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Posted on 05/24/2006 6:57:28 AM PDT by Plutarch

Senate Floor Statement of Senator Sessions

SENATOR SESSIONS ON IMMIGRATION

Monday, May 22, 2006

Mr. SESSIONS. Mr. President, cloture has been filed on the immigration legislation, and I suspect cloture will be obtained on the immigration bill. We will have a vote later on in the week. The train is moving. People simply want to do something, and I suppose that is where we are headed….

I shared earlier thoughts about the large numbers and the CBO numbers in that amendment. I have discussed it. I would like to take a few moments to discuss the Earned Income Tax Credit (EITC) limit

This amendment would do two things. One, it would clarify existing law that makes illegal aliens ineligible to claim the earned income tax credit and postpones the ability of illegal aliens who are given status by this bill to claim the earned income tax credit until they become citizens. So the amendment is clearly a moneysaver. It is also a way to make sure that illegal aliens are more likely to contribute more in taxes than they are taking out. The inability to claim the earned income tax credit should be one of the things added to the list of items illegal aliens will have to agree to do in order to receive the benefits of the amnesties contained in title VI of the bill. Other items on the list include a background check, a medical check, and payment of back taxes, and being required to not claim the EITC until the illegal alien becomes a citizen is a natural addition to that list.

The EITC tax credit was established in 1975. It is a refundable tax credit for families that can offset income taxes or provide a tax credit directly to the family. According to IRS data for 2003, 22 million households received $39 billion in EITC payments, an average of $1,782 per household or $2,100 for any families with children.

Now, let me just repeat that. This is a huge Government program. And most of the low-income people don't owe any taxes. If you are making below $20,000 a year, you are unlikely to pay any income taxes. If you have children, you certainly are not going to be paying any income taxes. So how do you get a tax credit if you don't pay any taxes? Well, they send you a check. That is what they do. You file your tax return at the end of the year, and if you have worked and your income was lower, they send you a check. We looked at the numbers. If you are a minimum wage worker and you make around $14,000 a year, that family would receive a check, a subsidy from the Government of 4,700-and-some-odd dollars.

So this was designed to encourage Americans to work. It was a plan to make work more attractive for people on welfare. Do you remember all that talk: Well, you can make more money on welfare than you make working. So a brilliant Congress, a number of years ago, came up with this idea that we would just give people extra money if they would work. It will be less than welfare, so why not do it? OK. That is what we did. But it was not designed to reward illegal aliens for coming into the country illegally, for heaven's sake. But that is what this bill does. As soon as they get that regularized status, they get it.

Now, this would allow them to get the earned income tax credit if they become a citizen but not before. That is not required of us. It is not required of the Senate that we should provide a $2,000 bonus check to individuals who work in our country, who seem to be happy to get the wages they are being paid, a $2,000 bonus check from Uncle Sam as a result and as an incentive for coming into the country illegally. That is a really big issue.

To qualify for the credit, married couples filing jointly who earn certain sums of money would qualify. For example, a single mother with two children, the earned income tax credit provides a tax credit for 40 percent of every dollar earned, up to $11,340. A family that earned between $11,000 and $14,000 received a maximum credit of $4,536, not $4,700. After the floor of $14,810 is reached, the credit is slowly reduced until the income cap of $36,000 is reached. It is only then that it is eliminated. For 2006, the maximum amount of the earned income tax credit is $4,556 for a worker supporting two kids and $2,747 for a worker with one child, $4,012 for a child of eligible employees and adjusted for inflation.

Now, a Social Security number is required in order to reap the benefits of this tax credit, and those applying must have a valid Social Security number and be a resident alien. Valid Social Security numbers are given out to all legally working people in the United States--legally working aliens. Legal permanent residents and citizens have Social Security numbers.

Under the tax law, resident aliens are citizens of a foreign country who are either lawful permanent residents of the United States or have been physically present in the country for at least a certain specified amount of time during the past 3 years. They are taxed in the same manner as U.S. citizens, and thus they qualify for the refundable tax credits.

According to the IRS, under the residency rules of the Tax Code, any alien who is a nonresident alien--an alien will become a resident alien in one of three ways: No. 1, by being admitted to the United States as or changing in status to a lawful permanent resident under the immigration laws; No. 2, by passing a substantial presence test, a numerical formula which measures days of presence in the United States; or No. 3, by making what is called the first year election, a numerical formula under which an alien may pass the substantial presence test 1 year earlier than under the normal rules.

Under these rules, legally present work-authorized aliens who pass the substantial presence test will be treated, for tax purposes, as resident aliens. They are able, then, to claim EITC. Under these rules, even an undocumented illegal alien who passes the substantial presence test will be treated for tax purposes as a resident alien. If they are using a fraudulent Social Security number, they can apply for the EITC. If they are using a legal IDIF number, they cannot apply.

