[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
THE FISCAL COSTS OF THE PRESIDENT'S
EXECUTIVE ACTIONS ON IMMIGRATION
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON NATIONAL SECURITY
AND THE
SUBCOMMITTEE ON HEALTH CARE,
BENEFITS AND ADMINISTRATIVE RULES
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MARCH 17, 2015
__________
Serial No. 114-14
__________
Printed for the use of the Committee on Oversight and Government Reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
TIM WALBERG, Michigan Columbia
JUSTIN AMASH, Michigan WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee JIM COOPER, Tennessee
TREY GOWDY, South Carolina GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida TED LIEU, California
MICK MULVANEY, South Carolina BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina MARK DeSAULNIER, California
ROD BLUM, Iowa BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama
Sean McLaughlin, Staff Director
David Rapallo, Minority Staff Director
Art Arthur, Staff Director, Sub Committee on National Security
Melissa Beaumont, Clerk
Subcommittee on National Security
RON DeSANTIS Florida, Chairman
JOHN L. MICA, Florida STEPHEN F. LYNCH, Massachusetts,
JOHN J. DUNCAN, JR. Tennessee Ranking Member
JODY B. HICE, Georgia ROBIN L. KELLY, Illinois
STEVE RUSSELL, Oklahoma, Vice Chair BRENDA L. LAWRENCE, Michigan
WILL HURD, Texas TED LIEU, California
Subcommittee on Health Care, Benefits and Administrative Rules
JIM JORDAN, Ohio, Chairman
TIM WALBERG, Michigan MATT CARTWRIGHT, Pennsylvania,
SCOTT DesJARLAIS, Tennessee Ranking Member
TREY GOWDY, South Carolina ELEANOR HOLMES NORTON, District of
CYNTHIA M. LUMMIS, Wyoming Columbia
MARK MEADOWS, North Carolina BONNIE WATSON COLEMAN, New Jersey
RON DeSANTIS, Florida MARK DeSAULNIER, California
MICK MULVANEY, South Carolina, Vice BRENDAN F. BOYLE, Pennsylvania
Chair JIM COOPER, Tennessee
MARK WALKER, North Carolina MICHELLE LUJAN GRISHAM, New Mexico
JODY B. HICE, Georgia Vacancy
EARL L. ``BUDDY'' CARTER, Georgia
C O N T E N T S
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Page
Hearing held on March 17, 2015................................... 1
WITNESSES
Mr. Robert Rector, Senior Research Fellow, Domestic Policy
Studies, DeVos Center for Religion and Civil Society, The
Heritage Foundation
Oral Statement............................................... 4
Written Statement............................................ 7
Steven A. Camarota, Ph.D., Director of Research, Center for
Immigration Studies
Oral Statement............................................... 20
Written Statement............................................ 22
Ms. Eileen J. O'Connor, Esq., Partner, Pillsbury Winthrop Shaw
Pittman LLP
Oral Statement............................................... 32
Written Statement............................................ 34
Ms. Avideh Moussavian, Economic Justice Policy Attorney, National
Immigration Law Center
Oral Statement............................................... 41
Written Statement............................................ 43
APPENDIX
March 16, 2015 GAO Report, ``Improper Payments,'' submitted by
Rep. DeSantis.................................................. 72
THE FISCAL COSTS OF THE PRESIDENT'S EXECUTIVE ACTIONS ON IMMIGRATION
----------
Tuesday, March 17, 2015,
House of Representatives,
Subcommittee on National Security joint with the
Subcommittee on Health Care, Benefits and
Administrative Rules,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:15 p.m. in
room 2154, Rayburn House Office Building, the Honorable Ron
DeSantis
[chairman of the subcommittee on National Security],
presiding.
Present: Representatives DeSantis, Jordan, Mica, Gosar,
Meadows, Mulvaney, Walker, Hice, Carter, Walberg, Cartwright,
Norton, Lynch, Lawrence, Lieu, Watson Coleman, and DeSaulnier.
Mr. DeSantis. The Subcommittee on National Security and the
Subcommittee on Health Benefits and Administrative Rules will
come to order.
Without objection, the Chair is authorized to declare a
recess at any time.
On November 20, 2014, President Obama announced a series of
executive actions regarding illegal immigration. These actions
grant benefits to non-citizens who are unlawfully present in
the United States, including work permits and Social Security
numbers.
Twenty-six States among others have challenged the legality
and constitutionality of these actions. In fact, a Federal
district court has recently issued a preliminary injunction
halting implementation of these executive actions. Time will
tell whether the President's actions will hold up in court.
Enacting major policy changes by executive fiat deprives
the American people of their right to influence important
policy debates. With this in mind, the fiscal cost associated
with the President's actions need to be examined as the
American people will be required to pay the tab for what the
President did.
Unfortunately, but not surprisingly, the Obama
Administration has not released any numbers on how much these
executive actions will cost American taxpayers, nor is there
any evidence that the Obama Administration sought advice from
other government agencies or departments, let alone State and
local governments, about the consequences of these actions.
IRS Commissioner John Koskinen recently testified before
this committee that the White House did not consult with him
when putting together its immigration plan. This is noteworthy
because illegal immigrants granted Social Security numbers will
be able to claim the refundable earned income tax credit.
They will be able to file retroactively amended returns for
the prior 3 years for work performed illegally in the United
States. This means that illegal immigrants benefiting from the
President's action will be able to claim as much as, and
perhaps more than, $24,000 in refunds even though the work
performed was not lawful to begin with.
And course the work permits issued to illegal immigrants
under the President's Executive Orders will give the amnestied
illegal worker a hiring preference over an American worker due
to being exempt from ObamaCare's Employer Mandate.
Furthermore, it is an open question if the non-citizen is
granted legal status will be tax consumes or tax contributors.
That is, will they consume more in benefits than they pay in
taxes. To answer that question among others, we have a panel of
distinguished experts today to discuss the possible cost of the
President's executive actions.
The White House, Federal agencies, Congress, State and
local governments need to understand the cost of these actions
should they go forward. The American taxpayer should not have
to bear the burden of paying for an illegal program.
Mr. DeSantis. I ask unanimous consent that our colleague
and fellow Government Oversight and Reform Committee member,
Mr. Gosar, be allowed to fully participate in today's hearing.
Without objection, so ordered.
I now recognize Mr. Cartwright, the Ranking Member of the
Benefits Subcommittee, for his opening Statement.
Mr. Cartwright. Thank you, Mr. Chairman.
I thank you for convening this afternoon's hearing on the
potential cost of the Administration's executive actions on
immigration.
There are indeed costs to immigration, costs that really
cannot be boiled down to a pissy sound bite. Certainly, there
is much disagreement on what to do about the 11 million
undocumented immigrants in the United States.
I think we can all agree that the cost of doing nothing is
too much to bear. That is why I supported and will continue to
support comprehensive immigration reform that includes a tough
but fair path to citizenship. I believe illegal conduct must be
punished with heavy fees and fines and dangerous, undocumented
persons need to be deported.
A plan like that would bring undocumented immigrants out of
the shadows and transform them into taxpaying individuals,
paying their fair share into our health care system and our
Social Security systems.
In the last Congress, the Senate passed a bipartisan bill
that would have helped fix our broken immigration system while
also spurring economic growth in my northeastern Pennsylvania,
where my district is, and also across the Country.
In fact, according to a White House report, the bipartisan
Senate immigration bill would have spurred Pennsylvania's
economy and created approximately 15,780 new jobs and generated
$64 million for Pennsylvania. That was a bill that was
supported by the U.S. Chamber of Commerce and the American Farm
Bureau.
Following the House Republican leadership's failure to act
on that bipartisan Senate immigration bill, the Administration
took executive action, as you all know, late last year.
