Kevin G. Hall, McClatchy DC, March 4, 2015
President Barack Obama’s executive order on immigration will allow people who’ve been working in the country without documents to retroactively file tax returns for the past three years and collectively get about $1.7 billion in refundable tax credits over 10 years.
It’s a little known consequence of the executive order on immigration announced shortly before Thanksgiving, and whose implementation is presently held up in the courts.
Republican lawmakers are scrambling to pass legislation that would limit the ability of the workers to file tax returns for years before their immigration status changed under the executive order and qualify for a tax refund that on average for other taxpayers has been about $2,300 per person.
Under Obama’s executive order, eligible workers would be given Social Security numbers, and that would allow them to work legally while the order is in effect. They could file a 1040 tax return, or amended returns for three years prior–the statute of limitations for amending a tax return–and potentially qualify for the refundable Earned Income Tax Credit.
“Those who were working illegally in the United States shouldn’t be rewarded for doing so,” Sen. Charles Grassley, R-Iowa, said in a statement to McClatchy. “That would have the effect of allowing retroactive benefits. My proposal would prohibit those granted deferred action from claiming the EITC for any year they were working without authorization in the United States.”
McClatchy obtained an estimate by the congressional Joint Committee on Taxation, done for Grassley and Senate Finance Committee Chairman Orrin Hatch, R-Utah. It shows the additional EITC refunds under the program could cost taxpayers $1.7 billion over 10 years, almost all of it in the first five years.
Obama’s immigration order overall is actually expected to bring in almost $20 billion in new revenue over a 10-year period after implementation, according to the nonpartisan Congressional Budget Office. That’s because new immigrants would be paying into Social Security and having taxes withheld from paychecks.