Trump Rule Would Threaten Low-Wage Legal Immigrants in the U.S. If Their Families Receive Any of Wide Array of Benefits, Including the Earned Income Tax Credit
Specifically, the Administration is planning to issue a proposed regulation -- which was leaked to the media and is now at the
This extreme proposal would have two main effects:
* First, immigration authorities could use it to prevent some immigrants here lawfully who receive -- or whose close family members receive -- any of these benefits or tax credits from becoming permanent residents, and to prevent prospective immigrants who want to reunite with their families from entering
* Second, the proposal almost certainly would convince large numbers of immigrants here lawfully and their children, many of them
Moreover, the leaked draft rule indicates that the Administration is considering whether to change the rules governing when federal authorities can deport legal immigrants in ways that might make their receipt of benefits a consideration -- though we have no information about what, if any, changes the Administration may propose. If the Administration makes problematic changes in this area, that would heighten the risk that the rule would have a very large "chilling" effect on lawfully present immigrants receiving benefits for which they are eligible.
Of particular note, the list of programs in question includes the EITC, which is a tax credit designed to offset federal payroll and excise taxes that disproportionately burden low-wage workers, and which is often also cited as easing the hardship from policymakers' misguided decision to let the federal minimum wage erode substantially over the last half-century. Under the rule, immigrants working lawfully for low pay -- sometimes at jobs that other workers consider undesirable due to their meager pay and tough working conditions -- would still have to pay payroll and excise taxes. Yet if the family received the EITC for which it qualifies, the immigrant could risk negative immigration consequences.
In fact, for the first time in memory, the rule would establish federal tax policies that discriminate against immigrants who are here lawfully and are authorized to work in
Current Rules and Radical Changes
Under current law, federal authorities can reject the requests of those who want to enter
The draft rule, however, would scrap this longstanding policy and replace it with an approach that's extreme. Immigrants could be termed a "public charge" if they or their family members receive, will likely receive, or have already received any of a sweeping array of benefits, putting them in jeopardy even if the benefit represents a small share of the family's income and most of that income comes from employment. The authorities could consider any past receipt of benefits, and any receipt within the past three years would be a "heavily weighted" negative factor in the "public charge" determination. In addition, for the first time, officials making the "public charge" determination would consider benefits that any family members receive even if the immigrant himself or herself doesn't get them -- such as CHIP or Medicaid that an immigrant's
As noted, the rule squarely targets legal immigrants. Undocumented immigrants are ineligible for nearly all those programs. And the rule would mainly affect immigrants who are not primarily dependent on cash assistance or Medicaid long-term care (because, as noted, those who are primarily dependent on those benefits are already subject to a "public charge" determination under the current rules). Thus, the rule mainly targets people who are here lawfully and authorized to work but have low earnings. In many cases, these individuals work hard at low-paid jobs that others generally consider undesirable.
EITC's Treatment Reflects the Rule's Extremism
That the EITC is included in this rule is particularly noteworthy, as it highlights the rule's severe anti-immigrant nature.
From its creation in 1975, the EITC was designed to help support and encourage work, in part by helping to offset the payroll tax, which is regressive, for people with low or modest earnings. It also helps offset the burdens of other regressive federal taxes, such as the gasoline tax. And the EITC eases the pain from the problematic effects of policymakers' unfortunate decision to let the minimum wage erode markedly due to inflation. At
Under the new rule, immigrant workers who are lawfully present would remain fully subject to the payroll tax, other excise taxes, and an eroded minimum wage, even as their families may feel compelled to forgo the EITC in an effort to prevent its receipt from causing them immigration-related problems in the future. The proposal would take these steps in the name of promoting self-sufficiency, drawing a false image of immigrants who don't work or contribute to the economy. Only those who work are eligible for the EITC in the first place. (Moreover, research has found that the EITC is among the most effective tools to draw more people into the labor market.) The rule would do the same with respect to the low-income component of the Child Tax Credit and the American Opportunity Tax Credit (available to help households paying college tuition). Like the EITC, these credits are limited to working households.
What This Could Mean
Suppose a legal immigrant and a
These examples show how the rule would likely have a profound "chilling effect" on program participation by individuals who are lawfully in
The assault on immigrant workers lawfully in
Finally, the rule would apply to benefits and tax credits that low- and moderate-income immigrant workers receive but not to tax subsidies that affluent immigrants may get. "Tax expenditures" -- i.e., credits, deductions, and other tax preferences that individuals and corporations receive through the tax code, which are heavily skewed to affluent households overall -- would not be subject to the rule, except for the refundable tax credits. So, while the rule would affect the EITC and the low-income component of the Child Tax Credit, which help immigrants who are here lawfully and working for low pay, it wouldn't affect the tax-free treatment of employer-provided health care, the mortgage interest deduction, the low tax rate on capital gains, or a wide array of other tax preferences for which most of the benefits go to middle- and upper-income individuals.
Adverse Effects on Families, Children, and the Economy
While harming large numbers of legal immigrants and their families, the proposal likely would have adverse long-term consequences for children -- including
An extensive body of research shows that tax credits like the EITC, SNAP, and other benefits have important positive effects on children -- and on their ability to become productive workers as adults. For example, the research indicates that children receiving the EITC do better in school, graduate high school and attend college at higher rates, and likely work and earn more as adults. The research also finds improvements in maternal and child health. Other studies find broadly comparable results from programs like SNAP, which led to an 18 percentage-point increase in high school graduation rates.
As a result, inducing low-wage immigrant workers lawfully in
The rule would likely have other adverse effects as well -- for example, on the financial health and viability of many hospitals, due to the significant increase it would produce in people who lack health insurance and come to emergency rooms for their medical care.
Footnotes:
(1)
(2) The rule would apply to the refundable parts of the EITC and the Additional Child Tax Credit (the low-income component of the CTC). The vast bulk of the EITC is provided as refunds, so the overwhelming share of legal immigrants receiving the EITC could be affected.
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