Anticipated economic benefits are significant.
For example, the White House Council on Economic Advisors
has conservatively estimated that the executive actions on
immigration would raise the level of GDP by 0.5 percent after
10 years, which is equivalent to an additional $100 billion in
real GDP in 2024 in today's dollars. It would cut Federal
deficits by $30 billion in 10 years. It would expand the
Country's labor force by 200,000 people and raise average wages
for U.S.-born workers.
Without immigration reform, our current immigration laws
impose huge fiscal and economic costs. A recent report from the
American Action Forum, a conservative leaning policy institute
headed by Douglas Holtz-Eakin, concluded the 20 year cost of
apprehending and removing all undocumented immigrants, while
securing the borders, would cost taxpayers between $815 billion
and $1.2 trillion. That is trillion with a T.
They also found ``The labor force would shrink by 6.4
percent or 11 million workers and as a result, in 20 years, the
U.S. GDP would be 5.7 percent or $1.6 trillion lower than it
would be without fully enforcing current law.'' This
conservative-leaning group's analysis is useful and it is a
reminder that all immigration reform policies have a price tag
attached to them. It is up to us in Congress to appropriately
weigh those costs and other factors when we are crafting laws.
I think why you are seeing so many Republicans and
Democrats, not to mention scores of labor, business and
advocacy groups, come down on the side of supporting a
comprehensive approach to immigration reform, is that it
strikes the right balance.
It secures our borders, it strengthens our economy, it
brings millions of undocumented immigrants out of the shadows
and into taxpaying individuals, paying their fair share into
our health care and Social Security systems, which everyone
knows could use shoring up all the time.
A comprehensive solution is what we need, something that
will advance our Country's values and will honor our history as
a Nation of immigrants.
Again, I thank the Chair and I look forward to our
witnesses' testimony today.
I yield back.
Mr. DeSantis. The gentleman yields back.
The Chair now recognizes the Chairman of the Benefits
Subcommittee, Mr. Jordan, for 5 minutes.
Mr. Jordan. I thank the chairman for this hearing and our
esteemed witnesses who are here today.
I will be very brief.
The title of the hearing is The Fiscal Cost of the
President's executive actions on Immigration. I like to view it
as the unfairness of the President's executive actions.
In this hearing room, as the Chairman pointed out in his
opening Statement, the colleague to my left, Mr. Mulvaney,
asked the IRS Commissioner ``Can illegal non-citizens get tax
refunds? Can they go back the previous 3 years and get those?
Yes, they can.'' How is that fair to taxpayers? How is that
fair to citizens?
How is it fair to seniors that illegal non-citizens can
participate in our Social Security system? Most importantly,
how is it fair to legal immigrants who did everything the right
way but now through the President's Executive Order, illegal,
non-citizens move to the front of the line and take away
resources from people who are doing it the right way and did it
the right way when they came here?
Also, in this very hearing room, 4 weeks ago, we had two
Secretaries of State who came and said because of the
President's action, because of the documents illegal, non-
citizens are now going to have access to, namely Social
Security cards, Social Security numbers and a driver's license.
The real potential for 5 million people participating in our
election process around the Country has increased dramatically,
so much so that our Secretary of State sent a letter to the
White House, a letter to the Ohio delegation and came here and
testified.
For all those reasons, the cost and unfairness, those are
huge concerns and that is why this hearing is appropriate and
why I am glad the chairman has convened it. I look forward to
hearing from our witnesses.
With that, I yield back.
Mr. DeSantis. The gentleman yields back.
I will hold the record open for five legislative days for
any member who would like to submit a written Statement.
We will now recognize our witnesses. I am pleased to
welcome: Mr. Robert Rector, Senior Research Fellow for Domestic
Policy Studies, DeVos Center for Religion and Civil Society at
The Heritage Foundation; Steven A. Camarota, Ph.D., Director of
Research, Center for Immigration Studies; Eileen J. O'Connor,
Esq., Partner, Pillsbury Winthrop Shaw Pittman LLP; and Ms.
Avideh Moussavian, Economic Justice Policy Attorney at the
National Immigration Law Center. Welcome to you all.
Pursuant to committee rules, all witnesses will be sworn
before they testify. Please rise and raise your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witnesses respond in the affirmative.]
Mr. DeSantis. In order to allow time for questions, please
limit your testimony to 5 minutes. Your entire written
Statement will be made a part of the record.
Mr. Rector, you are up for 5 minutes.
WITNESS STATEMENTS
STATEMENT OF ROBERT RECTOR
Mr. Rector. Thank you, Mr. Chairman. I appreciate the
opportunity to speak today.
I want to talk about the fiscal cost of one part of the
amnesty, the deferred action, for parents.
Our estimate is that there are about 3.9 million illegal
immigrants who are eligible to gain legal status through this
program. On average, these individuals have a tenth grade
education. I want to emphasize that. Many of them have a third
and fourth grade education.
I am kind of a strange person. In the last decade or so, I
have gone around and asked people in the U.S. how many people
believe that someone with a tenth grade education pays more in
taxes than they get in government benefits?
Outside the confines of Congress, I have yet to find a
single American citizen that believes that is the case. The
reality is that when you look either at legal immigrants or
U.S.-born people, individuals who do not have a high school
degree, in general if you look at all the government benefits,
Federal, State and local, that they get and all the taxes they
pay, income tax, property tax, cigarette tax, lottery payments,
all of those things, on average, that individual who does not
have a high school degree gets $5 in government benefits for
every $1 they pay in taxes.
The illegal immigrant population in the United States gets
about $2.50 in total benefits, Federal, State and local, minus
taxes for every dollar paid, 250 to 1. The reason for that is
the illegal immigrants do not have access to our two most
expensive programs, Social Security and Medicare, and their
access to the 80 different means tested anti-poverty programs
such as Medicaid and food stamps is limited.
What Obama's executive action does is essentially removes
those barriers. The first thing it does is it grants 3.9
million people with a tenth grade education a Social Security
number which makes them eligible for Social Security and
Medicare at retirement age.
They have to work 40 quarters or 10 years but it is a
minimal work requirement, so most of those individuals, to the
extent that they apply and receive that amnesty, will, in fact,
become eligible for Social Security and Medicare.
The only question would be, how much does that cost? If you
assume they, in today's dollars, get the average Social
Security and Medicare benefits that go to legal immigrants who
are elderly with that same level of education, the costs that
they are going to be getting over $20,000 a year in benefits in
retirement in today's dollars, it will actually be much more
than that obviously, the total cost of that is $1.3 trillion.
This is a system that is already completely bankrupt. What
the President has done is taken nearly 4 million people with a
tenth grade education and given them benefits into that
program.
It is true that they will pay a small amount in FICA taxes
but in general, they are going to be getting $3 of benefits for
every dollar of FICA taxes they pay. I am going to show that
they actually really don't ever make a net payment.
It is said we need them to pay taxes. This group never
makes a net payment into the U.S. Treasury. At every stage of
their lives, they will always be drawing more out in government
benefits than they pay in.
How can that be? For example, this household already,
because they have U.S.-born citizens, gets around $6,500 a year
in means tested benefits for their kids, food stamps, Medicaid,
SCHIP and so forth.
This action gives them access to the ACTC and EITC which
are the two largest cash welfare programs. That is another
$4,000 per household per year. On top of that, the action does
not give them access to ObamaCare but I would ask anyone who
supports this, do you think we ought to let them stay here for
30 years and never give them health care?
That is not very feasible. If they got ObamaCare, that is
around another $7,500 a year. That is close to $18,000 a year
in benefits that they will be getting even before they get into
retirement. It vastly exceeds the FICA and income taxes that
they pay.
