U.S. taxpayers file millions of individual tax returns each year. Some of these tax returns contain W-2s with fake Social Security numbers. Some belong to people who get married and never report changing their names. Others merely submit erroneous tax forms. But a huge number of these forms are filed by employers for a group who was never expected to fund Social Security: undocumented workers. They pay billions of taxes for retirement benefits that they may never receive.
You see, some immigrants who aren’t authorized to work in the United States buy fake Social Security cards. They submit them to employers who are neither trained nor expected to distinguish fake from genuine cards. Since these Social Security numbers aren’t linked to people on file, the federal government holds onto the payroll taxes which end up in Social Security trust funds that are paid out to aging Americans.
The Social Security System is now dependent on this stream of revenue as aging Baby Boomers retire. The chief actuary of the Social Security Administration (SSA) estimates that about two million immigrants work with fake, expired, or stolen Social Security cards and expects that number to reach three million in the next decade or two. Another four million other immigrants work in the underground economy. There are millions more who have temporary authorization to work, have overstayed, or obtained work by using fraudulent documents. These groups constitute a major reason why our Social Security System remains solvent.
The same chief actuary calculates that undocumented immigrants pay $13 billion into the retirement trust fund but collect only about $1 billion in benefits. The result is a windfall for the system – a net positive upshot of about $12 billion into cash flows. He also estimates that the System may not be able to stay afloat without continued support from undocumented immigrants.
Ironically, it was never designed this way. This windfall originated from the 1986 Immigration Reform and Control Act that set penalties for employers who knowingly hired undocumented immigrants. The goal was to curb the hiring of undocumented immigrants; the result is a steady source of revenue for the Social Security System.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].
