Remittances to Mexico Hit All-Time High
Mexican-Americans sent home a record $28.1 billion in remittances in 2017—an increase of 6.6 percent from 2016.
Mexico was the largest single destination for remittance payments from America last year, while China was a distant second ($15.4 billion).
That being said, Mexico is far from being an outlier. Latin America absorbed roughly half of all America’s remittance outflows, which totaled nearly $140 billion in 2017. Furthermore, over $50 billion in remittances were sent to Mexico and Central America alone: Guatemala received $6.8 billion in remittances, El Salvador $4.2 billion, the Dominican Republic $4.1 billion, and Honduras $3.4 billion.
Perhaps comically, remittances were actually Mexico’s biggest source of foreign income after auto exports, far surpassing the $20 billion that Mexico earned from oil exports and the $19 billion from tourism in 2017.
Undoubtedly the majority of these remittances were sent by legal immigrants to America, although a substantial share was in fact sent by illegal immigrants. It is estimated that illegal immigrants sent $38 billion abroad in remittances in 2017.
But why should you care about remittance outflows? Regarding remittances sent by legal immigrants, there’s really nothing that can be done: it’s their money, they can do with it as they like. However, remittances sent by illegal immigrants are a cause for concern. Spencer P Morrison explains:
Imagine the worst possible tax you can think of. What would it look like?
If you’re like most people, you thought of some fat, curly-haired king sitting in a palace spending your money on foppish garments and a harem of French harlots. That’s a bad tax. No doubt about it.
But at least he’s (presumably) your king, and he’s spending the money in your country. Eventually you will see that money again, no matter how frivolously he spends it.
I can think of a worse tax: pretend the above situation’s exactly the same in every respect except now he’s not your king. He’s king of Timbuktu. Even worse. It’s bad enough you’re paying for someone’s pomp and circumstance, but now he’s not even buying the pomp locally—you’ll never see that money again.
Paying taxes, no matter how inefficient, is better than paying tribute to a foreign land. Redistribution is bad, elimination is altogether worse.
Remittances function in the economy the same way as does a maximally inefficient tax: money literally disappears from America’s economy, never to be seen again. This decreases the velocity of money, reducing economic efficiency and therefore growth—most of the arguments against high taxes likewise apply to remittances, although it’s beyond the scope of this article to deal with them in any detail.
Suffice it to say that this “hidden tax” is one of the often ignored economic arguments against illegal immigration, and should be given more attention by American citizens and politicians.