It is an illusion. The way this is ordinarily done, as you
talked about, they make $5,000 or $6,000 in Social Security or
FICA taxes and they put in that money, but that does not do the
U.S. Treasury any good if at the same time they put in $5,000
or $6,000 to the Social Security Trust Fund, they draw $20,000
out of general revenue. Is the U.S. Treasury any better for
that? Absolutely not.
The reality is this group, on the Federal level, never
makes a net contribution. The FICA taxes they pay are more than
offset by what they draw back. At the State and local level,
they are getting around $18,000 to $19,000 in free public
education. They never cover that cost. Other taxpayers have to
pay for it.
When they hit Social Security, then you have this huge loss
in retirement of around $1.3 trillion.
Again, the bottom line is you cannot take people with a
tenth grade education, bring them to the United States, give
them access to the largest and most expensive entitlement
system, the largest and most expensive welfare system on the
globe, and expect there will not be negative fiscal
consequences. The fiscal consequences are extremely large and
run in the trillions of dollars.
[Prepared Statement of Mr. Rector follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. DeSantis. Thank you. The gentleman's time has expired.
The Chair now recognizes Dr. Camarota for 5 minutes.
STATEMENT OF STEVEN A. CAMAROTA
Mr. Camarota. I would like to thank both the committee and
the subcommittee for inviting me here to talk about this very
important topic.
Let me start by stating that there is this general
agreement that individuals, immigrant or native, legal or
illegal, with modest levels of education and resulting lower
incomes, are a net fiscal drain, paying less in taxes than they
use in services.
In contrast, more educated individuals, immigrant or
native, earn higher wages and are a net fiscal benefit. This is
not just common sense, but it is not even very controversial.
Prior research by the Center for Immigration Studies, as
well as the Pew Hispanic Center, indicate that about half of
all legal immigrants have not graduated high school and about
another quarter have only a high school education.
That gives us an idea and helps us understand what the
likely educational profile would be of those who receive the
President's deferred action. Given the education level of
illegal immigrants who are likely to receive DAPA, it seems
certain that allowing them to remain in the Country is costly
to taxpayers, whether they have legal status or not.
For example, in 2014, 61 percent of households headed by
immigrants who had not graduated high school told the Census
Bureau in the current population survey that they were using
one of the Federal welfare programs, cash and non-cash.
Again, these figures are just what they told the Census
Bureau. There is actually under reporting. The actual rates are
higher.
Given the education level of immigrants likely to get DAPA,
the total fiscal cost, all taxes paid minus all services used
at all levels of government is probably something like $30
billion negative, if you take into account all their taxes and
use of services.
What would happen if we legalized them? If everyone who is
eligible for DAPA comes forward and everyone pays all the taxes
they should, these are big assumptions but if you just reduce
it, cut these by 10 to 20 percent, whatever you think the
compliance will be, the point is if everyone gets what they are
entitled to and pays all the taxes they are supposed to, then
it looks like they would pay about $8 billion more in taxes and
you get about $9 billion more at the Federal level from just
the earned income tax credit and the additional child tax
credit. Those are the two main programs for low income workers
of this kind.
In short, amnesty will not increase both tax revenue and
cost but this is a reminder that you cannot generate net income
for public coffers from less educated, low income people.
Having said that, it must be remembered that most immigrants
come to America to work. Most immigrants, in fact, do work and
even most illegal immigrants pay taxes, but less educated
immigrants, as a group, do not pay anywhere near enough in
taxes to cover their consumption of public services regardless
of legal status.
Let me also say that the net fiscal drain that less
educated immigrants create and less educated natives, for that
matter, we should not see this as some kind of moral failing on
their part.
Instead, we should see this fiscal drain as simply
reflecting the nature of the modern American economy that
offers limited opportunities to the less educated and the
existence of a well developed welfare State which provides
assistance to low income workers.
This last point is important. Welfare and work in America
go together like love and marriage. The vast majority of
households reporting they are using the welfare system,
particularly the non-cash programs, have a worker in them. That
describes a lot of immigrant households, particularly the ones
that would get DAPA.
The existence of a welfare State remember is one of the
very reasons we have an immigration system in the first place
that admits some people but not others because we are trying to
very much avoid the fiscal costs.
Granting amnesty like DAPA to those in the Country
illegally and letting them stay negates one of the very reasons
we have a legal immigration system that selects people.
Of course the fiscal costs, let me say in conclusion, are
only one consideration. There are many others to think about.
If we do move forward some kind of amnesty, if the judge lifts
his order or what have you and people continue to advocate for
it, we have to be honest with the American people and
acknowledge the very real costs that come from allowing illegal
immigrants to stay in the Country and not try to bamboozle them
with the idea that this is going to be a fiscal benefit.
Thank you.
[Prepared Statement of Mr. Camarota follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. DeSantis. I thank the gentleman.
The Chair now recognizes Ms. O'Connor, for 5 minutes.
STATEMENT OF EILEEN J. O'CONNOR
Ms. O'Connor. Mr. Chairman, Ranking Member and members of
the subcommittees, thank you very much for inviting me to be
with you today.
I speak on my own behalf as a private citizen and not on
behalf of my firm or my partners or its clients. I hope to
bring to you some of the understanding I have gained through
many decades of working with the Internal Revenue laws both
inside and outside of government.
You have called this hearing to examine the fiscal costs of
the President's executive actions on immigration. I will
address the likely consequences of those programs to Federal
tax administration and enforcement.
The Internal Revenue Service is charged with administering
and enforcing the internal revenue laws. When enforcing the tax
laws requires the involvement of a court other than the Tax
Court, the United States' interests are represented by the men
and women of the United States Justice Department Tax Division.
It was my privilege for 6 years to be the head of the Tax
Division and that is the basis of some of my experience that I
will relate to you today.
As required by the Inspector General, Act, the Department
of the Treasury has an Office of the Inspector General. It was
established in 1989. In accordance with the Internal Revenue
Service Reform and Restructuring Act of 1998, a new Inspector
General was established, the Treasury Inspector General for Tax
Administration, often called TIGTA.
The Treasury Inspector General for Tax Administration,
TIGTA, has studied the issue of refundable credits for many
years and issued many reports. In my testimony, I summarize
many of those reports for you.
To understand the phenomena that we are talking about, the
impact of DACA and DAPA, are under tax administration and
enforcement, we need to understand two phenomena: ITINs,
Individual Tax Identification Numbers, and refundable credits.
In 1996, the Internal Revenue Service established
individual tax identification numbers so that it could track
the tax payments and tax returns of people who don't have
Social Security numbers because they are not Americans.
Many people outside the United States, for example, might
have rental property in the United States. If you do, you are
taxed on that income but you don't have a Social Security
number because you are not a United States citizen. You,
nonetheless, have to pay tax.
To track those taxes and tax returns, the IRS established
the individual tax identification number.
It also almost immediately began giving those numbers to
people who are in the Country illegally, working, earning
income but not able to get a Social Security number because
they were in the Country illegally and not authorized to work,
but they were working and they were earning income so they were
obligated by law to file a tax return.
The Internal Revenue Service does not consider its
obligation to determine the legal immigration status of people
who file tax returns. The IRS was happy to have the tax returns
that are filed by people in the Country illegally and to have
their tax payments.
For 1997, one of the first years the IRS issued ITINs,
180,000 tax returns were filed using them. By the end of 2003,
that number had blossomed to 7 million.
Let me discuss for a moment refundable credits. Refundable
credits are neither refunds nor credits. A refund is an amount
you get back after you have paid it. A credit is an amount that
is credited to your account because you have paid it. A
refundable credit is neither.
