In the past nine years the cash that immigrants send from the United States back to their home countries has almost doubled, but the Bush Administration is planning to use the upcoming G-8 summit to discuss ways to increase the outward flow of cash.
Immigrants Drain Billion in Cash Annually
by Joseph A. D'Agostino
Posted May 28, 2004
In the past nine years the cash that immigrants send from the United States back to their home countries has almost doubled, but the Bush Administration is planning to use the upcoming G-8 summit to discuss ways to increase the outward flow of cash.
"Technological advances in communication and data transfer--and a surge in labor mobility--have fueled enormous growth in remittances," Deputy Secretary of the Treasury Samuel Bodman said at a May 17 conference at which a new study on remittances was released. "Since 1995, annual remittances from the United States have nearly doubled. . . . In recognition of the importance of remittances around the world, the G7 is committed to facilitating remittance transfers and increasing options available to recipients to help them improve their own economic livelihood. This is a top priority issue for this year's G8 Summit to be held in Sea Island, Georgia, next month."
The study, based on a survey of 3,800 Latin American immigrants living in the United States conducted by Bendixen & Associates, found that legal and illegal immigrants send a combined billion annually to their home countries. Mexico alone receives .3 billion a year.
The largest amount in remittances (.6 billion) comes out of California. That is followed by New York (.6 billion), Texas (.2 billion) and Florida (.5 billion). The study says of those surveyed 24% were Latin American-born U.S. citizens, 39% were legal residents, and 32% were "undocumented" aliens. It estimated that 16.7 million people of Latin American origin now live in the United States. Sixty-one per cent of those surveyed said they send money overseas at least once a month. The typical individual transaction ranges from 0 to 0.
"It's money flowing out of some of the poorest communities of the United States," said Steve Camarota, research director at the Center for Immigration Studies. Camarota said that statistics on remittances are hard to generate accurately due to the large number of illegal immigrants in the United States and to the "informal banking arrangements" that often serve as conduits for money sent home. He said there was no reliable way of estimating how much of the billion was taxed by the United States and how much went under the radar screen. "It's certainly not being taxed in the way money spent here would be in sales taxes, etc," he said. "Roughly half of what illegals make is on the books and half off."
Asked if remittances were helping poor Latin American countries stay afloat, Camarota replied, "Does it stymie development in the home country? Everyone sees their economic future dependent on immigration to the United States."
"It encourages governments in other countries to push harder and harder for open borders," said Rep. Tom Tancredo (R.-Colo.), chairman of the Congressional Immigration Reform Caucus. "They want those funds to keep flowing."
In fact, Georgetown Prof. Manuel Orozco reported in a presentation to the Inter-American Development Bank on Sep. 17, 2002, that Haiti depends on remittances for 24.5% of its GDP, El Salvador for 17%, Nicaragua for 22%, Jamaica for 15%, the Dominican Republic for 10%, and Mexico for 1.7%. Since billion out of Latin America's total remittance receipts of billion come from the United States, these countries are heavily dependent on immigrants to America.
Tancredo advocates taxing remittances or reducing our foreign aid to those countries that receive significant sums in remittances from the United States. "It is in our interest to encourage savings and investment inside this country," he said. "It is also in our interest to discourage illegal immigration into this country." Remittances provide a financial incentive for families to send members here, he said.
A White House fact sheet dated Jan. 13, 2004, boasts of Bush's success in increasing remittance flows: "Bilateral efforts to promote competition in the market for remittance services and to bring those without bank accounts into the formal financial system have produced dramatic results since 1999: The cost of sending remittances from the United States to Mexico has fallen by 58%. Remittance flows have grown at a rate of 10% annually."
A January 2000 study by J. Edward Taylor, University of California, Davis, found that some U.S. taxpayer money is finding its way into remittances. "There is no evidence that means-tested income transfers [i.e., most welfare] increase remittances to Mexico," he wrote. "However, there is a positive association between non-means-tested transfers and remittances. Other things being equal, households that received Social Security or unemployment insurance were 10 to 15% more likely to remit, and their monthly remittances were 0 to 0 higher than those of households not receiving non-means-tested public transfers."
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