On Tax Day, Special Interest Groups are Pushing Congress to Expand Tax Breaks that Benefit Illegal Aliens

FAIR Take | April 2024

As Americans are looking to Washington for solutions to the border crisis, lawmakers instead are considering a massive tax bill that has major immigration consequences.  Special interests are currently lobbying to get the Senate to take up H.R. 7024, the Tax Relief for American Families and Workers Act. The bill, if enacted, would expand the Additional Child Tax Credit (ACTC).

The ACTC is a tax credit intended to benefit low-income families. As a refundable credit, eligible individuals can receive it even if they do not owe any tax. Importantly, the tax credit helps more than low-income American families.  Due to a loophole in the law, illegal aliens may also claim the credit. With the proposed expansion of the ACTC in H.R. 7024, that means even more tax dollars will be used to support illegal aliens.  

H.R. 7024 proposes expanding the ACTC in two ways.  First, it increases the maximum amount a parent may claim per qualifying child from $1,600 to $1,800. That increase would be implemented retroactively.  H.R. 7024 also increases the ACTC in future years, raising it to $1,900 in 2024, and $2,000 in 2025.

H.R. 7024 passed the House on January 31 of this year, but it faces opposition by some in the Senate, particularly from Senator Crapo (R-ID), who is the lead Republican on the Finance Committee, which has jurisdiction over tax related matters. While most of the in-fighting relates to traditional work eligibility requirements, Congress has still not addressed the loopholes in the law that allow illegal aliens to claim the credit.

Currently, the law does not require either the parents or dependent children to be citizens or otherwise have lawful status (such as legal permanent residence) in order to claim the ACTC.  It only requires that the dependent children have social security numbers.  That means illegal alien parents can file tax returns using an Individual Taxpayer Identification Number and claim the credit for qualifying children. To make matters worse, the Biden Administration is now releasing millions of illegal aliens into the U.S. in ways that make them, and their children, eligible for work authorization and social security numbers. They will also be allowed to claim the credit.

The cost of the expansion to taxpayers will no doubt be immense. The Center on Budget and Policy Priorities estimates that the proposed expansion of the ACTC would provide 16 million children more money in tax refunds. According to the Congressional Budget Office, all of the changes to the Child Tax Credit would increase government spending by $30.6 billion over just a two-year period (2024-2026). 

While these concerns have not been addressed, it has not stopped Majority Leader Schumer from working behind the scenes to peel off Republican members to support of the $79 billion bill. The Washington Post reported last week that the “prospects could be growing rosier” and that privately, some Republican Senators are “increasingly willing to support the bill.”

Desperate to get this over the finish line, some have called on Schumer to put the bill on the floor and see where the votes are. Last week, Schumer said to reporters, “Look I’m all for the package, if there are enough votes to move it forward in the right way, yeah, we’ll try to get it on the floor,” Schumer said, adding that “the sponsors are trying to see if there are enough votes.”

FAIR has expressed concern about H.R. 7024 to congressional leaders, and has repeatedly urged House and Senate members to increase immigration enforcement and reduce the incentives that draw illegal aliens to the United States. The tax bill currently in the Senate would simply reward those who have entered the U.S. in the past several years rather than fixing the broken immigration system.

Congress should not expand the Additional Child Tax Credit without closing loopholes allowing illegal aliens to take advantage of it. Senator Hyde-Smith (R-Miss.) has a bill to close one of the loopholes in the law. Her bill, S. 3798, would require that the parents, in addition to the children, have Social Security numbers to claim the credit, indicating the parents have work authorization. Although this wouldn’t completely solve the issue, given that it would still allow otherwise illegal aliens with work-authorized SSNs to potentially claim the credit, it would be an improvement.

The Tax Relief for American Families and Workers Act is one example of how taxpayer-funded benefits incentivize and support those who have violated our immigration laws.  The bill places a financial burden on American taxpayers, especially at a time when they are being asked to spend billions on border security to end the crisis that the Biden Administration created.