U.S. Rep. Sam Johnson, R-Texas, left, wants to end the practice of giving illegal immigrants tax credits for kids, but U.S. Sen. Harry Reid, D-Nev., wont let the House-approved measure H.R. 556 through the Senate. "The System is Working Fine" says Senator Harry Reid, even though the Joint Committee on Taxation calculates that enactment of H.R. 556 would save taxpayers $24.4 billion over the next decade.
The House of Representatives repeatedly has passed an IRS bill that could save U.S. taxpayers up to $24.4 billion over the next 10 years but Harry Reids Democratic Senate will not hear it.
The Refundable Child Tax Credit Eligibility Verification Reform Act, or H.R. 556, would require tax filers to provide Social Security numbers to claim child tax credits.
Currently, the IRS allows undocumented residents to collect the $1,000 credits for dependents not even living in the country. Watchdog reported that illegal immigrants received $4.2 billion from the tax agency in just one year.
My bill (targets) billions of dollars in waste, fraud and abuse. Instead of hitting up taxpayers for even more taxes, Washington needs to go after these billions of dollars, said U.S. Rep. Sam Johnson, R-Texas.
Though the GOP-controlled House has passed Johnsons measure three times, Senate Majority Leader Reid, D-Nev., refuses to allow the bill to come up for a vote in his chamber.
The IRS has been doling out the credit to tax filers claiming children who do not even live in the country, Johnson charged.
Tax preparers agree that the system is broken and that the IRS must fix it. They say the agency has to stop disbursing ACTC refunds based on Individual Taxpayer Identification Numbers, which are available to undocumented residents.
Tax preparers told Watchdog they have seen clients from Guatemala, El Salvador, Honduras and Nicaragua claiming Mexican children as dependents.
A 2009 TIGTA audit concluded that the child tax credit appears to provide an additional incentive for aliens to enter, reside, and work in the U.S. without authorization, which contradicts Federal law and policy to remove such incentives.
Johnsons bill would impose a 10-year ban on tax filers who commit fraud and a $500 penalty on tax preparers who knowingly bilk taxpayers through the ACTC program.
I just think the child tax credit is working just fine, and theres no need to punish children, the Democratic leader told the Associated Press in February.
Better Ideas
Johnsons bill would impose a 10-year ban on tax filers who commit fraud and a $500 penalty on tax preparers who "knowingly" bilk taxpayers through the ACTC program.
Proving that a tax preparer "knowingly" sent in a fraudulent return would be next to impossible. What if we paid tax preparers $250 for every illegal immigrant removed from the system?
Active incentives to weed out existing fraud would certainly work better than passive incentives to stop further abuse. If Johnson's bill would save $24 billion, my idea would surely save more.
One could reasonably go further and kill the program in entirety.
Hypocricy and Partisan Politics
One would hope that with budget deficits wildly out of control and with interest on the nation's debt piling up even with historic low interest rates, that common sense measures to save $24 billion would get easy passage.
But such hopes are dashed on the hard rocks of partisan politics. What one party wants, the other doesn't.
Moreover, I am quite sure enough Democrats would vote for this bill if they were allowed. But they aren't. Reid has blocked the measure.
Recall the outrage by Senator Reid, the media, and the Democrats when House Speaker John Boehner would not allow a vote on a clean budget resolution bill.
Now Reid is doing the same thing, and it's costing taxpayers $24 billion. Where's the media outrage?
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com