Statements on Introduced Bills and Joint Resolutions

Floor Speech

BREAK IN TRANSCRIPT

Mr. GRASSLEY. Mr. President, today I am introducing legislation with
Senator Enzi and a few other Senators to close a tax loophole that
could mean billions of dollars in tax benefits going to individuals
based on work they performed illegally in the United States.

The tax benefit I am referring to is the earned-income tax credit.
The earned-income tax credit was established as a work incentive to
help move more individuals from the welfare rolls to the payrolls. The
policy behind the EITC is one I and many of my colleagues support as it
is intended to foster betterment and personal responsibility by giving
those on the lowest rungs of the labor pool an extra incentive to jump
in and stay in the workforce rather than rely on welfare programs.

It does this by providing a tax benefit to low-income individuals
based on the amount of earned income they have.

The earned income tax credit is refundable, so it benefits even those
who don't earn enough money to have a Federal income tax liability by
providing them a cash payment.

In 1996 Congress as a matter of policy determined that the earned
income tax credit should be ``denied to individuals not authorized to
be employed in the United States.'' That is the exact language used in
the title of the relevant provision that was enacted in 1996. Congress
carried this policy out by requiring those claiming the earned income
tax credit to provide a Social Security number for themselves, their
spouse, and their children.

From a policy perspective, this rule made a lot of sense to me and
many of my colleagues, as it passed both the House and the Senate with
broad support. Obviously, if the object of the earned income tax credit
is to encourage work, it makes no sense to provide such an incentive to
those who are not legally allowed to work. Why would we want to
encourage individuals to break our immigration laws?

What Congress didn't know at the time was that at an unknown future
date, a President, with the stroke of a pen, would essentially grant
millions of undocumented workers amnesty. Under the President's action,
those previously working illegally in the United States will be
eligible for work authorization and a Social Security number.

Based on an IRS interpretation of the earned income tax credit
eligibility requirements, those who obtain a Social Security number
will be eligible to claim the earned income tax credit not only for
future years but for previous years while they were living and working
in the United States undocumented. Based on the statute of limitations,
those obtaining deferred action could then go back and amend or file
returns for up to 3 previous tax years to take advantage of a credit
that can be worth several thousands of dollars each year.

The legislation I am introducing today with Senator Enzi will fix
this loophole by making it clear that those granted deferred action are
not eligible to claim the earned income tax credit for the years they
worked in the United States as undocumented workers. This proposal is
simply an extension of current policy. Those granted deferred action
will still be able to claim the earned income tax credit in years going
forward for work they perform legally. This proposal reflects the
commonsense proposition that American taxpayers should not subsidize
work they performed illegally in the United States.

This bill should be a no-brainer for any of my colleagues who agree
that we should not reward individuals for breaking our immigration laws
and our employment laws. I encourage my colleagues on both sides of the
aisle to support this commonsense piece of legislation.

BREAK IN TRANSCRIPT

Source