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Immigrants and the Child Tax Credit by the Numbers

Denying the Credit to Some American Children Doesn’t Make Sense

SOURCE: AP/Damian Dovarganes

Jonathan Martinez, 12, works on a school paper at the Hermandad Mexicana offices, a community outreach center for Hispanic immigrants in Lynwood, California.

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As the February deadline for Congress to extend the payroll tax holiday through 2012 approaches, members of Congress continue to come up with inhumane and counterproductive ways to offset the loss of tax revenue. Rather than look to the wealthiest citizens who can afford to pay more (and in many cases are already paying a lower tax rate than those of us with significantly less income), some members are arguing that low-income American children of immigrant parents should be the ones to foot the bill.

The “Refundable Child Tax Credit Eligibility Verification Reform Act” would require taxpayers to provide their Social Security numbers in order to claim the refundable portion of the child tax credit. This means that parents filing their federal taxes using an Individual Taxpayer Identification Number, or ITIN, which enables immigrants who are not eligible for Social Security numbers to file and pay federal taxes, would no longer be eligible for the credit.

Extending the payroll tax cuts is vitally important as our economy continues to recover from the recession. But as the following numbers show, if our end goal is a stronger economy, offsetting the payroll tax holiday by denying the child tax credit to  immigrant parents of American children would be both cruel and ineffective.

Importance of extending the payroll tax cut

122 million: The number of American households that will continue to see more take-home pay if the payroll tax holiday is extended.

$1,426: The average amount of money that will be put in the pockets of U.S. households annually if Congress extends the payroll tax holiday.

More than 1 million: The number of new jobs that will be created through the payroll tax cut extension. Nearly three-quarters of this job growth will be due to increased spending by workers who will see a bump in their take-home pay.

1.3 percent: The decline in economic growth our nation will face if the payroll tax holiday is not extended.

The benefits of the child tax credit

2.3 million: The number of people, including 1.3 million children, who were kept out of poverty by the child tax credit in 2009.

$1,800: The average amount claimed in child tax credits by ITIN filers in 2010.

3: The number of months for which a family of four with two children could put food on the table using the average child tax credit refund under the Department of Agriculture’s “Thrifty Food Plan.”

$1.38: The amount of economic growth that results from every $1 spent on child tax credits. Not all tax cuts are created equal, though. The payroll tax holiday results in $1.25 of economic growth for every $1 spent, while making the Bush tax cuts permanent would result in $0.35 per dollar.

Lunacy of funding the payroll tax cut through denying the child tax credit to immigrant parents of American children

4 million: The number of U.S.-born children whose families would be affected by the proposed offset.

20 percent: The amount of the payroll tax holiday extension that would be offset by raising taxes on lower-income immigrant parents of American children. The payroll tax holiday extension is worth $120 billion. The proposed legislation to offset the tax cut, however, will, by conservatives’ own calculations, save a total of only $24 billion over 10 years.

About $100 billion: The amount of payroll taxes that will be contributed by ITIN filers over the next 10 years. These taxes contribute to the trust funds for Medicare and Social Security—programs from which immigrants will never recoup benefits because of their status.

$21,240: The average household income for ITIN filers claiming additional child tax credit refunds in 2010. This is less than half of the 2010 median household income in the United States of $49,445, and would mean that a family of four with two children was living below the poverty line. Latino children are more likely to be living in poverty than any other racial or ethnic group in the United States.

Alternative offsets

$155 billion: The amount of money that would be gained by implementing Senate Democrats’ 1.9 percent surtax on income of more than $1 million.

0.2 percent: The amount of surtax on millionaires that would result in the same savings as denying the child tax credit to lower-income immigrant families.

$20 billion: The additional tax revenue over 10 years if the “carried interest” loophole is closed so that financial managers—among the highest-paid workers in the nation—are required to pay the same tax rates on their wages as other Americans in their tax bracket.

$321.3 billion: The amount that would be saved over 10 years if itemized deductions that disproportionately benefit the wealthy are limited.

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To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund)
202.741.6285 or kpeters@americanprogress.org

Print: Anne Shoup (foreign policy and national security, energy, LGBT issues, health care, gun-violence prevention)
202.481.7146 or ashoup@americanprogress.org

Print: Crystal Patterson (immigration)
202.478.6350 or cpatterson@americanprogress.org

Print: Madeline Meth (women's issues, Legal Progress, higher education)
202.741.6277 or mmeth@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Lindsay Hamilton
202.483.2675 or lhamilton@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org