Marketplace Morning Report: Episode Summary Episode Title: When IRS Info Is Shared with Law Enforcement
Release Date: April 24, 2025
Host: David Brancaccio

IRS Data Sharing with Immigration Officials

Introduction to the Issue
David Brancaccio opens the episode by addressing a significant policy shift in the United States: the government's move to provide immigration officials access to IRS records. This strategy, championed by the Trump administration, aims to identify individuals who are under deportation orders or have committed crimes by leveraging tax information. Brancaccio highlights the controversy surrounding this approach, noting that the departure of an acting head of the IRS may be linked to this policy change.

David Brancaccio [00:31]: “The Trump administration wants to use tax info to find people under deportation orders or have committed crimes. This blurring of a traditional boundary is reportedly the reason one of the acting heads of the IRS quit the other day.”

Impact on Immigrant Communities
Nova Safo from Marketplace introduces Itzel Ramirez, a tax professional from Milwaukee who utilizes ITINs (Individual Taxpayer Identification Numbers) to help undocumented immigrants file taxes. Ramirez observes a significant decline in tax filings this season, attributing it to fears that the IRS data sharing with ICE (Immigration and Customs Enforcement) is deterring immigrants from participating in the tax system.

Itzel Ramirez [01:24]: "The prevailing wisdom in immigrant communities has been that filing taxes can help efforts to remain in the US at minimum by showing proof of residency and responsible behavior."

However, Ramirez notes a troubling decrease in her client base:

Unknown Speaker 1 [01:24]: "All the time I say do your taxes. It's good for you."

Further emphasizing this trend, she explains the hesitation among immigrants to file taxes:

Unknown Speaker 1 [01:47]: "The people say, no, I don't want it because maybe IRS shared information with ICE or no, because for what I need to do the government sent us to Mexico or sent us to our country. So they wait."

Economic Implications
Natasha Sarin from the Yale Budget Lab discusses the financial repercussions of reduced tax filings by unauthorized immigrants. She estimates that undocumented immigrants contribute approximately $66 billion in federal income and payroll taxes and an additional $30 billion in state taxes annually. Sarin warns that a decline in tax compliance could exacerbate the existing tax gap—the difference between taxes owed and taxes paid—potentially increasing it by $25 billion.

Natasha Sarin [02:20]: "Unauthorized immigrants pay about $66 billion in federal income and payroll, and another about $30 billion in state taxes. If more undocumented immigrants stop filing and begin working outside of the traditional payroll system... the annual gap between taxes owed and taxes paid could widen."

Humanitarian and Legal Concerns
Michael Kircher from NYU's Tax Law Center raises concerns beyond economics, highlighting the humanitarian issues associated with the IRS data sharing:

Michael Kircher [02:52]: "There's a humanitarian concern as well. IRS data simply is not designed for law enforcement purposes, and he's worried about false positives."

Nina Olson, the National Taxpayer Advocate, elaborates on potential misidentifications and the inaccuracies inherent in using tax data for immigration enforcement:

Nina Olson [03:06]: "The IRS might confirm that somebody with a given name lives at a particular address only for them to be an entirely unrelated person, but still end up sort of being detained because, for example, they have a common and similar name."

Olson also points out systemic issues within the IRS data management:

Nina Olson [03:21]: "The IRS does not update addresses in real time between tax filings, so those could be wrong as well."

Legal Precedents and Government Position
Nancy Marshall Genser, head of the nonprofit Center for Taxpayer Rights, underscores the legal implications of the Trump administration's policy shift. She references the 1976 law that restricts the sharing of taxpayer data, highlighting that the current policy breaks this longstanding precedent.

Nancy Marshall Genser [03:34]: "It breaks a precedent that at least."

She further clarifies the IRS's previous stance on data sharing:

Nancy Marshall Genser [03:53]: "Up until this year, the IRS's position had always been we do not share information with ICE or DHS unless there is a specific investigation specific to that person going on and there has to be a court order requiring it."

Despite these concerns, the Trump administration maintains that the data sharing plan is legal and confined to specific criminal cases. As of the episode's release, no lawsuits have been filed challenging this assertion.

Itzel Ramirez [04:12]: "The IRS did not provide us with an interview, but the Trump administration has said its data sharing plan is legal and limited to specific criminal cases. So far, there is no lawsuit challenging that claim."

Federal Reserve’s Beige Book and the U.S. Economy

Tourism Declines Amid Policy Uncertainty
David Brancaccio transitions to discuss the Federal Reserve's Beige Book, which gathers regional economic data from businesses. Despite a broadly steady economy, the report flags significant declines in U.S. tourism, particularly from Canada. Various regional Fed reports indicate:

• Philadelphia, New York, and Boston: Notable decreases in Canadian tourists.
• Minneapolis Fed: A North Dakota retailer reported a 7% drop in first-quarter revenues.
• Atlanta Fed: Airlines noted a significant reduction in foreign passengers entering the U.S.

