Here's a thought for most of the nation's governors, or, more precisely, the 41 in places with state income taxes on wages.
Governors, you can, all in one fell swoop:
- Save large chunks of state tax money,
- Encourage some illegal aliens in your state to leave without being deported, and
- Thereby open more jobs for the voters,
all by taking a simple action against a specific criminal population, people who are committing fraud by using Social Security numbers that were not issued to them.
What you, governor, should do is to instruct your state income tax officials to refuse to issue tax refunds to anyone with a Social Security number that does not match the name on the income tax return. That's all.
There are several federal reporting systems that your tax people can use, each of which sorts out licit and illicit SSNs. All that needs to be done is to run all refund applications against the federal list to see if there is a match of name and SSN; no match, no check. Some states may be doing that now, a subject to which we will return.
The underlying notion is that both state and federal tax refunds are, in many cases, a substantial part of an illegal alien's annual income. If an alien discovers that these refunds have been abolished, that fact, together with other enforcement pressures, may persuade that illegal to return to the homeland. Simultaneously, the combination of the denial of these refunds and other signs of enforcement may cause the attractions of the United States to diminish, and thus slow the inflow of new illegal aliens.
What we are suggesting is not a cure-all for illegal migration, but it may help to reduce it, and with fewer illegal aliens holding jobs, more residents of the United States will find it easier to find work.
The SSN checking process will not prevent all illegals from collecting refunds, however; this leads to a brief discussion of the interaction of SSNs and taxes.
SSNs and Taxes. Our understanding is that many illegals work and file income tax returns under their own names and addresses, yet use SSNs either issued to someone else, or use an imaginary number. The suspicion is that this is the way most illegals handle their returns — perhaps the new administration in Washington could fund a study to learn more precisely how illegals use and misuse SSNs, and the extent of the various patterns.
But there are at least four ways that illegals could get around the proposed checking of SSNs, with the worst of the practices being listed first:
- Stealing the SSN and the identity of a living stranger, something my colleague Ronald W. Mortensen has written about frequently;
- Working in the cash economy, meaning neither the employer nor the worker is paying payroll taxes (and no SSN is used);
- Borrowing, presumably with consent, a name and the linked SSN, perhaps from an older member of one's own extended family, or
- Working with an outdated number issued to the worker when in legal status, such as that of an F-1 foreign student, a number that should have been deleted, but that was not.
However, we understand that the predominant pattern, when an SSN is used for tax purposes, is that the worker files the income tax return with his or her real name and address, but uses an SSN that has been purchased from a criminal vendor, a number that belongs to someone else or one that has never been issued.
Under these circumstances the state can save money by simply not sending refunds to those whose names and Social Security numbers do not match with the federal records. It is pretty clear that under the Obama administration no effort was made by IRS to deny refunds on these grounds, and it is almost equally clear that the Treasury Department under Trump — there seem to be no confirmed presidential appointments in the department other than the secretary — has not yet taken up this issue.
But perhaps one or more assertive governors can show the way.
What Are States Doing Now? Meanwhile, since this idea is both basic and easy to understand, I wondered if some states are already doing this no match-no check program. I decided to try to find out; it was an uphill climb.
I sent out inquiries to about 10 states with income taxes asking if the systems refused to send refunds to those with illicit SSNs. I sent these notes to the publicists for state income tax programs whose email addresses I could glean from their press releases. Most simply did not respond, but three did.
Virginia, my home state, replied that they checked refunds many different ways but refused, even after a second round of inquiries, to answer my specific question.
Michigan said that they could not answer the question because state law prevented them from doing so. Odd.
Illinois' response was frank, and helped me understand the non-responses and the lack of responses from some of the others. The state agency, we were told, does not disclose internal strategies and methods utilized to combat fraud on the grounds that would help the fraudsters. That posture is understandable, but it also prevents useful research in this field.
Other reasons for not responding to my queries could be:
- Laziness on the part of the pressies, (why bother replying to an out-of-state inquiry?);
- Guilt, (we don't want to admit we don't take these steps); and
- Avoidance of a sensitive issue (we don't want to stir up the immigrant groups).
Thwarted at the press secretary level, I turned to one of my bright, persuasive sons, the one in New Mexico, and suggested that he go to a store-front state income tax assistance office there and ask how that state handles such matters. He reported that while they do sometimes check SSNs, if the worker's return has the same income and the same state deductions that the employer has reported — if all of the dollar numbers match — they send out refund checks without regard to the validity of the SSN.
I suspect that this practice is widespread.
It would be most helpful if one or more of the 41 governors stepped forward and, with suitable press efforts, announced that his or her state was adopting the SSN no-match, no-refund policy, and, later, announced how much money that policy had been saved for the law-abiding tax payers of that state.
Presumably that activity would help the governor in the next election, and would, at the same time, set a useful precedent for the Trump administration in connection with federal income tax refunds.