Taxing Remittances Is a Long Overdue Enforcement Tool to Curb Immigration

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By Joe Guzzardi

Joe is a CAPS Senior Writing Fellow whose commentaries about California's social issues have run in newspapers throughout California and the country for nearly 30 years. Contact Joe at joeguzzardi@capsweb.org, or find him on Twitter @joeguzzardi19.

The writer's views are his own.

March 16, 2016

Enforcement advocates have proposed many solutions to curb illegal immigration: double-layered fencing, mandatory E-Verify, hefty fines and jail sentences for employers who hire aliens. But a less publicly discussed option that might be equally effective is to tax remittances, the money illegal aliens send back home.

Remittances are a prominent factor in a prospective alien’s decision to travel north. Imposing a tax like the one suggested in Sen. David Vitter’s, S. 79, The Remittance Status Verification Act, might not only deter illegal immigration, but with less incoming remittance revenue and more nationals staying home, Mexico, Central America and China would be pressured to do a better job of providing for their citizens.

A recent Government Accountability Office report found that foreign nationals, some living in the U.S. illegally, send an average of $54 billion yearly to their home countries, mostly Mexico. But S. 79 would impose a 7 percent fee on remittances for customers who wire money to another country but cannot prove that they are in the United States legally. Currently, remittances are untaxed. The revenue, after paying for implementation of the program, would be directed to pay for border security fencing, infrastructure and technology.

If the legislation were enacted and there were no reduction in the amount of remittances sent by illegal aliens, the fines could yield more than $1 billion “in potential net revenue for border protection,” said the GAO.

In recent years, remittances to Mexico have been up sharply. The central Bank of Mexico reported that dollars sent home by immigrants working abroad, presumably in the U.S., totaled $22.6 billion from January to November 2015, a 5.44 percent increase from the same period in 2014. Analysts expect total annual remittances could reach $25 billion by year end, an indication that more Mexicans may be working in the U.S. than at any time in history.

Please go to the CAPS Action Alert page here to tell Congress that you support the 7 percent remittance tax on funds illegal immigrants send home.

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