Under S. 2611, the bill before us today, if illegal aliens pay their taxes legally today, they do so with an individual taxpayer identification number they are given for tax purposes. The ITIN cannot currently be used to get the EITC because a Social Security number is required to claim the EITC. They are not eligible to get a Social Security number.

So under S. 2611, illegal aliens will become legally present and work authorized immediately upon passage of the act. They would then be given Social Security numbers and will pass the substantial presence test, making them automatically, at once, eligible to claim the very generous benefits of the EITC.

The Congressional Budget Office has looked at this and tried to figure out what the cost would be. American taxpayers would pay this. This would be a new cost on the taxpayers, created by the very bill that is before us today. Under the current legislation, in S. 2611 as initially offered and came out of the Judiciary Committee, the preliminary CBO score revealed the following about directed spending contained in the compromise. They say this:

CBO and Joint Tax Committee estimate that direct spending outlays would total about $8 billion for the first 5 years, 2007 through 2011, and $27 billion for the first 10 years. Most of those costs are for the earned-income tax credit and for Medicaid and food stamp programs. Costs in subsequent decades would be greater than in this first 10-year period.

``Costs in further decades would be greater than the first decade.'' Mr. Robert Rector of the Heritage Foundation has worked on numbers like this. He was the architect of the welfare reform. He said to us recently, a group of Senators: Senators, this is how this Government gets out of control. This is how things go wrong. You don't start out to pass a bill that is going to cost $29 billion. You don't think it through. You pass the legislation, and a new Congress 20 years from now wakes up and says: How did this ever happen? We don't have the money to pay for this. We made this obligation way long ago. How are we going to get out of it? Maybe we should cut back.

Then all the protests start because you can never cut a program, it seems.

He warned us about that. That is exactly what is happening with this particular provision in the legislation.

Once the Hagel-Martinez bill became S. 2611, I, along with five other Senators, asked CBO to provide a comprehensive score so we would know how much this amnesty provision would cost the taxpayers. The final CBO score estimates that, of the 2007-2016 period, 10 years, this bill would increase outlays for refunding tax credits $29.4 billion, the largest direct expenditure in the bill--$29 billion.

I had a conversation a few moments ago with a fine Senator who is concerned about spending. He was sincerely asking me about the cost of enforcement at the border and at the workplace in our country. Where are we going to get this money so we are not just putting it to our grandchildren? I don't know how much it is going to cost. We spend $40 billion now on homeland security every year. Maybe this is going to cost $5 or $6 billion. A lot of it will be one-time costs, setting up computer systems and border barriers and in purchases of equipment. A lot of that will be repetitive, like border patrol and bed spaces or removing people from the country. But it will not exceed $29 billion, trust me. It will be a fraction of that.

Mr. President, $29 billion is a lot of money under any circumstances, I have to tell you. You can buy three aircraft carriers for $29 billion. They have 4,000 people on them. Mr. President, $29.4 billion will be added. These refundable tax credits will include EITC and child tax credits, where most of the cost is clearly attributable to the EITC. To clarify, the credit first reduces an individual's tax liability. If the credit exceeds the tax liability, the excess is sent to the individual in the form of a check from Uncle Sam. These refunds are classified as outlays in the Federal budget. They are classified as outlays. They are not classified as tax deductions because they are, in fact, outlays. They are, in fact, payments from Uncle Sam sent in the form of a check to individual Americans.

In conclusion, I would note the bill increases the amount of refundable tax credits by increasing the number of resident aliens, people who are illegal today, converted to resident aliens. Although this bill grants amnesty to those who came illegally, it is not required, in my view, that they be absolved from all consequences of coming here illegally nor be provided every benefit we provide to those who come legally. Certainly nothing is strange or unusual in that.

If we decide to give certain benefits to people who came here illegally and not give them to others, what is wrong with that? For example, we are going to allow them to stay in the country. At least overwhelmingly, they will be able to stay in the country. We are going to forgive them for being prosecuted. Do we have to then also reward them for their illegal activity by providing a sizeable check every year from the Federal Government? No, you don't have to do that. If they become a citizen one day, fine, they are entitled to the same benefits of every other American citizen. But not in the interim.

My amendment clarifies existing law to make sure that illegal aliens--existing law--who pass the substantial presence test cannot use fraudulent Social Security numbers to claim the earned-income tax credit, and it postpones the ability of illegal aliens at a given status, some sort of legal status by the bill, to claim the earned-income tax credit until they become citizens. I believe that is the right approach. It is unthinkable that we would provide this kind of incentive when it really has no necessity.

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