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Back taxes a thorny issue in immigration bill

Amendmentmay imperil passage of Senate plan

Workers harvested cantaloupes near Firebaugh, Calif. A study states that 61 percent of the nation’s illegal immigrants who arrived after 2001 work in the underground economy.2011 file/Associated Press

WASHINGTON — A proposal to collect unpaid taxes from illegal immigrants, introduced in hopes of gaining Republican support for legislation to provide a pathway to citizenship for 11 million people, could complicate efforts to pass the bill, according to some analysts.

The Senate begins debate this week.

The amendment, authored by Senator Orrin Hatch, a Utah Republican, would require illegal immigrants to pay any back taxes before applying for citizenship. Hatch is in a powerful position to sway other conservatives and he has said he would walk away from the bill if his “reasonable” amendment is not included.

Significantly, Senator Marco Rubio, the Florida Republican who is a key figure in the immigration debate, has said he supports Hatch on the issue. “We strongly support Senator Hatch’s amendments to address the finance issues in the legislation,” Rubio spokesman Alex Conant said.


But critics said the amendment could hamper efforts to pass the bill. They said it is unrealistic to think that an illegal immigrant who worked in the underground economy would be able to calculate unpaid taxes and pay potentially huge amounts to the government.

Senator Charles Schumer, the New York Democrat, said the measure was impractical. He said an illegal immigrant might say, “I don’t know what my back taxes are. I’ve worked for 12 years for these eight companies. Four of the companies paid me in cash.”

Sixty-one percent of the nation’s illegal immigrant population that arrived after 2001 works in the “underground economy,” according to a 2009 Social Security Administration study, meaning they have no Social Security numbers.

These immigrants often receive wages in cash from a different employer at the end of each day and rarely pay income or Social Security taxes. The task of calculating and providing proof of what they owe may be too onerous and deter them from emerging from the underground, according to immigration advocates.


“Think about the day laborer who works day to day, going job to job, going back and trying to reconstruct their employment history in a way that would create a credible tax filing,” said Marshall Fitz, immigration policy director at the Center for American Progress, a liberal think tank. “It’s not realistic.”

According to the Immigrant Learning Center in Boston, the top five most popular jobs for immigrants living in Massachusetts range from low-wage day-labor jobs such as building maintenance and manufacturing to high-skilled salaried jobs in the tech sector and health care. As a result, there are likely to be “huge inconsistencies” in the employment histories of undocumented immigrants without Social Security numbers, according to Paul Watanabe, director of the Institute for Asian American Studies at the University of Massachusetts Boston.

Immigration advocates in Massachusetts are split on the issue.

Eva Millona, executive director of the Massachusetts Immigrant and Refugee Advocacy Coalition, welcomed the provision, saying that many Massachusetts immigrants already pay their taxes, often through a tax ID number.

Although data do not reveal what percentage of immigrants pay their taxes, families with an immigrant head of the household paid $1.36 billion in Massachusetts state income taxes in 2009, according to a study by UMass-Boston.

“I think we are at a very historic moment. Landmark legislation is about to pass, and we understand it is a compromise,” Millona said.

Rocio Saenz, president of the State Employees International Union 615 in Boston, said she opposes a back taxes amendment, but would not pull her support from the immigration bill if it was included.


“When you impose these back taxes and fees, it really makes it impossible for eligible immigrants to earn their legal status,” Saenz said. “We are hoping to see that we continue a path to making it real and affordable and reasonable.”

The citizenship seekers would not only need to pay back their income taxes but would also be accountable for seeing that their Social Security taxes, also known as payroll taxes, have been paid, a cost usually shared between employer and employee.

That is a problem because immigrants may have a hard time tracking down past employers and seeing that they pay their share, because employers may not be willing to disclose to the government that they hired an undocumented worker, according to Sharon Parrott, vice president for budget policy and economic opportunity at the Center on Budget and Policy Priorities, a research and policy institute in Washington.

Some Republican supporters of the legislation signaled they have concerns about the back-taxes amendment but have left the door open for negotiation.

“I think there’s going to be a lot of back and forth and a lot of compromises made with a piece of legislation like this, so I can’t commit,” said Senator John McCain, the Arizona Republican. “We would certainly like to have Senator Hatch, but we’d like to have a lot of other people, too.”


Senator Lindsey Graham, a South Carolina Republican, said he wants to be sure that collecting immigrant taxes will not cost the Treasury more than it takes in.

“I don’t mind putting a burden on people, but I want it to be an achievable burden and it be something that the system could absorb,” said Graham.

Correction: Because of a reporting error, an earlier version of this story incorrectly stated Rocio Saenz’s position on the immigration bill if it included a back taxes provision. While she opposes the amendment, she would not pull her support from the bill if it were included.