Part I:  Taxation without Representation 2014

Clara Orozco got her first job, waiting tables, three days after she arrived in New York from Mexico. Since then, she’s worked as a cashier at McDonald’s, painted nails, and cleaned houses. And every year, whether she’s been paid by cash or check, on the books or off, she has filed her taxes.

“A friend told me ‘You have to pay your taxes so that one day you can become a citizen. Or at least get a green card,’” she recalls.

That was in 2002. Since then, Orozco has married an American citizen, had two American children, and paid she-doesn’t-know-how much in taxes.

“I started paying taxes in 2002,” Orozco says. “It’s been 12 years and there’s no benefit, because I’m still illegal.”

People who are against immigration often say undocumented workers take more out of the American system than they put in. It’s hard to quantify, but it may not be true.

Last year, the Institute on Taxation and Economic Policy, a non-partisan research organization in Washington, D.C.  did a study to try to get a handle on how many undocumented immigrants pay taxes.

Matt Gardner, the organization’s executive director, says the results show undocumented immigrants actually pay more than a billion dollars in income taxes: “The best estimate is that roughly half of undocumented taxpayers are one way or another paying into the system—having taxes withheld.”

He said the study also found that immigration reform would bring in more taxes,  because immigrants would earn more, and more people would pay taxes. So, he says, “Emphasis should be not on preventing undocumented taxpayers paying in, but allowing them to fully participate the way everybody else does.”

Even though she pays taxes, Clara Orozco doesn’t get a lot of benefits that she might if she were documented. She can’t get the Earned Income Tax Credit, for which low-income families are eligible. She doesn’t get Medicaid.

And bureaucratically speaking, she doesn’t really exist. Orozco has no American drivers license, and her name isn’t on the lease, the electric bill, or the cell phone contract.

But the US government lets her pay taxes. Just like everybody else. When she was working at McDonald’s, she says, they asked for her Social Security number.

“It was easy to get a fake card,” she says. “I didn’t fake it myself. But they knew the card had a fake number; it wasn’t just somebody else’s Social Security number.”

Orozco says McDonald’s withheld a lot of money from her paycheck. “I think they took out more than I earned,” she says.  “I was only taking home about 100 dollars a week.”

But she doesn’t pay taxes using her fake Social Security Number. She doesn’t have to, because the IRS came up with a way for undocumented taxpayers–and other people who don’t have Social Security numbers–to file. It’s called an Individual Taxpayer Identification Number, or ITIN. And with very few exceptions, the IRS won’t turn that information over to immigration authorities.

“I pay my taxes with my husband,” she says. “I pay with my ITIN.”

He’s an American citizen so he has a Social Security Number. They deduct their US citizen children.

Sam Rock is an accountant and attorney who specializes in tax issues for low-income immigrants. He says the IRS will even merge a W-2 that uses a fake Social Security number with the ITIN tax return.

“The IRS will process it as if the name and number on the W2 were the same as that were on the 1040,” he said. “So when you file these returns electronically, there is a box: “If you filed with an ITIN, what’s the name and number you filed under?’”

And if you’re paid in cash, you can just use your ITIN to file like a freelancer does. Rock says the IRS tries to make it simple, because the law says that just about everybody has to pay income taxes.

“The fact that you’re undocumented, make cash, work with false Social Security number, doesn’t relieve you of obligation to file tax return,”Rock says. “Because if you make that money, the government wants it.”

But to Clara Orozco, it all adds up to something like taxation without representation. “We don’t have a voice,” she says. “We don’t have a vote. But we’re behind all the restaurants, behind every business. It’s just not fair. We’re not asking anything, we’re not thieves, we’re not trying to steal anything. We’re just looking for a better life.”

She says she sometimes thinks about not paying taxes. “But then I think about if I don’t pay,” she said, “And if there’s immigration reform some day, this is the only proof I have that I’ve been here for 12 years.”

Part Two:  A Conversation on Citizenship and Taxation

Undocumented taxpayers obviously make up just a fraction of the people who pay taxes in the US. But even for citizens, the tax system is fraught and complicated. We wanted to get to the bottom of how it got that way, and how that complexity affects our attitudes toward taxes.

One of Life of the Law’s new advisors, Ajay Mehrotra, is tax historian and Associate Dean at Indiana University’s Maurer School of Law. Professor Mehrotra invited some of his fellow tax scholars to talk about taxation and citizenship,  Lawrence Zelenak a Professor of Law at Duke University, Molly Michelmore, an Associate Professor of History at Washington and Lee University; and Beth Pearson, a PhD Candidate at the University of California Berkeley who’s studying the evolution of state tax laws.

Find out more about the fascinating history of Americans and their taxes in the US:

Ajay Mehrotra,  “Making the Modern American Fiscal State: Law, Politics and the Rise of Progressive Taxation, 1877-1929” Cambridge University Press, Sept 2013.

Lawrence Zelenak, “Learning to Love the 1040” University of Chicago Press, March 2013.

Molly Michelmore, “Tax and Spend:  The Welfare State, Tax Politics, and the Limits of American Liberalism”  University of Pennsylvania Press, Feb 2012.

Elizabeth Pearson, University of California at Berkeley

Institute on Taxation and Economic Policy study: Undocumented Immigrants’ State and Local Tax Contributions