GAO Report Finds Huge Wealth Transfer: $54.2 Billion Remittances Sent Abroad

By Joe Guzzardi
February 26, 2016
 
The Government Accountability Office, an independent, non-partisan agency that works at the behest of Congress, has issued another insightful report, this one about funds sent abroad by foreign-born United States residents. The practice is commonly referred to as remittances.
 
Prepared at the request of U.S. Senator David Vitter (R-Louisiana) and House Budget Chair Tom Price (R-GA), GAO revealed that in 2014, $54.2 billion in remittances were distributed worldwide, but principally to Mexico, China, India, and the Philippines. Mexico and China received $25 billion and $15 billion respectively while India and the Philippines each got $10 billion. Other countries getting money included Vietnam, Nigeria, Guatemala, El Salvador, Dominican Republic and Korea. The U. S. is the largest sender of remittances and have increased 40 percent since 2006 when the total stood at $38 billion. With the U.S. foreign-born population projected to increase annually for the foreseeable future, person-to-person remittances from U.S. immigrants to their relatives will continue to grow exponentially.
 
Remittances have long been a contentious, but mostly under-the-radar subject in the roiling immigration debate. For families in the countries receiving remittances, the funds represent a stable income source. The sums are considerable. Frontera NorteSur, a New Mexico State University project that studies border issues, recently reported that the amount of remittance money sent home by Mexicans living in the U. S. exceeds Mexico’s oil revenues
 
But critics claim that untaxed money that leaves the U.S. should instead be spent locally to help the economy. They question why remittances themselves are untaxed and wonder about the wisdom of allowing aliens to send money abroad, some of which illegal immigrants have not paid taxes on. Skeptics worry that untaxed remittances might fund terrorism, drug trafficking, human smuggling or money laundering.
 
Since the GAO found significant challenges in preventing remittance money for use in criminal endeavors, Vitter, Price and others in Congress question why senders shouldn’t be required to prove they’re legal residents. GAO interviewed Department of Homeland Security officials who agreed that, in general, collecting more information would be useful, and added that knowing a senders’ legal status would be particularly helpful in a pending deportation investigation. 
 
Vitter used the GAO analysis to promote his legislation, the “Remittance Status Verification Act,” also known as the “Wire Act,” which proposes to levy a 7 percent remittance tax on all transfers sent by residents who can’t confirm their citizenship or legal immigration status. The tax, according to Vitter, would generate $1.3 billion for every $18 billion sent that could be applied toward border security.
 
The fine revenues would be applied to enhancing border security. In his statement after the GAO released its conclusions, Vitter blasted the Obama administration for “complete incompetence” on securing the border and enforcing immigration law which he claimed is “costing us a lot of money.”
 
Remittances haven’t surfaced as a talking point in the presidential hopefuls’ campaigns. But the multi-billion transfer of wealth from the U.S. is one more example of why the next president should take a harder look at how to work with Congress to implement more sensible immigration policies, a goal current White House has apparently never had in its sights.