The Republican tax bill would deny the Child Tax Credit (CTC) to roughly 1 million low-income children in working families who lack a Social Security Number (SSN) – even though their parents face payroll and other taxes on their income. That means the bill, which would give just a token CTC increase of $75 or less to 10 million children in low-income families, would also eliminate the credit altogether for roughly 1 million children and their families.
People who work in this country must pay taxes on their income, regardless of their immigration status. Immigrant workers lacking an SSN file their income taxes using an Individual Tax Identification Number, or ITIN. ITIN filers are generally subject to the same tax rules as other filers and are eligible for the same tax benefits, such as the CTC (including the “refundable” part, which goes to those who earn too little to owe federal income tax).
The Republican tax bill, however, would let filers claim the CTC only for children with an SSN, not an ITIN. That’s harsher than the Senate-passed bill, which would have applied the SSN requirement just to the refundable portion of the CTC.
Proponents describe this change as an “anti-abuse” measure. It isn’t: it’s a major eligibility cut for working families who are doing nothing wrong by claiming the credit.
Roughly 1 million children, most of them in low-income working families, would lose CTC eligibility, based on data from the Pew Hispanic Center. They are overwhelmingly Dreamers — undocumented children whose immigrant parents brought them to the United States.
The CTC goes only to working families, including many in which the parents work in tough jobs that often lack basic protections that most other workers take for granted. Parents use it to help feed their families and keep a roof over their heads.
The children who would lose the credit will remain part of our communities and the economy as adults, so all Americans have a stake in ensuring that they get the resources they need to become productive workers. Taking the CTC’s income away from poor children would not only increase poverty and hardship immediately, but would also affect their performance in school and make it less likely that they will finish high school and go on to college, recent research shows. The CTC changes thus could increase poverty both today and in the future.
The IRS is already acting to prevent error and fraud concerning ITINs and the CTC, and President Obama and Congress took action as well. But the Republican tax bill’s CTC provision isn’t designed to strengthen tax compliance. It’s designed to deny the credit to a million children in immigrant working families.