Taxes on Remittances Sent to Latin America = More Poverty and More Illegal Immigration
Remittances from the United States are crucial to Latin America, and such policy would take money from people who are already very poor.
· Half of the US foreign-born population is from Latin America and the Caribbean. These regions receive almost one-third of the world's remittances. (O'Neil, Kevin. “Remittances from the United States in Context.” Migration Policy Institute. June 1, 2003)
· Over three-quarters of remittances to Latin America and the Caribbean originate in the United States. (Inter-American Development Bank)
· Six out of the 10 countries most dependent on remittances as a contribution to its GDP are Latin American countries. (Source: International Monetary Fund, Balance of Payments Yearbook 2002; Migration Information Source; World Bank, World Development Indicators 2002.)
Taking from remittances just makes developing nations in more need of US foreign aid.
· Remittances are a substantial portion of developing nations’ GDPs. Remittances to Mexico are the country’s number one source of income.
· Taxing remittances means these regions would receive less money.
· To compensate, foreign aid from developing nations (of which the United States is usually one of if not the primary contributor) will have to increase.
Taxing remittances forces immigrants to stay longer or even permanently and could lead to increased levels of illegal immigration.
· Immigrants, especially those from Mexico and Central America, often arrive in the US with the intention of staying only temporarily.
· Cutting into the amount of money that is sent back to sending countries forces immigrants to stay longer in order to accumulate a sufficient amount of money.
· Often an individual who can serve as the bread winner will work in the U.S. while the rest of the family stays behind.
· Reducing the amount of remittances such families receive reduces their capacity to survive in their country of origin; this will encourage more people to immigrate illegally.
Taxing remittances will create a black market.
· In countries (e.g. Tajikistan) with remittance taxes, migrants withdraw their money from formal channels and send it though other illicit channels.