A refundable credit eliminates the Social Security taxes
that people have paid. Low income people are relieved of many
income tax burdens because the first x amount of dollars is not
taxable and then after that, they are taxed at a very low rate.
The Social Security system does not work that way. Social
security taxes have to be paid. The earned income tax credit is
a way to refund to people who have paid the Social Security
tax, refund that tax to them.
The additional child tax credit is another refundable
credit. Again, this is an amount which represents an amount
that the Treasury Department is going to write checks for even
though the person to whom they are writing the check has not
actually paid any tax at all.
You can have a tax liability before one of these credits of
$400, have paid in nothing, have a refundable credit of $1,000
and Uncle Sam will write you a check for $600.
This is equally true of earned income tax credits and the
additional child tax credit. For years and years, the Treasury
Department Inspector General for Tax Administration has been
warning the Internal Revenue Service that these refundable
credit systems are absolutely fraught with fraud. Hundreds of
billions of dollars are paid out annually on fraudulent refund
claims.
The Treasury Inspector General also pointed out to Senator
Roth back in the 1990's that the earned income tax credit was
being given to people who were not eligible to be working in
the United States. Congress then changed the law to make a
Social Security number a requirement for the earned income tax
credit.
That same requirement was not extended to the additional
child tax credit, so contrary to what my colleague on the right
said a few moments ago, additional child tax credits, the
refundable credit, are paid out to people who do not have
Social Security numbers who are in the Country and working in
the Country illegally.
[Prepared Statement of Ms. O'Connor follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. DeSantis. We have your written testimony. I see your
time has expired, so thank you for that.
The Chair now recognizes Ms. Moussavian for 5 minutes.
STATEMENT OF AVIDEH MOUSSAVIAN
Ms. Moussavian. Thank you.
Good afternoon, Chairman DeSantis and Chairman Jordan,
Ranking Members Lynch and Cartwright, and members of the
subcommittees. Thank you for the opportunity to appear before
the subcommittees today.
My name is Avideh Moussavian. I am an Economic Justice
Policy Attorney at the National Immigration Law Center, an
organization dedicated to ensuring that all Americans,
regardless of how much money they have or where they were born,
have the tools they need to achieve their full human potential.
I am also the daughter of Iranian immigrants who are proud
to have raised four American children and to call this Country
their home.
Last November, President Obama announced policy changes
that will allow parents of Americans and people who came here
in their childhood to apply for temporary relief from
deportation and work authorization.
The application process, which includes a $465 fee and an
extensive criminal background check, would allow immigrants
with deep ties to this Country to contribute more fully to our
economy and to our communities.
These initiatives are an important first step toward fixing
parts of our broken immigration system. The economic benefits
of these initiatives are profound.
Deferred action for parents of American, DAPA, and expanded
deferred action for childhood arrivals, DACA, will provide a
natural economic stimulus for everyone. Both the Congressional
Budget Office and the Joint Committee on Taxation estimate that
DAPA and expanded DACA recipients would generate $18.9 billion
in revenues in the next 10 years.
Conversely, they estimated that not implementing these
policies would severely harm the Federal budget and increase
the Federal deficit by over $6.3 billion in that same 10 year
period. Beyond payroll and income taxes, the Council of
Economic Advisors estimates that the November 2014 deferred
action initiatives will collectively increase our Nation's
gross domestic product in the next 10 years by $90-$210
billion.
Although immigrants who qualify for DAPA and expanded DACA
pay taxes, they are nevertheless excluded from many economic
supports. They are unable to purchase health insurance, even at
full cost, in State or federally run health exchanges as
acknowledged by my co-panelist. They are also excluded from
programs such as temporary assistance for needy families, SNAP
and Federal Medicaid, among others.
As taxpayers, however, those with a Social Security number
are subject to the same rights and responsibilities as every
other taxpayer and for good reason. Our tax structure should
encourage and facilitate all workers, regardless of their
immigration status, to submit their taxes in a timely fashion.
It is a longstanding Federal tax principle that the same
rules apply to all taxpayers who are working lawfully in the
United States. This includes access to certain earned economic
support like the earned income tax credit.
While we may disagree on the President's executive actions,
we need to protect the integrity of our tax system.
The impact that DAPA and expanded DACA will have on all of
our communities extends beyond dollars and cents. Once DAPA and
expanded DACA begin to take effect, millions of aspiring
Americans redouble their investment in this Country. These
actions will make our communities safer, more prosperous and
better integrated in ways that simply cannot be calculated.
Once implemented, these immigration initiatives will have a
life changing impact on the parents and young immigrants
eligible to apply. A good example is Maria from Orange County,
California.
Maria is the proud mother of five children, including a son
and a daughter who are U.S. citizens and one child who is a
recipient of DACA and attending college today. She came to the
United States 19 years ago to escape domestic violence and
poverty in Mexico. She supports her family as a waitress.
DAPA would allow Maria and her family members, who are
undocumented, to apply for deferred action and work permits. It
would also allow them to be paid fair wages and contribute as
taxpayers, while striving for greater educational and job
opportunities to reach their full potential.
Maria and her family, including a nephew who is a U.S.
military veteran, are proud Americans. They are just one
example of why the deferred action initiatives are an important
opportunity for our Nation to make a smart, long term
investment in our shared economic prosperity.
I thank you for the opportunity to testify before you
today. I look forward to answering any questions you may have.
[Prepared Statement of Ms. Moussavian follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. DeSantis. Thank you.
The Chair now recognizes himself for 5 minutes.
Mr. Rector, is it your understanding that an illegal
immigrant who is amnestied by the President's executive actions
will be able to file retroactive tax returns for 3 years?
Mr. Rector. That is correct.
Mr. DeSantis. They would be able to claim the earned income
tax credit, the additional child tax credit for work they
performed that was illegal when they performed it?
Mr. Rector. Yes, although they don't even really have to do
that because in order to get those two credits, all they have
to do is assert they performed the work. The IRS does not
actually check that and if you look at the IRS' own documents,
they show that 25 percent of all EITC payments, close to $20
billion a year, are fraudulent on the basis of people claiming
they did certain work they probably never performed at all.
All they would have to do is assert that they performed
certain amounts of work and they would be able to get the
refundable EITC and ACTC. I calculate if they did it without a
lot of fraud, it would still cost around $20 billion
retroactively.
Mr. DeSantis. Ms. O'Connor, apart from the executive
actions on illegal immigration, the IRS does pay out a
substantial amount in fraudulent refundable credits generally,
correct?
Ms. O'Connor. Right, the program is fraught with fraud.
Mr. DeSantis. Of all the programs, I think this has to be
one of the highest fraud rates across the entire Federal
Government. In 2011, TIGTA recommended the IRS require
additional documentation to support claims of child tax credits
in particular. Did the IRS implement that recommendation?
Ms. O'Connor. No, the IRS says that it is not authorized to
ask for documentation during the return processing period, that
it is only if they select a return for examination that they
can ask for documentation justifying the credit.
Mr. DeSantis. Has the IRS taken any steps to reduce the
amount of fraud in refundable tax credits?
Ms. O'Connor. As I mentioned in my testimony, every year
the Treasury Inspector General for Tax Administration gives the
Internal Revenue Service a number of recommendations. The IRS
does follow many of them but the rate of fraud continues to
increase. It went up 23 percent from 2013 to 2014, as a matter
of fact, according to a GAO report issued just yesterday.
Mr. DeSantis. Do you know how much refundable credit fraud
can be traced to individuals who are not authorized to work but
nevertheless are working in the United States?
Ms. O'Connor. I do not.
Mr. DeSantis. Do you, Dr. Camarota?
