A recent story posted by Marketplace shows just how valuable the contributions are made by undocumented workers, especially when it comes to Social Security.
Although undocumented workers are not eligible to receive Social Security benefits, it doesn’t mean they don’t contribute to Social Security. Many undocumented workers pay Social Security taxes just like everyone else. The story estimates that 8 million undocumented workers pay into Social Security. If these workers were rounded up and deported, and no longer worked or paid into Social Security, the story estimates this would result in $13 billion less for the Social Security trust funds, which are already facing shortfalls in the coming decades. These workers are paying in, but getting nothing out. Below is a breakdown from the story of how these undocumented workers pay into Social Security.
How undocumented immigrants pay into Social Security
Payroll tax, the 12 percent tax taken out of salaried workers’ paychecks, split between employer and employee, primarily funds Social Security, accounting for 88 percent of the payouts in 2017. Undocumented workers typically use a fake SSN or someone else’s SSN when applying for salaried jobs. Only a handful of U.S. states require employers to check an employee’s eligibility and their SSN through E-Verify, a Department of Homeland Security database. Other states have varying levels of E-Verify requirements, from partial to none.
Undocumented immigrants’ payments into the Social Security funds become a murkier matter when they are self-employed. By law, anyone earning an income while in the United States is required to pay taxes, even if they are breaking other laws in doing so.
Many undocumented sole proprietors, from gardeners to tech startup founders, pay self-employment taxes through an Individual Taxpayer Identification Number, legally issued by the IRS. It would be easy enough not to pay anything to the IRS, especially if paid in cash. But many undocumented immigrants do file with an ITIN to be in good standing with the government should there be an opportunity to apply for a green card or citizenship in the future. Undocumented immigrants who pay self-employment taxes via an ITIN also pay into the Social Security funds, however there are no statistics on exact dollar amounts.
This $13 billion stat isn’t known to most voters. It’s not exactly an uplifting PR talking point for immigrant advocates, observes Daniel Costa, director of Immigration Law and Policy Research at the Economic Policy Institute, which focuses on low and middle-income workers.
