Alabama Congressman Mike Rogers introduced a bill on Thursday that would levy a 2 percent tax on remittances — portions of wages earned by migrant workers, which are then transferred to family members based in their home countries— sent “south of the U.S. border.”
In a press release also published Thursday, Rogers noted that the tax revenue would help “jumpstart the funding” of President Donald Trump’s long-promised border wall between the United States and Mexico, an estimated $22 billion project.
“This bill is simple,” Rogers said in a statement. “Anyone who sends their money to countries that benefit from our porous borders and illegal immigration should be responsible for providing some of the funds needed to complete the wall. This bill keeps money in the American economy, and most importantly, it creates a funding stream to build the wall.”
Trump himself has also suggested taxing remittances — the single most valuable financial asset for Mexico, which was the recipient of about $27 billion in remittances last year — to pay for a border wall. He has argued that the policy would be effective because remittance money, typically only sent in increments of about $100, is “de facto welfare for poor families in Mexico.”
Dilip Ratha, a remittance expert and economist at the World Bank, called taxing remittances is “a bad idea.” In a blog for the bank called People Move, he notes that the policy failed when it was implemented in Gabon and Palau; moreover, he says, remittance taxes would likely drive expatriates to other countries with lower tax rates.
A 2016 report by the Government Accountability Office estimates that a tax on remittances would reap minimal — if any — net gains after factoring in the costs to administer and enforce the tax.