Dr. Camarota. Yes. In 2011, the Inspector General said $4.3
billion for the ACTC went out to people who were not authorized
to work in the United States. They know that from auditing the
records of people getting that money without Social Security
numbers but did use an ITIN. That is how they know it.
Mr. DeSantis. What would be the easiest way for Congress to
address this? If we said these refundable tax credits are on
the books but we want them to go to people who are legally
working, what would we need to do to reduce the fraud?
Mr. Camarota. Require documentation for both the income and
require valid Social Security numbers. It would be a common
sense step and not keep paying them out.
Ms. O'Connor. And require the Internal Revenue Service to
verify the eligibility for the credit before they pay them out.
That is the problem. They pay them out first without checking.
Ms. Moussavian. If I may add, the TIGTA report my colleague
on the panel quoted was from 2011. Since then, the IRS has
implemented very rigid changes to the individual taxpayer
identification number program, the ITIN Program. It has
resulted in a drastic reduction in the number of ITINs that are
issued.
In fact, those figures do not reflect the IRS initiative to
address alleged allegations of fraud within the Child Tax
Credit Program.
Mr. DeSantis. What is the basis of that? Is that your
understanding, that they have reduced the fraud by a lot?
Ms. O'Connor. No, not at all. Remember that it is not fraud
for someone in the Country illegally to get the additional
child tax credit. Congress has never made it clear,
notwithstanding IRS' published position that you don't have to
have a Social Security number to get the additional child tax
credit. Congress should make that clear if that is its
intention.
Further, the GAO report issued yesterday says that IRS
issued $17.7 billion in improper payments of the earned income
tax credit just last year. That is a 23 percent increase over
the year before.
Mr. DeSantis. That is a staggering amount of fraud.
This could be for Dr. Camarota or Mr. Rector. Does the
President's November 2014 executive actions include a
requirement that any candidate for ``deferred action'' have
never filed for nor received nor been party to tax or other
Federal benefits for which he or she was not entitled at the
time?
Mr. Rector. No, it does not require that. I would say on
behalf of the earned income tax credit, we know there is a lot
of fraud in that program because it is very rigorously audited.
If you were to go over to the Food Stamp Program, there is a
fraud rate of at least 10 percent over there that you never
hear about because they do not audit it as well. If you wanted
to see real fraud, go to public housing.
There is a massive amount of cases where individuals claim
or hide income and in the case of the EITC, claiming income
they don't actually have in order to gain the benefit, or in
the case of these other programs, working off the books and
hiding the income in order to get benefits. It is rife within
the entire welfare system, not just the EITC.
Mr. DeSantis. Thank you. My time has expired.
The Chair will now recognize Mr. Lynch for 5 minutes.
Mr. Lynch. Mr. Chairman, Mr. Cartwright has a scheduling
problem so I would like to yield my time to him and then I will
take his time later.
Mr. DeSantis. Very well.
Mr. Cartwright. Thank you, Mr. Lynch and thank you, Mr.
Chairman.
From Mr. Rector's testimony today, we have head many
absolutely stunning numbers on the fiscal costs of the
Administration's deferred action programs. For example, Mr.
Rector's written testimony States, ``Increase in the ITC and
ACTC cash payments to DAPA recipients would be $7.8 billion per
year.''
This figure is more than ten times the estimate by the non-
partisan, not Democrat, not Republican, Congressional Budget
Office earlier this year. With all due respect, this is not the
first time immigration cost analyses from The Heritage
Foundation have come under scrutiny.
For example, a May 2013 immigration report by Mr. Rector
was sharply criticized by the Cato Institute. They said in that
study, ``Its flawed methodology and lack of relevancy to the
current immigration reform proposal relegate this study to
irrelevancy.''
Mr. Rector, my question is, were you aware of this
criticism by the Cato Institute at that time?
Mr. Rector. Yes, I am aware of the criticism.
Mr. Cartwright. Why did you choose to ignore any potential
economic benefit that would come from introducing these people
to our work force?
Mr. Rector. Would you like me to answer that?
Mr. Cartwright. Sure.
Mr. Rector. The EITC numbers that I have come directly from
the census. The census, when we talk about illegal immigrants,
most of them are inside the census. The census takes the
family's income and their demography and imputes a value for
the earned income tax credit.
The number I gave there, roughly $7 billion, simply takes
the illegal immigrant population that is subject to DAPA and
takes the census number and adds it together.
Mr. Cartwright. That is relegated to irrelevancy by the
Cato Institute and more than ten times the estimates by the
non-partisan CBO. We need to talk about this later but I only
have 5 minutes and I want to shift over to Ms. O'Connor, Mr.
Rector.
Ms. O'Connor, my impression from your written testimony was
that in large part it is a reStatement of TIGTA reports. Would
that be a fair Statement?
Ms. O'Connor. That is correct.
Mr. Cartwright. TIGTA is the Treasury Inspector General for
Tax Administration, right?
Ms. O'Connor. Right.
Mr. Cartwright. What you have done is you have taken the
points from a number of TIGTA reports on this whole question,
right?
Ms. O'Connor. Right.
Mr. Cartwright. Since November 2004, the man's name has
been J. Russell George, am I correct in that?
Ms. O'Connor. You are correct.
Mr. Cartwright. That is the TIGTA that we are talking
about, right?
Ms. O'Connor. Yes.
Mr. Cartwright. I invite your attention to page four of
your written testimony, the first report there is a 2009
Inspector General report. When you say Inspector General, you
are talking about TIGTA in your report, right?
Ms. O'Connor. That is right.
Mr. Cartwright. My question is, why didn't you mention J.
Russell George's name when you talked about that 2009 TIGTA
report? It is not in there, is it?
Ms. O'Connor. I did not mention him by name because what is
important is the office. The first TIGTA report I mentioned was
before Mr. George took office.
Mr. Cartwright. You mentioned another 2009 report from
TIGTA on the same page. You did not mention J. Russell George's
name there either, did you?
Ms. O'Connor. Why would I?
Mr. Cartwright. Then on page five, you mentioned the
Inspector General report from 2011, a third report from TIGTA,
and you do not mention J. Russell George's name in that one
either, am I correct in that?
Ms. O'Connor. What you are missing is that I am referring
to reports that are prepared by the Office of the Treasury
Inspector General for Tax Administration.
Mr. Cartwright. On page six, you mentioned a fourth report
from TIGTA and you also mentioned a 2013 report from the
Inspector General, I am asking you simply yes or no questions
and I am entitled to a response.
Ms. O'Connor. No, you are not.
Mr. Cartwright. The fourth report on page six refers to a
2013 IG report, also from TIGTA, and you do not mention Mr.
Russell George's name in that report.
Ms. O'Connor. And I did not mention the name of the TIGTA
in the first TIGTA report before Mr. George took office.
Mr. Cartwright. On page six, the fifth report, last year in
2014, Inspector General mentions another set of findings and
you did not mention J. Russell George's name in that fifth
report either, did you?
Ms. O'Connor. And your point is?
Mr. Cartwright. Are you aware, Ms. O'Connor, that
Representative Gerry Connolly from Virginia and I have called
for an ethics complaint against J. Russell George for his
handling of other matters because of his lack of non-
partisanship? Are you aware of that, Ms. O'Connor?
Ms. O'Connor. No.
Mr. Cartwright. I yield back, Mr. Chairman.
Mr. DeSantis. The gentleman yields back.
The Chair now recognizes the Chairman of the Benefits
Subcommittee, Mr. Jordan, for 5 minutes.
Mr. Jordan. I apologize, Mr. Chairman.
Let me go with a couple numbers. First of all, Mr. Rector,
would you characterize Cato as non-partisan when it comes to
the immigration issue?
