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Illegal immigrants finding it harder to pay taxes, submit tax returns

A new study argues that a lack of a path to citizenship has made it increasingly harder for illegal immigrants to work and pay taxes. (iStock Photo)

Illegal immigrants are finding it increasingly harder to find work, pay taxes and submit tax returns because of tighter immigration restrictions, according to a new study by Vanderbilt University sociologist Katharine Donato.

She looks at the levels at which unauthorized Mexican immigrants have integrated into American society and institutions through their rates of paying Social Security and federal taxes, submitting tax returns and opening bank and credit card accounts. Mexicans – both authorized and unauthorized – make up about two-thirds of the United States’ immigrant population.

“The results strongly suggest that if we offered a path toward citizenship then we would experience extremely high rates of tax-paying and the benefits that come with that,” Donato said.

Donato analyzed information from The Mexican Migration Project created in 1982 by an interdisciplinary team of researchers to further understanding of Mexican migration to the United States. The project gathers social and economic information on Mexican-U.S. migration and has done an annual survey of households in four to six Mexican communities since 1984.

Immigration act sparks more tax paying

She found that from 1986 to 1996, the United States and Mexican immigrants, both legal and illegal, experienced a kind of “honeymoon” period during which the rates at which Mexican immigrants submitted tax returns and paid federal and Social Security taxes rose – with rates at their highest between 1993 and 1996.

Those not eligible for Social Security numbers can request an Individual Taxpayer Identification Number to report earnings to the federal government.

Donato attributes the rise to the passage of the Immigration Reform and Control Act of 1986. The act, while passed to control and deter illegal immigration through increased border patrol and sanctions for employers who knowingly hire undocumented workers, included an amnesty component. It granted legalization for undocumented aliens who met certain criteria and had been living in the United States continuously since 1982. Certain agricultural workers were also given legal status under the act.

“Because of the amnesty component, there was a great sense of optimism among the Mexican immigrant community. There were now two million immigrants with legal status to pay taxes, submit tax returns and open bank and credit card accounts. Those who did not have legal status also began paying taxes and submitting tax returns with the idea, ‘I am going to have a good history with the government if the amnesty opportunity comes around again,’” Donato said.

Stepped up enforcement causes decline

However, it appears the optimism began to fade as the rates of taxes paid and tax returns submitted by unauthorized immigrants began to stall following the passage in 1996 of the Illegal Immigration Reform and Immigrant Responsibility Act, which did not grant amnesty, but strengthened enforcement, expanded the number of crimes for which migrants could be deported, permitted laws to be applied retroactively so that previous offenses led to deportation, removed the right to appeal deportation orders through judicial review and permitted local and state law enforcement to work with federal immigration authorities under its 287 (g) provision. The act also did not permit use of government-sponsored social services by migrants, although states could overturn this decision.

“After 1996 we saw a shift toward the criminalization of immigrants and subsequent legislation passed in 2000, 2001 and 2007 further stepped up enforcement efforts to where unauthorized immigrants who want to work are now limited to cash jobs and generally are running scared,” Donato said.

“The unintended consequence of increased enforcement is that you now have unauthorized immigrants staying in the United States whereas before they might have come here worked for a few years, saved their money and gone back to Mexico to return only if they once again needed a better paying job. It was a cyclical pattern that has now stalled because of fear.”

Benefits to offering illegal immigrants a path to citizenship

Donato suggests it is a “no brainer” to offer the estimated 11 to 12 million illegal immigrants in this country a path to citizenship.

“We would likely see the amount of federal and social security taxes paid and tax returns filed go up to a level matching the legal population.”