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Quarter-million Oregonians denied tax credit for low-wage workers

News Release
March 24, 2021

More than a quarter-million Oregonians in working households — most of them U.S. citizens and authorized immigrants — cannot claim a tax credit for families surviving on low wages because they live with a family member who lacks a Social Security Number, according to a new report by the Oregon Center for Public Policy (OCPP).

Federal rules deny the Earned Income Tax Credit to an entire household when just one of its members uses an Individual Taxpayer Identification Number (ITIN), as opposed to a Social Security Number, to file taxes. A number of groups use an ITIN, including undocumented workers, student visa holders, some survivors of domestic violence, and others.

Because Oregon follows the federal rules to determine who qualifies for the EITC, these “mixed-status” families also lose out on the state tax credit. Of the 273,000 Oregonians denied the credit, 173,000 are U.S. citizens and authorized immigrants.

“The denial of the EITC to ITIN taxpayers and their families undermines the purpose of the tax credit, which is to lift up working families struggling to get by on low wages,” said OCPP Senior Policy Analyst Janet Bauer. She noted that immigrants are more likely to work than U.S.-born Oregonians and to be paid low wages.

The denial of the tax credit to mixed-status families results in 85,000 Oregon children — one in 10 of all children in the state — missing out on the benefits of the EITC, according to Bauer.

Researchers have found that the income boost to households receiving the EITC improves the economic and social well-being of families, said Bauer. As a result, children do better in school, are more likely go to college, and earn more as adults.

“We are shooting ourselves in the foot by excluding large numbers of Oregon children from a tax credit proven to improve the well-being of children,” said Reyna Lopez, Executive Director of PCUN, Oregon’s union of farmworkers. “They are our future, and the more we can do now to ensure they thrive academically and emotionally, the stronger our state will be in the long run.”

A bill presently before the Oregon legislature would end the exclusion of ITIN users from the Oregon Earned Income Tax Credit. Under House Bill 2819, the Leave No Worker Behind Act, mixed-status families would receive the benefit of the state tax credit. It would also provide these families the amount of money they lose out on from being denied the federal EITC.

“This legislation is a matter of decency and fairness,” said Lopez. “Workers who use an ITIN pay taxes. Many are designated ‘essential’ workers during the pandemic, and they risk their health for all of us during these trying times, while being paid low wages. The least we can do is make sure ITIN families have the same tax supports as other lower-wage families have.”