July 28, 2014
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Tax Benefits for Hiring Foreign Workers Add to Shortages in Trust Funds for Elderly

Social Security, Medicare, Unemployment Funds Lose Over $1.5 Billion

WASHINGTON, July 9, 2012 /PRNewswire-USNewswire/ -- The Center for Immigration Studies (CIS) provides the first published estimates of shortfalls to government trust funds for senior citizens resulting from the hiring of certain categories of foreign workers. In the Center's recent study, How Employers Cheat America's Aging by Hiring Foreign Workers, CIS fellow David North examines how American employers and over half a million alien workers avoid paying payroll taxes to the detriment of American retirees and disabled workers.

The report is online at http://cis.org/employers-Cheat-Aging-By-Hiring-Foreign-Workers.

By hiring certain classes of aliens, American employers and their foreign workers can avoid paying taxes to the Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) trust funds. Employers save at least 8.45 percent of the total payroll, undermining the incentive to hire American citizens or legal residents. While employers are just playing by the rules outlined in legislation, it is clear that the legislation is written to benefit the non-citizen workers and their employers.

"We have in these programs a double whammy: a government program that subsidizes employers to hire alien workers, rather than resident ones, on one hand, and, on the other hand, the routine siphoning of moneys that should be going to the trust funds for the aging, moneys that instead wind up in the pockets of the foreign workers and their employers," North comments.

"Although some may contend that foreign workers who won't remain in the country long enough to benefit from these trust funds shouldn't be required to contribute, there's no rationale for the employer benefiting" said Mark Krikorian, Executive Director of the Center for Immigration Studies. "These trust funds are losing over $1.5 billion a year as a direct result of these foreign-worker programs. This is obviously a small part of the shortfall faced by these programs, but there is no excuse for retaining these loopholes carved out by Congress and special interests."

Mr. North's research provides calculations on trust fund losses for each of the relevant foreign worker programs, including Summer Work Travel, foreign students working off campus, cultural workers, and foreign college graduates working on OPT permits. The latter category permits foreign workers to stay for as long as two years and five months after graduation.

The Center for Immigration Studies is an independent, non-partisan, non-profit, research organization. Since its founding in 1985, the Center has pursued a single mission - providing immigration policymakers, the academic community, news media, and concerned citizens with reliable information about the social, economic, environmental, security, and fiscal consequences of legal and illegal immigration into the United States.

CONTACT: Marguerite Telfordmrt@cis.org (202) 466-8185

SOURCE Center for Immigration Studies



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