You raise a good point about illegals paying federal and state income tax. Don't you have to have a SSN to file your taxes? If so, how does one get one except through document fraud if they are illegal?
"Have you ever wondered what happens to all the money collected for Social Security that beneficiaries don't get?What happens to the money assigned to people using false identities, or names matched with the wrong Social Security Number (SSN), or newlyweds who forgot to register their name changes with the Social Security administration?
The answer lies in a little-known aspect of the Social Security behemoth known as the Earnings Suspense File (ESF).
The ESF has become a hotbed for debate over everything from immigration rights to identity theft, as it continues to accrue money at roughly $6 billion a year, with the total as of 2005 sitting at $519 billion.
http://www.consumeraffairs.com/news04/2006/02/ss_secret_stash.html
Why doesn't the government do anything about illegal immigration?
The government IS doing something...it's making a huge amount of money from illegal aliens.