Trump Continues to Ignore Ways to Collect Billions From Illegal Aliens

By David North on August 13, 2019

More than two and half years into the president's term, his administration continues to battle illegal alien entries at the southern border, but seems oblivious to three different ways to collect billions of dollars from illegal aliens now residing in this country.

Raising the money would help with the skyrocketing national debt and, at the same time, would tend to encourage some of the illegal aliens to leave voluntarily.

Two of the most useful of these changes require little more than a change in regulations, if that; the third would probably require legislation.

The Biggest Prize. Many illegal aliens, probably millions of them, use a Social Security number that does not belong to them; usually it was issued to someone else years ago. The illegal aliens file tax returns using the SSN that they have given to their employers; thus, their claims for their refunds and their W-2s match each other. But they do not match the government's own records.

My proposal is to simply not pay tax refunds to people who are lying about their SSNs; since these refunds often contain the benefits of the Earned Income Tax Credit and the Additional Child Tax Credit, they often come to several thousands of dollars per filer. For example, if the refunds averaged $2,000 each, and covered four million illegal alien filers, there's $8 billion a year.

The glory of this proposal is that the money is already in the hands of the government. All IRS has to do is to compare the SSN on the 1040 with the name in the Social Security records; if they match, the refund goes out; if not, not.

Food Stamp Eligibility. This is a lot more complicated than the above, more difficult to understand, and reform in this area would raise less money — say only a billion or so a year — but it is well worth doing.

The current system, in most states, and at just the right income levels, allows some of the better-off of the mixed families (consisting of both illegal and legal residents) to collect food stamps when all-citizen families of the same size and the same income cannot collect the same benefits. This presents a bizarre situation in which the undocumented are not just treated as equals to legal residents, they are treated better than citizens.

All this relates to how the income of the illegal alien in the family is treated and which I have reported in detail several times in the past (see here and here). This is how we described it three years ago, using the income limits of that time:

Let's say that the all-citizen family consisted of three people, employed father, stay-at-home mother, and a small child. Dad makes $2,400 a month. The family's income is too high for food stamps since the maximum monthly income is $2,177 for a family of three.

Then next door there is a mixed family, also three people, with the father being the only worker, also earning $2,400 a month. The difference is that the father is an ineligible alien and so, under many states' regulations, one-third of the family's income is ignored (prorated is the word in SNAP circles), leaving the family with a nominal income of $1,600 a month that allows the family to get a food stamps allotment, but only for the two citizens, not for all three in the family.

We asked the Department of Agriculture if these, easy-on-illegal-aliens rules were still in effect earlier this summer and were assured that they were.

A 2 Percent Fee on Wired Remittances. A third way to raise money from illegal aliens would be to place a 2 percent fee on all wire transfers of moneys sent by individuals to places outside our borders. No corporations would be subject to the fee. The fee would be treated like a tax withholding on wages, and could be used as a credit toward one's federal income tax, so that taxpaying people would not be paying anything at the end of the year.

Overseas remittances from the United States are usually in the neighborhood of $50 billion a year, so this would produce about $1 billion a year for the Treasury.

Oklahoma, alone among the states, has this system, and received in 2018 more than $13 million from this source — though its fee is only 1 percent. Oklahoma's experience is that most of the fees are not used to offset state income taxes, so most of the wired money out of Oklahoma was not being taxed.

This new revenue source would need congressional authorization, and would probably create substantial opposition from both employers of illegal aliens and from the wire transfer companies.

* * *

These three sources of funds, if our estimates are roughly on target, would produce $10 billion a year, virtually all of it from illegal aliens. (Some remittances are sent overseas by legal aliens and by citizens, but if they were paying their income taxes, the new fees would not hurt them.)

The White House should look into these untapped resources; $10 billion a year would pay for a lot of immigration enforcement, and/or could be used to nibble away at the national debt.