Mr. Rector. The Cato Institute is an open borders
libertarian institution. It believes in no restrictions on
immigration whatsoever and everything they have to say on this
policy flows from that.
Mr. Jordan. A slightly different position than Heritage
takes?
Mr. Rector. A little bit.
Mr. Jordan. I like the Cato Institute, I think they do some
great work, but on this particular issue, I am not where they
are. To cite them as the end all, be all definitive Statement
on numbers Heritage has on immigration policy, I do not think
makes sense.
Mr. Jordan. Ms. O'Connor, you mentioned 7 million people
with the tax identification number in your testimony. Tell me
what that number is again because there is a dramatic increase
from when the tax ID number was first put in place, I believe
you said in the mid-1990's, to where it is today? Will you
elaborate on that, please?
Ms. O'Connor. The 7 million number is a couple years old
already. The Internal Revenue Service says it issues about 2.5
million additional ITINs every year.
Mr. Jordan. The 7 million was from what year?
Ms. O'Connor. I think that was 2009.
Mr. Jordan. It is significantly higher today?
Ms. O'Connor. Right.
Mr. Jordan. The 5 million who are part of the President's
latest, would they be reflected in the most current number,
whatever that number is, or is that going to be 5 million
additional added to that number?
Ms. O'Connor. That is a good question since we know that
many people who are in the Country illegally are already paying
taxes and they use ITINs to do so. I would not imagine that the
President's action is going to increase the number of ITINs
that much more than it increases every year anyway.
Mr. Jordan. Mr. Camarota, you mentioned a $4.3 billion
number from a 2011 study. Tell me about that again?
Mr. Camarota. The Inspector General went through and looked
at all the people in the United States who were working and
filed an income tax return using an ITIN and gave them $4.3
billion.
The Inspector General report is very clear that basically
all these individuals are illegal immigrants getting the ACTC,
the cash portion of the additional child tax credit. That is,
they did not pay any Federal income tax and they gave them $4.3
billion instead.
Mr. Jordan. I am not sure if the Chairman asked this
question in his time but based on what the President did in
November, the additional $5 billion, this sort of relates to
the previous question I asked Ms. O'Connor, what do you
anticipate that number is going to do? Is going to go up
significantly? What is going to happen?
Mr. Camarota. We would certainly expect that now that they
have valid socials, more of them would actually work on the
books. We think right now only about 55 percent of illegal
immigrants work on the books but presumably that number would
increase with legalization and valid Social Security numbers.
The number of people getting the EITC or the ACTC, which we
have been discussing here, would grow proportionately,
depending on how many people come forward. Obviously if it is a
lot of folks, it will run into the billions.
Mr. Jordan. You cited the Inspector General. Mr. Cartwright
made a big deal of the Inspector General in his previous time.
In your estimation, the reports and numbers you received from
the Inspector General, are they in any way not accurate, is
there some doubt as to the validity of the reports and numbers
the Inspector General has brought forward?
Mr. Camarota. No, these are pretty straightforward. How
many people are filing income tax returns.
Mr. Jordan. It does not matter if it is Inspector Russell
George or Santa Claus, right, as long as the numbers add up, it
adds up, right?
Mr. Camarota. I have no reason to doubt them.
Mr. Jordan. The Democrats like to make a big deal on Mr.
George, but the fact is when Mr. George discovered that
targeting was taking place, he gave a heads up to the Treasury
Department, he gave a heads up to the IRS, clear back before
the Presidential election. He gave a heads up to everyone else.
He did not give us a heads up. I would like for him to have
told Congress that the IRS was using the terms tea party and
patriot to identify groups and put them in this category where
they never got their tax exempt status.
They would like to make a big deal that they have filed
some ethics charges against him but the truth is, Mr. George,
if anyone has a complaint with Mr. George, it should be the
Republicans because he told the White House Administration
information before he ever told us, in fact, 6 months before.
This whole idea that somehow these numbers are not valid or
not accurate makes no sense to me. We can make a big deal of it
if we want but the fact is, they targeted conservative groups.
Now they are just giving us accurate numbers, simple
mathematics, right?
Mr. Camarota. To my knowledge.
Mr. Jordan. Simple math and you guys are bringing
information forward. For that, we thank you and I yield.
Ms. Moussavian. Congressman, if I may add, the same TIGTA
report----
Mr. DeSantis. The gentleman's time has expired.
The Chair asks unanimous consent to enter into the record
the GAO report published this Monday, March 16, about improper
payments for the whole government but it does include the
information on earned income tax credits.
Without objection, so ordered.
Mr. DeSantis. The Chair now recognizes a proud Bostonian on
St. Patrick's Day, Mr. Lynch, for 5 minutes.
Mr. Lynch. Thank you, Mr. Chairman.
That is part of the reason why I arrived a bit late. We
have the Taoiseach of Ireland in today. Maybe it is an Irish
trait, but he spoke a bit long, so I arrived a little bit late.
I want to thank all of the witnesses. You all have been
helpful. While you are not in agreement, I would hope that our
immigration policy would be data driven to some extent. The
ideas that you have shared are certainly very helpful.
I think the answer to this is to structure an immigration
policy and immigration laws that maximize the longer term
general benefits to our economy and to our Country while at the
same time trying to mitigate and eliminate possibly some of the
short term costs that you are describing which are more local
in many respects.
The President, with all due respect, has not had that
opportunity. DAPA is a very blunt instrument as it does not
allow us to, as I said before, maximize the positive and
mitigate the negative. It is a rather crude instrument. It is
not of his choosing.
I think the President has said on many occasions that he
would prefer to have a comprehensive, well thought out, well
structured, thoroughly debated, data driven immigration law
introduced rather than using this more crude mechanism, but
this is what he is left with. That is what the President has
said on countless occasions.
There are some longer term general benefits. I know that
one of my issues is Social Security. The birth rate in the
United States is not sufficient. We do not have a sufficient
what they call replacement rate because new workers are not
coming into the economy, the birth rate is so low and that
fewer number of citizens will eventually carry a tremendous
burden for the pensions, Social Security obligations and tax
burden for a much larger, earlier generation.
Immigration could help that if it were structured in a
positive way which would address that gap.
Ms. Moussavian, you have been very, very kind to appear
before us and I want to ask you about the earned income tax
credit and the Work Pays Initiative.
At the time of the program's expansion, Senator Chuck
Grassley took to the Senate floor to support the earned income
tax credit stating, ``It is important to bear in mind the
billions of dollars that have been provided in this bill to
encourage struggling families to enter the work force or expand
the number of hours they work. Too often, we focus on the
welfare specific provisions and completely forget or ignore the
major efforts to encourage work that are contained in the Tax
Code.''
Ms. Moussavian, I would like to know, is that your
understanding of that provision? Is that how it works?
Ms. Moussavian. The earned income tax credit is a long
standing tax program that is meant to incentivize work and
recognize that work should be acknowledged, particularly for
low income families struggling to support their children and
families.
Mr. Lynch. In general, would you agree that the families
who receive the EITC increase the number of hours they work? Is
that how this works?
Ms. Moussavian. The earned income tax credit is only for
people who are working and who are paying taxes. In that sense,
it was intended specifically as an alternative to public safety
net programs and means tested public benefits. It is entirely
different in nature.
It rewards work. It rewards particularly work performed by
low income families. Over 74 percent of recipients of the
earned income tax credit make less than $25,000 a year. In that
sense, these are vital economic supports that are viewed as
essentially an economic stimulus for the local communities that
money gets reinjected back into.
Mr. Lynch. For that strata, that classification of low
income and middle income families, do you believe the EITC
original purpose is served by continuing to encourage them to
work?
Ms. Moussavian. That is correct.
