Last year, while volunteering as a tax preparer, I helped Alejandro (not his real name) renew his Individual Tax Identification Number (ITIN). I noticed he first got his ITIN in 2006. I also noticed he was over 65 years old, which puts him in retirement age. Unfortunately, even though he has probably paid Social Security taxes for over a decade and therefore earned the right to collect Social Security benefits, it is unlikely Alejandro will see any benefits at all. That is because he is not eligible for a Social Security number. As a result, he cannot claim any retirement or disability benefits provided by the Social Security Administration (SSA).
The Internal Revenue Service started the ITIN program in 1996 to give foreign nationals and other individuals who are unable to obtain a Social Security number the ability to comply with the U.S. tax laws. The ITIN is just a tax processing number. It does not provide work authorization or confer eligibility for social security benefits.
Many undocumented immigrants pay taxes willingly. They want to comply with our tax laws, to show their good moral character, and, if a comprehensive immigration reform is implemented, to remove any potential barriers to full citizenship. However, ITIN itself is not an immigration document. It does not provide any guarantees to gain citizenship.
Imposing Social Security taxes on a group of people with no guarantee of becoming U.S. citizens or residents is counterintuitive. This is especially the case when one considers all the immigrants who are exempt from Social Security taxes, including employees of foreign governments or international organizations, scholars, professors, teachers, trainees, researchers, and other aliens temporarily present in the United States.
Take a look, for example, at foreign students who are actually eligible for a Social Security number. Once they complete their academic programs and earn their degrees, they can apply to an Optional Practical Training (OPT) program, which allows them to work in the U.S. and gain work experience. But because they are here temporarily to gain work experience, OPT program participants are not subject to Social Security and Medicare contributions. I myself became an F1 visa holder and participated in the OPT program after I earned my degree in the U.S. in 1998. When my employer erroneously deducted Social Security and Medicare taxes from my paycheck, I was able to challenge this deduction and had that amount refunded. Then, once I changed my immigration status from student visa to a work visa, I started paying Social Security taxes.
The Pew Hispanic Center estimates that there are about 12 million undocumented immigrants in the U.S., and the SSA estimates half of this group pay Social Security taxes. According to New American Economy, a research firm, undocumented immigrants contributed $13 billion into the Social Security funds in 2016 and another $3 billion to Medicare. The SSA conducted a review in 2013 and concluded that undocumented immigrants have a net positive impact on the Social Security systems financial status. The review also found that undocumented immigrants had paid over $100 billion in social security taxes over the last decade.
Some would say that we should simply continue to take undocumented workers’ money and use it to prop up the Social Security system that they get no benefit from. After all, the financial status of the Social Security Administration is delicate. SSA’s report “Actuarial Status of the Social Security Trust Funds” suggests that Social Security funds will begin to run out by year 2034. But just because one can keep levying Social Security taxes on undocumented immigrants, just because there is an incentive to do so, it does not mean that it is morally correct.
We should not continue to charge Social Security taxes to a group of people who will not receive the corresponding benefits. Congress can fix this social inequality by either not charging Social Security taxes to ITIN holders or by making sure those undocumented immigrants who pay Social Security taxes become eligible to recoup their money, either via a Social Security number or another number designed for the purpose. Until then, Social Security recipients should thank an undocumented worker for their check.