House GOP zeroes in on immigrants to help fund tax cuts

Politico

23-05-2025

Republicans are leaning on immigrants, undocumented or not, to help make the math work for their sprawling tax package.
Even as they push to cut taxes on millions of Americans, lawmakers want to simultaneously bar immigrants from claiming a panoply of tax benefits, from the popular Child Tax Credit to Obamacare health-insurance subsidies to an obscure break on student-loan debt that's forgiven when someone becomes disabled.
Republicans are zeroing in on so-called refundable credits, where people can get a check from the government when the benefit exceeds their tax bills. They say those payments should not be going to people who are not citizens.
The little-noticed provisions are likely to generate more than $80 billion for the Republicans' $4 trillion tax-cut plan while dovetailing with the president's hardline approach to immigration.
'Why don't we just find people in Ethiopia and Iran and pay them benefits too?' said Rep. Kevin Hern (R-Okla.), a tax writer. 'They're not citizens of the United States and we're going to make sure taxpayer dollars are protected.'
It's a move that has outraged Democrats and immigration groups, who say it would hurt vulnerable populations.
They also note it would hit some people who are here legally, including some children who are U.S. citizens. Two million of them would lose access to the Child Tax Credit through provisions in the bill requiring their parents to have Social Security numbers, forecasters say.
And they warn it could actually depress tax collections. Undocumented immigrants are required to pay income taxes like everyone else, and taking away benefits could dissuade some from filing altogether — especially in the wake of a controversial agreement by the IRS to help the Department of Homeland Security identify people in the U.S. illegally.
'It's disgusting,' said Rep. Linda Sanchez (D-Calif.), another tax writer. 'It's a malicious thing that hurts not just individuals, but communities at large.'
'They're just trying to throw red meat to the MAGA base.'
The provisions haven't gotten much attention, overshadowed by higher-profile fights over state and local tax deductions and other flashpoints in Republicans' megabill, approved Thursday by the House. But it amounts to another front in Republicans' fight against illegal immigration, and the most comprehensive effort in years by lawmakers to cut off immigrants from tax benefits.
Immigrants are ineligible for Social Security numbers, so the IRS gives them so-called Individual Taxpayer Identification Numbers allowing them to file. In 2023, the agency issued almost 900,000 ITINs. Not all went to undocumented immigrants, and the IRS doesn't track how much they pay in tax, but budget experts generally agree they contribute more in taxes than they receive in benefits, though estimates vary.
The bill aims to deny undocumented immigrants various tax benefits by barring claims using ITINs.
Currently, a child is required to have a Social Security number to qualify for the $2,000 Child Tax Credit, which means kids who are citizens can benefit even if their parents are not here legally. The legislation would require the person filing the return to have a Social Security number too.
If married, both parents would have to have them, and the couple would be required to file their taxes jointly. That's designed to prevent people from evading the rules by doing their taxes separately, but it could be awkward for some, like a couple getting a divorce.
People would also be required to have Social Security numbers to receive two popular college education breaks: the $2,500 American Opportunity Tax Credit and the $2,000 Lifetime Learning Credit.
Immigrants would also lose access to a provision in the tax code that waives the tax bill that would otherwise be triggered if a person becomes disabled or dies and their outstanding student-loan debt is canceled. Normally, the IRS sees forgiven debt as equivalent to income and subjects it to tax.
Undocumented immigrants would likewise be barred from provisions sought by President Donald Trump creating new breaks for tips and overtime pay.
Republicans would also restrict Obamacare subsidies used to buy health insurance, though there, the effect would be felt by other categories of immigrants.
Undocumented immigrants have always been banned from taking that credit. The legislation would prevent claims by other immigrants who have been legally admitted to the U.S., including those granted asylum, temporary protected status and others.
And Republicans would impose a new 3.5 percent tax on remittances to people abroad. U.S. citizens would get a special tax credit to compensate them for having to pay the levy.
Many Republicans call the tax benefits wasteful and some say they create an incentive for people to illegally migrate to the U.S.
'We should be able to make it very clear that illegal immigrants are not going to be given certain benefits,' said Rep. Blake Moore (R-Utah).
At the same time, he said he's concerned about hurting other immigrants here legally, such as refugees. 'That's where I find there to be much more nuance and need for conversation,' he said.
The effort is drawing protests from Democrats, immigrant advocacy groups and the Mexican government.
Sanchez is particularly incensed by the child credit restrictions.
'You're punishing the U.S. citizen's children for their parent's immigration status,' she said, adding that Hispanic children are more likely to live in poverty.
Advocates also worry about an uptick in uninsured health care as people lose access to Affordable Care Act subsidies.
Meantime, Mexico's ambassador to the U.S. fired off a letter to tax writers criticizing the remittance tax.
It amounts to 'double taxation, since migrants already pay taxes in the country where they work,' wrote Esteban Moctezuma Barragan. 'Applying this tax would disproportionately affect the most vulnerable workers, many of whom perform essential functions critical to the proper functioning of the U.S. economy.'