Mr. Lynch. We got into child tax credits. Senator Grassley
also Stated, ``This is a tax credit that particularly helps low
and middle income families who pay for child care for the young
children.''
Ms. Moussavian, do you agree with Senator Grassley that the
tax credit does help with that, when affording child care for
their young children is considered?
Ms. Moussavian. Yes, both the ATC and the CTC by design are
anti-poverty programs. They have been enormously effective in
lifting millions of low income families, working, tax-paying,
low income families out of poverty.
They provide essential economic support for families so
that they do not have to make difficult choices about do I put
food on the table for my young child, do I pay the utility bill
or do I pay the rent.
It allows those families to invest, again, these are
parents of largely U.S. citizen children. Proposing any threats
to change access to these important anti-poverty programs, we
are hurting U.S. citizen kids.
I would just add, and I apologize if I interrupted my co-
panelist before, but I wanted to also correct. These are
taxpayers and the ITIN program that is available to non-
citizens, both unauthorized immigrants as well as those with
status who are lawfully present.
They make tax contributions. In fact, the same TIGTA
Inspector General we have been citing, his 2011 report
specifically said that in the tax year 2010, ITIN holders
contributed $897 million in tax revenue.
Yes, there are some ITIN holders or some immigrants who are
receiving this tax credit, but again, to your point, it goes to
provide those families with really vital economic support.
Mr. Lynch. Thank you very much.
Thank you, Mr. Chairman, for your indulgence. I realize I
went over. I yield back the balance of my time.
Mr. DeSantis. The gentleman yields back.
The Chair now recognizes the gentleman from South Carolina,
Mr. Mulvaney, for 5 minutes.
Mr. Mulvaney. Thank you, Mr. Chairman. Happy St. Patrick's
Day to everyone.
Thank you, Ms. O'Connor, from Mr. Mulvaney, for wearing
your green today.
I am sitting here talking to my friend, Mr. Jordan, trying
to figure out what to talk about.
Mr. Rector, every time I listen to you, and I have before,
and you and I have talked about this before, the thing that
stick in my craw is every time I listen to you, I get the
feeling that you think all immigration is bad.
I know that is not the message you want to convey but that
is the message you convey, is that immigrants are bad. I have
to disagree with that fundamentally.
At the same time, Ms, Moussavian, I look at what the
President did and I think that does not work either. What Mr.
Rector wants to do, which is keep everybody out, does not work
and what you are defending, what the President did, which was
with the stroke of a pen, violate the law and give bunches of
benefits to people costing billions of dollars, is also wrong.
Instead of sitting here and trying to figure out who is
right because I think neither of you is right, help me be more
positive today on St. Patrick's Day. Tell me what a functioning
and healthy, legal immigration system looks like. Mr. Rector, I
will start with you and keep your answer fairly short because I
want to hear from everyone on this. I do not want to eat up all
my time.
Mr. Rector. I think it has been very clear over the last
decade or so that when you look at the fiscal consequences of
immigration, immigrants who have a college degree pay far more
in taxes.
Mr. Mulvaney. I hear you, Mr. Rector. Again, I am not going
to go into the details of it but I recognize the fact that the
welfare system and the welfare State is different now than it
was when my great grandparents came over but we did not build
the Country on college graduates. That is just not how it
worked.
When my great grandparents came over, there were farmers
who came because they were literally starving to death. They
were not college graduates. They were not doctors and lawyers.
They came over and that is how we built the Country. I do not
want to get into it today.
Give me one idea on how we provide for a healthy, legal
immigration system going forward.
Mr. Rector. Bring in people who are net taxpayers and will
not impose additional cost on the already extraordinarily
overburdened U.S. taxpayer.
Mr. Mulvaney. Mr. Rector, we could do it different from
that. Again, when my ancestors came over, we did not have much
of a welfare State at the time. We had a little bit. They were
required, if I know my history right, to have a sponsor who
effectively posted a bond for them and said, Ms. O'Connor is
coming over, she is my responsibility, she is my ward and I am
guaranteeing that she will not be on any Federal programs for
the next 15 or 20 years. That is the history, give or take,
right?
Ms. O'Connor, am I right about that?
Ms. O'Connor. I believe so.
Mr. Mulvaney. We could do that again now, couldn't we? We
could allow folks to come over and they would not be a net tax
loss?
Mr. Rector. Those principles are still in effect. It is
still in the law. I have been doing this for 40 years. I have
yet to see a single individual who has redeemed that bond
because these families go on welfare. I understand what you
just said. It is in law. It is never, ever enforced.
Mr. Mulvaney. If we could look at something we could agree
on, enforcing the current immigration law might do great steps
toward improving things?
Mr. Rector. Again, you have to simply acknowledge that if
you bring in people that have very low education levels, there
is a fiscal cost. If you want to do that, I am just going to
tell you what the fiscal cost is.
Mr. Mulvaney. Ms. O'Connor, do you want to check in on
this? Give me some ideas on how to fix the legal immigration
system in the Country?
Ms. O'Connor. Enforce it.
Mr. Mulvaney. That is fair. You think the laws we have now
are adequate?
Ms. O'Connor. I have not studied immigration law to a large
extent. I am, however, a first generation American, so I have
some personal experience with immigration and naturalization.
The problem I see from a tax perspective is what is being
called amnesty bonuses. We have open borders and a welfare
system. That relinquishes our sovereignty. That is wrong.
Mr. Mulvaney. I agree. I think that is the difficulty, Ms.
Moussavian, with what the President has just done. He has
created a financial bonus for having come here illegally. That
is what strikes so many of us, even those of us who are for
reforming the legal immigration system, as being unfair.
We are looking at folks and saying, if you came here
legally, you do not get the 3-years backward looking earned
income tax credit. There is an incentive to have come here
illegally and that is simply not fair.
Ms. O'Connor. Immediately repeal all refundable credits and
take the Internal Revenue Service out of the business of
welfare program administration.
Mr. Mulvaney. Ms. Moussavian, I have about 20 seconds. Give
me an idea on how to fix legal immigration?
Ms. Moussavian. First, I would say people who are eligible
for DAPA and DACA are not going to be eligible for any of the
Federal public benefits programs we are talking about. In fact,
any of you who have met with any of our staff have seen this
chart that really highlights all the barriers to access to
programs.
Mr. Mulvaney. I am sorry to go over my time but I am
misunderstanding you because I had Mr. Koskinen in here and I
asked him myself if some were qualified for the President's
amnesty from November.
Ms. Moussavian. The tax credit programs are not Federal
public benefits. They are for people who are taxpayers and
workers. These are people who are paying without any type of
work authorization. They are contributing $13 billion.
Mr. Mulvaney. You are consolidating. I am giving you one
example of someone who is here, came here illegally, might have
worked or not, and the President is now going to give them a
Social Security number and they can claim 3 years of back to
the EITC.
Ms. Moussavian. This look back provision we are talking
about, claiming past years, it is not exclusive to the EITC, it
is not exclusive to people who would be getting Social Security
numbers through DAPA or DACA.
Mr. DeSantis. The gentleman's time has expired.
Votes have been called. We definitely have time to
recognize Mr. Lieu and I think at that point, we will stand in
recess. I do think this is likely to be a lengthy vote series.
To the witnesses, if we are in recess or an hour, how is your
schedule? Would you be able to reconvene at that time? That
will be the plan.
The Chair now recognizes the gentleman from California for
5 minutes.
Mr. Lieu. Thank you, Mr. Chair.
We heard some numbers from The Heritage Foundation. There
are other institutions that have also done economic analyses
and I would like to put those in the record.
Last month, the Council of Economic Advisors released its
latest economic analysis of the executive actions. My question
will be for Ms. Moussavian.