These tourism downturns are concerning as they paint a picture of an economy grappling with external uncertainties, potentially influencing the Fed's upcoming decisions on interest rates.

David Brancaccio [04:41]: "Tourism warning signs are sprinkled throughout the Beige Book, which includes anecdotes from the businesses around the 12 regional Fed banks."

As anticipation builds for the Fed's meeting on interest rates scheduled for early May, the Beige Book serves as a critical indicator of underlying economic trends.

David Brancaccio [04:41]: "The April Beige Book was released yesterday in preparation for the Fed's next meeting on interest rates in early May."

Market Movements: Stocks and Mortgage Rates

Stock Market Volatility
Following a previous rise of 1.7% in the S&P 500, today's index futures are experiencing a downturn. Both S&P and Nasdaq futures have decreased by 2.10% each, reflecting the market's reaction to conflicting signals about whether to maintain or adjust tariffs.

David Brancaccio [05:19]: "After the S and P stock index went up 1.7% yesterday, index futures are down this morning amid conflicting information about holding fast or easing off tariffs. S and P and Nasdaq futures are down 2. 10% each."

Mortgage Rates Stabilize Slightly Below 7%
Mortgage rates have remained relatively steady over the past week, hovering just below the 7% mark. This stabilization provides some relief to potential homebuyers amid fluctuating economic indicators.

David Brancaccio [05:19]: "30 year fixed rate mortgages pretty steady in the last week, still under 7% on average."

Toy Industry Faces Supply Chain Disruptions Amid Trade Wars

Shift in Manufacturing Locations
Savannah Peters reports on the turmoil within the U.S. toy industry, driven by escalating tariffs and geopolitical tensions. The industry is heavily reliant on Chinese manufacturing, with up to 80% of toys sold in the U.S. being produced in China. However, the trade war has accelerated the shift of production to other countries like Vietnam and India, though these regions face challenges in scaling production to meet demand.

Michael Kircher [06:17]: "As many as 80% of the toys we buy in the US are manufactured in China. Big players were shifting more production into countries like Vietnam and India even before the trade war."

Challenges Beyond Relocation
Nina Olson highlights the difficulties faced by manufacturers in transitioning to new production hubs, such as limited capacity, infrastructure issues, labor shortages, and the inability to replicate the sophisticated manufacturing processes perfected in China.

Nina Olson [06:31]: "The challenge with that is capacity, infrastructure, availability of labor, and the ability to do some of the more sophisticated manufacturing."

Implications for Holiday Season
Michael Kircher warns that the ongoing disruptions are likely to manifest in the upcoming holiday season, predicting higher toy prices and empty shelves due to canceled orders and halted production.

Michael Kircher [06:41]: "That Chinese factories have been perfecting for decades. The trade war will likely speed up the shift to those other countries, but not in time to save the industry's busiest sales season."

Nina Olson [06:55]: "Chaos right now... creates a several day ripple in the supply chain."

Michael Kircher [07:12]: "By Halloween, Zahn predicts, we'll start to see much higher prices and empty shelves in the toy aisle."

Nina Olson [07:12]: "This is deja vu to the pandemic in the worst way."

Trade publication "The Toy Book"'s James Zahn echoes these sentiments, noting that American retailers have already begun canceling orders and manufacturers in China have stopped production, exacerbating the supply chain issues.

Conclusion

David Brancaccio wraps up the episode by summarizing the key economic concerns discussed:

• IRS Data Sharing: The controversial collaboration between the IRS and immigration officials is leading to decreased tax compliance among undocumented immigrants, risking significant losses in tax revenue and raising humanitarian and legal issues.

• Federal Reserve’s Beige Book: While the overall economy appears steady, declining tourism presents warning signs that could influence future monetary policies.

• Market Volatility: The stock market is experiencing significant fluctuations amidst tariff uncertainties, and mortgage rates remain just below 7%.

• Toy Industry Crisis: The trade war is severely disrupting the toy supply chain, likely leading to higher prices and scarcity during the critical holiday season.

David Brancaccio [07:32]: "Los Angeles, I'm David Brancaccio. This is the Marketplace Morning. This morning report from APM American Public Media."

Note: Advertisements and promotional segments, including the initial Gamma App advertisement and the Financially Inclined podcast promotion at the end of the episode, have been excluded from this summary to focus solely on the core content discussed.