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April 05, 2005
Many Undocumented Workers Pay Taxes, Receive No Benefits

Undocumented workers in the United States are contributing as much as $7 billion a year into the Social Security system but are not entitled to benefits, the New York Times reports.

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Estimates show that about seven million undocumented workers are contributing to the system, accounting for about 10 percent of last year's Social Security surplus, the difference between benefits paid and payroll taxes collected, according to the newspaper.

While the Immigration Reform and Control Act of 1986 (IRCA) bars employers from hiring individuals who are not legally entitled to work in the United States, the legislation has done little in curbing the hiring of undocumented workers, according to the newspaper. Many undocumented workers have purchased a fake green card and Social Security card, allowing them to secure jobs and be put on their employer's payroll.

Social Security officials tell the newspaper that they suspect that a significant portion of the W-2s filed with incorrect Social Security numbers--9 million in 2002--are from undocumented workers with fake IDs.

"Our assumption is that about three-quarters of other-than-legal immigrants pay payroll taxes," says Stephen C. Goss, Social Security's chief actuary.

When Social Security officials receive a mismatched W-2, they put it in an "earnings suspense file" until the government finds to whom it belongs. Each year, the Social Security Administration sends about 13,000 letters to employers with high numbers of mismatched W-2s.

The unintended consequence of the letters is that many undocumented workers lose their jobs or leave because they fear immigration officials are cracking down on the hiring of undocumented workers, the newspaper reports.


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