It is true, is it not, they estimated these actions would
raise America's GDP level between $100-$250 billion over the
next 10 years?
Ms. Moussavian. Yes, that is correct. I believe the
estimates are between $90 billion and $210 billion, according
to that study.
Mr. Lieu. It would also reduce the Federal deficit by $30
billion over the next 10 years?
Ms. Moussavian. That is correct.
Mr. Lieu. Let us look at it another way which is, if we
were to eliminate these actions, we also had some analysis on
that. In January, the Congressional Budget Office and the Joint
Committee on Taxation made some estimates of what would happen
if we eliminated the deferred action for parental
accountability and the deferred action for childhood arrivals.
They said that would actually increase the Federal deficit
by $7.5 billion over 10 years?
Ms. Moussavian. Yes, that is correct.
Mr. Lieu. Those two institutions are non-partisan or
bipartisan, correct?
Ms. Moussavian. Yes.
Mr. Lieu. It is also my understanding the Joint Committee
on Taxation estimated $14.9 billion may be spent on EITC but it
would be offset by $22.3 billion in additional Social Security
payroll taxes, isn't that correct?
Ms. Moussavian. Yes, it is.
Mr. Lieu. I am going to reserve the balance of my time to
make a Statement. It will be directed to Mr. Rector, not so
much on the substance of your testimony but just on the tone of
it.
I think it is easy for people like you and me who wear
suits and ties and work in offices to cast aspersions on those
with a tenth grade education. I certainly hope you are not
saying that only those with college degrees or high school
degrees should be eligible for Federal benefits.
Let us talk about some of these folks with a tenth grade
education such as Maria Isabel Jimenez. She was a farm worker,
17 years old. She worked for 9 hours 1 day on a farm near
Stockton in brutal heat without shade or water and then she
collapsed. She was taken to a hospital. Her body temperature
was 108.4 degrees. She died 2 days later.
When I was in the California State Legislature, I had the
opportunity to meet over many years, many farm workers who have
had families die in brutal conditions and in the heat so that
you and I can have less expensive orange juice, cheaper
artichokes, and less expensive garlic.
I just want to suggest that people like Maria Isabel
Jimenez, that her net contribution in dying so that you and I
can have cheaper grocery bills so that we can spend less, she
has given far more to American society than you and I ever
will.
I yield back.
Mr. DeSantis. The gentleman yields back.
We do have some more time. Mr. Carter is in the queue if
you would like to go? The Chair will recognize the gentleman
from Georgia for 5 minutes.
Mr. Carter. Thank you, Mr. Chairman. Thank all of you for
being here.
Bear with me if you will, OK? Are any of you parents just
by chance? None. OK.
What bothers me so much here is it just seems like we are
rewarding bad behavior. Would you agree with that, Mr. Rector?
Mr. Rector. Absolutely. What you have here is a situation
where you are taking close to 4 million people, granting them
access to the most expensive government entitlement system in
the world and my calculations are that over the course of a
lifetime, the total benefits they will get through amnesty
minus the taxes they pay in is around $500,000 to $600,000. It
is a massive reward.
Then we talk about oh, they will pay a fine of $1,000.
There are hundreds of millions of people who would like to come
live in the United States. What you are doing here is not only
permitting people to stay here illegally but giving them this
massive financial windfall because they came here and broke our
laws.
I think that sends a very bad message to our population and
across the globe. I think it is completely unfair to the U.S.
taxpayer.
We tried it before. We gave amnesty to nearly 3 million
people and ended up with 10-12 million more that replaced those
folks. It seems hard to imagine that rewarding illegal activity
is going to give you less of it in the future.
Mr. Carter. Ms. O'Connor?
Ms. O'Connor. Similarly, by rewarding it, we are creating
an incentive for more of it and we are punishing the people who
have been waiting in line for the legal immigration because our
systems are going to be completely overwhelmed by handling the
DACA and DAPA applicants that those who have already been
waiting in line for years are going to be waiting in line for
more years to enter the Country legally.
Mr. Carter. You are not a parent but you have parents, Ms.
Moussavian?
Ms. Moussavian. Yes, I am from a very large family. My
comment is that this is recognizing work and it is work that
directly fed into our Social Security coffers and to our
Federal tax revenue, into billions of dollars in State and
local taxes.
Mr. Carter. You would subscribe to the theory that as long
as you are doing something productive, it is OK to do it
illegally?
Ms. Moussavian. I would subscribe to the theory that the
IRS' mission is to enforce the Internal Revenue Code and
recognize they want everyone to be in compliance with their tax
obligations.
By providing this important economic support to parents of
U.S. citizens, 95 percent of the DAPA eligible population is
parents of U.S. citizens, Americans who have parents.
Mr. Carter. How did they become U.S. citizens?
Ms. Moussavian. I am sorry?
Mr. Carter. How did they become U.S. citizens?
Ms. Moussavian. Their children.
Mr. Carter. I understand but how did their children become
U.S. citizens, because they were born here?
Ms. Moussavian. That is correct.
Mr. Carter. Their parents were here illegally and they were
born here. That makes them U.S. citizens, I get that. That
means we should reward the parents who were here illegally?
Ms. Moussavian. It is not rewarding them. First, with
respect to the tax credit, it does not take away the ability of
any other person with a Social Security number to make claims
for those same tax programs.
With respect to the parents we are talking about of DAPA
eligible population, we are talking about a population that has
been here a minimum of 5 years, that have been paying taxes,
that have been raising our next generation of innovators,
students and the work force.
Mr. Carter. Understood. If they have been here more than 5
years illegally, that makes it OK?
Ms. Moussavian. Under the executive actions, the President
has said we need comprehensive immigration reform, and that is
what I would ask of you and your colleagues, that ultimately
the long term solution rests with you.
The President has said through these initiatives, this is a
way to put some order and sense into our immigration system
rather than put these parents of U.S. citizens at risk of
deportation. We want to recognize they have been here for a
long time, they are deeply embedded in our communities and our
work force. They are vital contributors.
That is what the President's executive actions are about.
Mr. Carter. What message do you think that sends to the
children of American taxpayers who have been here legally? What
message does that send to our society?
Ms. Moussavian. The President is sending the message, I
want you to be able to stay with your parents regardless.
Mr. Carter. The President is sending the message that it is
OK to break the law.
Ms. Moussavian. No, he is saying that our immigration
system is dysfunctional and Congress, please work together to
come up with a long term solution.
Mr. Carter. Two wrongs make a right? Is that what we are
saying?
Ms. Moussavian. I think there have been many wrongs that
have led to this current situation that we are in. We are out
of touch. It is all well and good to say we should follow the
laws. The problem is the system is broken at every level.
Mr. Carter. For some reason, I just do not think we will
agree on this.
Mr. DeSantis. The gentleman's time has expired.
Mr. Carter. Thank you. Thank you for being here.
Ms. Moussavian. Thank you.
Mr. DeSantis. I really appreciate the witnesses. I think we
have had enough people that have asked questions. My sense is
that we probably would not have many coming back. I want to
thank the witnesses.
I think at the end of the day, all of you made good points.
The problem with being here is these are debates that should be
had in Congress before you have massive policy changes. The
President, by unilaterally doing something he said 22 different
times he did not have the authority to do, really short
circuited the American peoples' ability to weigh in on this.
We do not know what is going to happen with the courts. We
do not know what Congress will do. We do not know a lot of
these things right now, but I think we need to put some of
these ideas on the table and get different views because I
think taxpayers deserve to know what effect, if any, this is
going to have on the public and their tax liabilities.
I appreciate everyone and we will stand adjourned. This
hearing is concluded.
[Whereupon, at 3:25 p.m., the subcommittees were
adjourned.]
APPENDIX
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