Illegal, But Not Undocumented:

  Identity Theft, Document Fraud and Illegal Employment

A forthcoming Center for Immigration Studies report examines the phenomenon of illegal immigration-related document fraud and identity theft, which is committed primarily for the purpose of employment.  In it, Ronald W. Mortensen, Ph. D and former Foreign Service Officer, debunks three common misconceptions:  illegal aliens are “undocumented;” the transgressions committed by illegal aliens to obtain jobs are minor; and illegal alien document fraud and identity theft are victimless crimes. 

The findings include:

·         Illegal immigrants are not “undocumented.”  Illegal aliens have numerous fraudulent documents such as counterfeit Social Security cards, forged driver’s licenses, fake “green cards,” and phony birth certificates.  Experts suggest that approximately 75% of working-age illegal aliens use fraudulent Social Security cards to obtain employment.

·         98% of Social Security number theft involves people who use their own names with the stolen number, according to a Social Security Administration official.  The federal E-Verify program, now mandated in only 13 states, can detect this fraud, so more widespread use would help curb this problem.  Universal mandatory use of E-Verify would also stop virtually 100% of child identity theft.  Only two percent of SSN-related identity theft is said to involve perpetrators assuming another’s entire identity, which E-Verify cannot as easily detect.

·         Illegal immigration and high levels of identity theft go hand-in-hand.  States with the highest incident of identity theft also have high levels of job-related identity theft (Arizona 39%, Texas 24%, New Mexico 19%, California 17%, Colorado 17%, and Nevada 15%).  Seven of the ten states with the highest number of illegal aliens per capita are among the top ten states for identity theft (Arizona, California, Texas, Florida, Colorado, Georgia, and New York).

·         Children are prime targets of illegal-alien-driven identity theft.  In Arizona, it is estimated that over one million children are victims of identity theft.  In Utah, 1,626 companies were found to be paying wages to the Social Security numbers of children on public assistance under the age of 13. These individuals suffer very real and very serious consequences in their lives.

·         Illegal immigrants who use fraudulent documents and/or identity theft to obtain employment or other benefits are committing serious offenses, and are not “law abiding”.  These acts are felonies.

·         Illegal employment enables illegal aliens to continue to send billions of dollars annually to their home countries rather than spending it in the U.S. and helping stimulate the American economy.  In October 2008 alone, a total of $2.4 billion was transferred to Mexico.

·         Corruption is a serious problem in the home countries of most illegal aliens.  Our society’s tolerance of it in the context of immigration erodes respect for the rule of law in immigrant communities and overall and paves the way for additional criminal activity and increased corruption throughout society.

·         Political, civic, religious, business, education, and media leaders support illegal aliens who commit identity theft while ignoring their victims.  These leaders blame Americans for “forcing” illegal aliens to commit document fraud and identity theft and make victims out of illegal aliens who are convicted of these crimes.  No similar concern is expressed for the American men, women, and children who are the actual victims of illegal alien identity theft.

·         The Social Security Administration and Internal Revenue Service facilitate illegal immigrant-driven identity theft.  For example, the Social Security Administration assigns Social Security numbers that are being used illegally to newborn infants. The IRS demands that victims of identity theft pay taxes on wages earned by illegal aliens using their stolen Social Security numbers while taking no action to stop the identity theft.

·         State and local governments should take steps to address this problem by adopting tougher laws and devoting more resources to prosecution and public outreach to supplement federal efforts.  While the Bureau of Immigration and Customs Enforcement (ICE) is making an effort by targeting large document fraud rings and the most egregious employers, their resources are limited and stretched across multiple priorities.  In 2007, such cases represented only seven percent of the total ICE caseload.

·         Employers can ensure that they have a legal workforce by using a combination of the federal government’s E-Verify and Social Security Number Verification Service systems and by signing up for the federal government’s IMAGE program or privately conducted audits.

PUBLIC BUDGETING - THE PARABLE OF THE SKUNKS

Ronald Mortensen, Ph.D.

Incremental budget:  A budget prepared using a previous year’s budget with incremental amounts added for the new budget period.

Introduction

State and local governments face serious revenue shortfalls this year.  Increasing taxes at a time when citizens have seen their net worth fall like a rock and cut their family budgets to the bare bone doesn’t make a lot of sense.  Bonding will only transfer current problems to future generations. 

Therefore, this should be the perfect time for governments at all levels to get rid of out-dated, redundant and/or nice-to-have programs that have worked their ways into the budget over the years.  This would minimize the impact on the core or legitimate functions of government such as public safety (law enforcement, jails, courts), public health (water, sanitation, air quality), and public infrastructure (roads, highways, water and sewer systems).

To understand why it is so important for government to clean out the dead wood every now and again, let’s look at how the incremental budgeting process works.  We’ll use the example of five skunks. 

