Unauthorized workers and their IRS, Social Security and Medicare payments

Investigators who are very critical about illegal employment present useful information about how workers who work without legal authorization generate very large contributions into the U.S. Treasury.

Most of this flow is into a suspense account for payments which do not match social security records. Social Security Administration’s Earnings Suspense File (ESF). “The total logged in the file has increased tenfold from $188.9 billion in 2000 to $1.9 trillion in 2021.”

These flows are largely the result of the IRS providing workers an ITIN (Individual Tax Identification Number) to persons without a valid social security number. They also result from persons using an invalid social security number, for instance issued to some one who died.

The Federation for American Immigration Reform found that the federal government collects about $22 billion annually in tax receipts from illegal aliens, with the bulk going toward Social Security ($12.6 billion) and Medicare ($5.9 billion), programs from which noncitizens are ineligible to receive benefits. FAIR estimated that illegal migrants also paid $3.3 billion in federal income tax and another $1 billion in state income taxes. The lower income tax figures are due to most illegal workers are low wage.  There is no way for these workers to capture the benefits of these payments or obtain refunds.

You can access a law review article on the legal issues involving these payments here.

The Trump administraion intended to use these kinds of mismatches to estimate the size of the unauthorized population by census district (go here.)


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