California became the 26th state to create its own EITC, but instead of offering about a fifth of the federal EITC’s value to all those eligible, as most other states do, California offered a much larger benefit—about 85 percent of the federal credit—to those with the lowest incomes.
Ever since, Manzo says, advocates of expanding the program have had a clear strategy. Their plan was to gradually expand the credit to include the self-employed (now accomplished), workers aged 18 to 24 and over 65 (also now accomplished), and ITIN filers (distinctly not accomplished). After all of these populations were included, then, the advocates reasoned, they could focus on increasing the value of the credit. The thinking was that it could be difficult to expand eligibility for the credit after increasing its value, because then opponents could argue that eligibility expansion would be too expensive. As Manzo tells it, there’s a real fear that now ITIN filers will face an uphill battle winning inclusion in the credit, since the value of the credit has just more than doubled without them.
According to the governor’s office, it was that increased cost that led to the exclusion of ITIN filers. “We were not able to finance that in our budget proposal at this time,” Governor Newsom’s budget director said at a budget conference committee hearing in June.
But advocates are skeptical of this reasoning. “The question of whether the state could afford it was not a genuine concern,” says Chris Hoene, executive director of the California Budget and Policy Center (CBPC).
Governor Newsom was committed to paying for the EITC expansion through a tax conformity provision in the state budget, which raised state taxes on businesses by the same amount that they received in federal tax cuts through 2017’s GOP tax giveaway to businesses and the rich. According to an analysis from CBPC, the tax conformity created $1.4 billion in new state revenue, and the EITC expansion cost about $1 billion. “The cost of including ITIN filers could have easily been covered in the space between,” Hoene says.
We can really only speculate why the expansion to ITIN filers fell out of the budget after both the State Assembly and State Senate wanted it in. It may well be because California was already expanding one benefit to more undocumented immigrants—Medi-Cal, California’s Medicaid program. Medi-Cal already covered undocumented children under the age of 18, but the final budget expanded the program to young adults under the age of 26. It’s possible that the governor didn’t want to be seen as giving too manybenefits to undocumented immigrants. Hoene adds that opponents could call the tax conformity an increase in business taxes, and therefore an EITC expansion to ITIN filers could be spun as a benefit to undocumented workers on the backs of businesses. Whether that would really matter in so manifestly liberal and pro-immigrant a state as California is—well, a good question. In “a state with California’s politics, the idea of provid[ing] a benefit for people paying taxes regardless of [immigration status] would seem like the kind of thing that would be a good fit,” Hoene says.
Advocates say they’ll try again next year to get the ITIN population included. There is currently a two-year bill, the EITC Immigrant Equity Act, in the State Assembly that would expand the state EITC to these workers through specific legislation rather than through a budget provision.
Despite her current travails, Rosalba is optimistic about the prospects for that expansion. Getting included in the EITC, she says, “could bring us [immigrant workers] to an equal footing as workers. I have trust that next year we can be more effective and push for the initiative to be brought to the legislators.”