The Parable of the Skunks

My skunks deserve public funding.  They make children happy.  Seniors love them because they remind them of their days growing up in the country.  People come from all around to watch the skunks playing in my yard.  While in the area, they go to restaurants and fill their cars with gas.  Thus, it is clearly in the public interest for the taxpayers to open up their “family purses” to support my skunks.  After all, they enhance everyone’s quality of life and they are a source of economic development. 

“Utahans for Skunks” is organized.  They hire a lobbyist, put up yard signs supporting public funding for skunks and they contact their elected officials.  The Chamber of Commerce, elected officials, civic groups and major newspapers all support a taxpayer investment in my skunks.  After all, it will only cost the average family the equivalent of a couple of pizzas a year in higher taxes and the rewards in terms of quality of life and economic development are immeasurable.

After a great deal of work, $1,000,000 in ongoing funding is approved for each of my five skunks.  The hard work is done.  No one will ever again ask why these stinkers are in the budget.

A year goes by.  Officials are preparing the next budget.  They have hundreds of millions of dollars in surplus funds to allocate.  The skunks automatically get a 10% increase simply because they are in the budget.  The next five years are good and now each skunk is getting well over $1,500,000 dollars.

Finally, the economy turns down and tax receipts drop like a rock.  Rather than going after the skunks and getting them out of the budget, officials propose a 7% across the board cut in spending.  After all, they don’t have the stomach to deal with the stink that the skunks would make if they tried to kick even one of them out of the budget.  So, at the end of the day, just like legitimate, core functions of government, the skunks will each be 7% poorer but they will be in the budget for ever more. 

Homework

Identify and list all of the skunks in government budgets that we are paying for out of our “family purses.” 

Keep an eye on the state and local governments this year.  Will they identity the skunks and get the stinkers totally out of their budgets or will they keep them in while cutting back on law enforcement, highways, public health and other legitimate functions of government?  What do you think?

__________________________________________-

The Family Purse is an ongoing series that encourages elected officials to limit government to its legitimate functions.  Ronald Mortensen is a co-founder of CitizensForTaxFairness.org.  If you would like to contribute to this series, send your contribution of between 200 and a maximum of 600 words to:  citizensfortaxfairness@gmail.com. 

MITT ROMNEY ON BUDGET CUTTING

“One department might have tons of cost reduction opportunity; another only ounces.  An overall 15 percent cost reduction goal is too easy for one, too hard for the other.  The approach is subject to the age-old ploy of manager putting an item that is obviously critical on the list of things to be cut.  The senior executive quickly restores the critical item and is thereby convinced his subordinate has no fat whatsoever left in his budget.   ”   Mitt Romney

So how do you get around this problem?  While at the Salt Lake Organizing Committee (SLOC), Romney utilized a comprehensive bottom-up budget review that allowed senior management to become completely familiar with all of the organization’s programs in a relatively short time.  It identified core functions, discretionary programs, duplication of services and required managers to immediately make structural and budgetary adjustments.

When Romney arrived in Salt Lake City as the President and Chief Executive Officer of the Salt Lake Organizing Committee, SLOC was facing a financial crisis of huge magnitude – a minimum of $379 million out of a $1.9 million budget.  Working with SLOC managers, Romney initially conducted a “top down” budget review that resulted in reductions of $98 million. 

Shortly after Fraser Bullock joined SLOC as COO, a comprehensive line by line, bottom-up analysis was undertaken. During this effort every line item was reviewed and subject to adjustment.  Prior to their budget review, each of the 40 plus directors divided their entire budgets, line by line, into those items that were “Must-Haves” and those that were “Nice-to-Haves.”  Must-Haves were items without which the Games could not proceed.  Nice-to-Haves were enhancements and these were divided further into three levels of priority – first tier, second tier and third tier.

As Romney explains the process:

Fraser’s approach was all encompassing.  In most budget meetings and cost-cutting exercises I have seen in corporate America, managers bring in the recommendations for reductions.  There are a number of problems with this approach.  First, it’s very hard for the senior executive to know just how much excess there is in each and every department.  One department might have tons of cost reduction opportunity; another only ounces.  An overall 15 percent cost reduction goal is too easy for one, too hard for the other.  The approach is subject to the age-old ploy of manager putting an item that is obviously critical on the list of things to be cut.  The senior executive quickly restores the critical item and is thereby convinced his subordinate has no fat whatsoever left in his budget.  As governor of Massachusetts, I see some municipal officials announce drastic cuts needed in police, fire and teachers.  Predictably, the public is appalled.  But what about patronage jobs, less essential functions, excessive pay contracts?  From them the attention has been deflected.[1]

Once budgets were broken down into Must-Haves and Nice-to-Haves, Bullock and the SLOC finance staff met with program managers responsible for developing and administering their budgets.  They quickly reviewed each line item.  Decisions were instantaneously made as to whether the item was a core “must-have” or an optional “nice-to-have.”  “Nice-to-haves” were immediately cut from the budget and moved to a prioritized list that could be considered for funding at a later date if a need arose for it.  Budgets were updated immediately to reflect the changes.

