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Why people are fighting over Social Security numbers

Liberal groups don’t like Mitt Romney’s proposal to limit who gets tax credits designed to help lift children from poverty

- July 19, 2022

In June, when Sen. Mitt Romney (R-Utah) released an updated plan to expand child benefits, liberal advocacy groups objected to provisions limiting the benefit to parents with Social Security numbers. Rather, they wanted the benefits made available to parents with individual taxpayer identification numbers (ITINs).

This may sound like a completely technical controversy. It is not. The United States’ unique history of tax benefits and unauthorized immigration underlies the fight over identification numbers.

SSNs and ITINs have different histories

Congress introduced SSNs soon after the Social Security Act of 1935 to track workers’ earnings and determine new program benefits. Their use grew quickly over time. Social Security numbers are now required for authorized work and access to many other government benefits.

The Social Security Administration issues SSNs to citizens, permanent residents, people granted asylum, and refugees authorized to work in the United States. As a result, undocumented immigrants — who lack SSNs because they are not authorized to live or work in the United States — are excluded from most federal government benefits.

Many other countries, including Canada and the United Kingdom, take similar approaches. In Canada, the government issues a Social Insurance Number to citizens and residents authorized to work there. The United Kingdom issues and requires a National Insurance Number. Both countries limit benefits to people who have a SIN or NIN.

Liberal advocacy groups in the United States instead want people without Social Security numbers to be eligible for benefits. They point out that these residents are identifiable through their individual taxpayer identification numbers.

ITINs were introduced much more recently to improve compliance with federal tax law. Most tax filers use their SSN as their taxpayer identification number. However, the IRS wanted to provide a way for people who were not authorized to work to fulfill their separate legal obligation to report earned income for tax purposes. The IRS created the new ITIN system in 1996 and began issuing numbers to unauthorized workers filing their taxes. Neither Canada nor the United Kingdom developed similar systems for taxing income derived from unauthorized work.

Who should be eligible for the new benefits?

America’s major family benefits — the earned income tax credit and the child tax credit — are administered through the tax code rather than the Social Security office. In other words, they claim these as part of their tax refund, instead of receiving them as direct support, as with SNAP (which provides food benefits to needy families) or disability benefits.

This distinction leads to a complicated question. Should these credits be viewed as tax breaks or as social benefits? Individuals’ answers to that question tend to influence their beliefs over whether an ITIN or SSN is more appropriate. Those who think of these credits as tax breaks are plausibly more likely to think they should go to all taxpayers — including unauthorized immigrants. Those who think of them as benefits will plausibly be more inclined to think they should only go to people who are authorized to work in the country.

ITINs were intended to make it easier for people to comply with tax law. Congress has rarely paid attention to whether ITIN filers claim particular exemptions, deductions or nonrefundable (which can’t exceed a taxpayer’s total tax liability) credits considered part of a standard tax code.

Congress disagrees on what to do about refundable tax credits — which means that if a taxpayer is owed more such credits than they would pay in taxes, the government will send them a check for the difference. Such credits are more like traditional social benefits because low-income households can receive refunds that are larger than what they owe. As a result, some in Congress think that they should not go to people with ITINs.

This has shaped the debate over the earned income tax credit and the child tax credit since ITINs were introduced in 1996. Republicans became increasingly concerned with limiting access to the earned income tax credit after 1993 when Democrats greatly expanded its refundable portion. Worries that the tax credit had been transformed from a tax break to a welfare benefit ultimately led to new Social Security number requirements as part of the 1996 welfare overhaul.

The child tax credit began as a nonrefundable credit and initially was available to taxpayers with either SSNs or ITINs. But Republicans grew concerned after Democrats made the tax credit partially refundable. After Congress expanded the refundable portion of the credit in 2009, a Treasury report found that taxpayers using ITINs — most of whom are widely believed to be unauthorized immigrants — claimed more than $4 billion in child tax credit benefits.

Congress responded with a flurry of bills aimed at adding SSN requirements for the child tax credit. While none passed, the 2017 expansion of the credit allowed Republicans to add a compromise requirement that beneficiaries provide a Social Security number for all children (but not parents) claimed under the credit.

Poor mothers get shut out of the Child Tax Credit, our research finds

The U.S. has many more unauthorized immigrants than comparable countries

The United States has an exceptionally large population of unauthorized immigrants, making up an estimated 3.5 percent of the population, more than countries like the United Kingdom, where it’s 0.73 percent, or Canada, where estimates place it between 0.05 and 1.3 percent.

As a result, SSN requirements affect more people in the United States than elsewhere, which particularly affects mixed-status families. Whereas Canada’s Social Insurance Number requirements exclude an estimated 3,000 mixed-status families in that country, SSN requirements could exclude up to 5.8 million mixed-status families in the United States. ​​ The stakes are simply much higher here.

In the U.S., immigration opponents are far more passionate than its supporters.

The limits of lessons from abroad

Liberal advocacy groups have won over many policymakers by pointing out that the United States is the only rich democracy without a universal child benefit. Potential expansions of the child tax credit would move the United States closer to other countries on this issue.

But the discussions have exposed tensions over the fact that the United States is the only rich democracy that provides child benefits to unauthorized immigrants. Given the strong anti-immigrant sentiment among some Americans, further expanding child benefits may bring up those tensions.

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Joshua McCabe is a senior family economic security analyst at the Niskanen Center and author of “The Fiscalization of Social Policy: How Taxpayers Trumped Children in the Fight Against Child Poverty” (Oxford University Press, 2018).