Bessent Protects Refundable Tax Benefits From Illegal Aliens

Secretary of the Treasury Scott Bessent is trying to ensure that refundable individual income tax credits are not accessible to illegal aliens who break our laws to enter the country and take jobs from Americans.

Bessent announced the Trump administration‘s new measures to this effect on Wednesday, August 19. The Department of the Treasury and the IRS joined together to produce the regulation change that will prevent the abuse of taxpayer-funded benefits going to foreign lawbreakers.

In an X post, in which he also linked to a press release, Bessent said that under President Donald Trump, “the days of illegal aliens collecting taxpayer-funded benefits are over. The federal law is clear, and @USTreasury is enforcing it. American taxpayers should not be forced to foot the bill for benefits going to those who are barred by law from receiving them. These proposed regulations end the abuse, protect the integrity of the tax system, and put Americans first.”

Bessent and his team from the IRS and the Treasury Department state that the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) needs clarification to make sure that the legal eligibility only applies to citizens and legal residents, not to anyone who holds a certain job or income regardless of legal status.

According to Bessent, the PRWORA applies to U.S. citizens, U.S. nationals, and qualified aliens who are not in the country illegally and can receive federal public benefits. It is not clear why the benefits do not apply only to citizens.

IRS Chief Executive Officer Frank J. Bisignano said, “Refundable tax credits, like the Earned Income Tax Credit (EITC), were enacted to help low-to-middle income American families and workers receive critical financial support. Today's proposed regulations ensure that federally funded benefits are reserved for eligible taxpayers and protect the integrity of every taxpayer dollar.”

The Treasury Department press release also clarified, “The proposed regulations apply PRWORA to four individual income tax credits: the adoption tax credit, the child tax credit, the American opportunity tax credit, and the earned income tax credit.”

Part of the problem is that our tax system has become so complicated and convoluted. Of course, the Founding Fathers were opposed to an income tax, and especially to our current progressive income tax system. They were right to be so concerned. Unfortunately, our federal government and its bureaucracy, along with its ability to tax unequally, have grown exponentially in the last 250 years to a size and scope that would have horrified the founding generation. The Trump administration is trying to implement some reforms to a system that is inherently rotten to the core. It is not this administration’s fault, but it does mean that deep reform is obviously difficult.

Bessent is taking a remarkable good first step with these new rules to exclude illegal aliens from the refundable tax credits. But Republicans in Congress should be looking into much more extensive reform.

Editor's Note: President Trump is fighting to renew America this 250th birthday year.

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