At the end of the first bottom-up analysis, Fraser and the Management team had identified $97 million in further cuts……They had placed an additional $72 million into three Nice-to-Have tiers of enhancements that would be held back until or unless revenues became available.  At the same time they identified another $56 million in previously unbudgeted expenditures.  The net savings from the bottom up exercise was $113. 

We committed our finance team to performing a bottom-up analysis every quarter….Another $16.5 million in cuts came in September.[2] 

Bottom-up reviews significantly reduced the initial budget and the immediacy of the process required managers to achieve their objectives with the limited funding and lean programs that were left at the end of the exercise.  Items were only added back into the budget when they met a core operating need and as increased revenues became available to support Nice-to-Haves.  Managers were held responsible for maintaining spending limits and rewarded financially for meeting their budget and operational targets.

The process required the COO to dedicate a great deal of time to it; however, it allowed him to learn virtually every detail about a 1.9 billion dollar budget, to identify overlapping programs and to cut out items that were not absolutely necessary to the production of an outstanding Winter Olympic Games.  When combined with an aggressive marketing effort, careful budget and program control enabled SLOC to realize a $100 million profit.

[1] Mitt Romney.  Turnaround: Crisis, Leadership, and the Olympic Games.  Regnery Publishing, Inc. 2004.  p.111.

[2] Ibid, pp. 114-15.

TAX DEFERRAL – HIGHER TAXES AND DIMINISHED PROPERTY RIGHTS?

In order to shield citizens from rising property taxes that have resulted from Utah’s “unfair” market value property assessment system, a number of state legislators have proposed that individuals be allowed (forced) to defer the payment of property tax increases until after their deaths or until they sell their homes whichever comes first.  Of course, upon death or the transfer of property ownership, the deferred taxes would have to be immediately paid with interest.

UNINTENDED CONSEQUENCES – HIGHER TAXES

The tax deferral proposal is ostensibly designed to help citizens who are struggling to stay in their homes.  It does this by forcing citizens to effectively mortgage their homes to the government or to an entity set up by the government.  Will this plan really help citizens or will it ultimately result in higher taxes, bigger government, a loss of liberty and a weakening of property rights?

A strong argument can be made that if this proposal becomes law, it will result in higher property taxes by removing the urgency on the part of citizens to oppose property tax increases.  If tax payments are deferred, many citizens, including those who are among the most active and vocal opponents of property taxes, will be silenced.  If the deferred property taxes are paid by some other entity, then the property owner will no longer be required to write a check each year for the tax payments.  This will make it substantially easier for the hundreds of statewide, elected and non-elected property taxing units to increase property taxes and increase the size of government.

A MOVE TOWARD SOCIALISM THROUGH AN ATTACK ON PROPERTY RIGHTS

In addition, as the opposition to property taxes decrease under a tax deferral system and as overall property taxes increase, more and more citizens will be forced to give government an ownership interest in their homes if they are to remain in their homes regardless of whether they want to or not.  Slowly but surely, government will gain a larger and larger interest in the property of an ever expanding number of citizens.  In effect, under this plan, conservative legislators will be encouraging socialism where governments eventually own, or at a minimum share ownership, in our private property.

Tax deferral does not enhance personal liberty, it takes it away.  Tax deferral does not protect property rights.  It eliminates them by socializing them.  Marx would be pleased.

IF NOT TAX DEFERRAL, THEN WHAT?

CitizensForTaxFairness.org believes that rather than socializing home ownership, it would make more sense to control government spending by restricting government to its legitimate functions.  After all, governments have no resources of their own and the only way they obtain what they want is by forcibly taking it from their citizens.

While we all have a responsibility to pay our fair share to fund what President Reagan referred to as the “legitimate functions of government,” the government has no right to take money through “legal plunder” in order to fund nice-to-have, non-legitimate functions or to force people to give up their ownership interest in their private property.  And yet, this legal plunder that is the basis of socialism is the primary driving force behind these tax deferral proposals.

Therefore, governments at all levels should adopt and follow the proposals that Governor Huntsman made during his first gubernatorial campaign – control spending and taxes by making government more efficient and by limiting the scope of government.

Furthermore, Utah’s elected officials would do well to read Governor Mitt Romney’s book on the Salt Lake Olympics and adapt and adopt the methods that were used to cut over $200 million out the 2002 Olympic Organizing Committee’s budget.

Finally, legislators should focus on replacing the current, fatally flawed, “unfair” market value property tax system with a modified acquisition value based property tax system.

CitizensForTaxFairness.org, along with other members of the statewide Citizens Coalition for Tax Fairness, will continue to adamantly oppose property tax deferral.  We will work to ensure that Utah’s legislators focus their attention on ways to ensure that Utah’s property owners are never, ever forced to give up their ownership interests in their homes and we will continue to work to replace the “unfair” market value property assessment system with a modified acquisition value property tax system that is designed to protect homeowners’ interests rather than governments’ interests.

What do you think? E-mail you comments to CitizensForTaxFairness@gmail.com.