Unintended Consequences? Undocumented, Working Poor Families and the Refundable Child Tax Credit

Abstract

Immigrants toil in sweatshops for torturously long days at sub-minimum wages, which may or may not be paid, with little meaningful recourse. Immigrant workers with and without authorization to work in the United States are disproportionately represented among the lowest earners. The average wage among all low-wage immigrant workers was $14,400 in 2001. Moreover, almost half of immigrant workers earned less than twice the minimum wage. These hard working individuals are living in poverty. The Earned Income Tax Credit (EITC) lifts almost 20 million low-income working individuals out of poverty every year. Unfortunately, the EITC does not apply if a worker, her spouse, or her qualifying child does not have a Social Security number. Consequently, many low-income immigrant working families cannot qualify for the EITC. However, the Child Tax Credit (CTC) under certain circumstances may provide relief. This Article begins with an explanation of the complex operation of the CTC. The operation of the CTC is examined by focusing the analysis on the different tax consequences for working poor families in which each member has a Social Security number (documented) and those in which at least one member does not have a Social Security number (undocumented). Next, the Article demonstrates how the CTC fails to ensure that undocumented, working poor families do not pay any taxes. Finally, the Article proposes a legislative reform for this onerous problem and encourages Congress to provide relief for all hard-working poor families.