Remittances: Illegal Immigration’s $30 Billion HIDDEN TAX

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From Remittances: Illegal Immigration’s Hidden Tax:

To be clear, it’s impossible to know exactly how much money illegal immigrants remit annually.  There are three reasons for this.  First, we don’t know how many illegal immigrants actually reside in America.  Second, the term remittance itself is ambiguous: should we include money stuffed in a birthday card in our calculations?  Third, we cannot track the location of every dollar even if we wanted to (if we could, black markets wouldn’t exist).

Nevertheless, I think we can apply a set of reasonable assumptions to a reasonable dataset, and reach a reasonable conclusion as to just how much money illegal aliens remit annually—although we cannot hit a home run, we can at least bat in the right ballpark.  Let’s step up to the plate.

First, assume that all of America’s remittance outflows are either sent by first-generation legal immigrants, or illegal aliens.  Next, assume that these two groups send equal amounts of money home per person.  Although legal immigrants earn more per capita, they likely send a much smaller proportion of their pay abroad (if they send any at all).  I think these are fair assumptions.

us remittance outflow map 2016

Now, let’s apply those assumptions to the numbers.  According to Pew Research’s 2018 remittance outflow data, America lost $138.2 billion in remittances in 2016.  And given that there are some 40 million first generation immigrants, and (at least) 11.1 million illegal aliens, this means that there are roughly 51.1 million people sending remittances abroad.  Of course, the number of aliens is debatable: a recent study from Yale University found that there were at least 22.8 million illegals residing in America.  That being said, let’s go with the low number for the sake of argument.

Dividing the total remittance outflows by immigrant proportions reveals that illegal aliens likely remit some $30 billion per year.  That’s a lot of money.  For context, it’s as much as the entire annual GDP of Vermont.  And of course, the figure would be higher if we used Yale’s population estimates.

But it’s not just about the money—it’s what’s happening to it.  Remember when I said earlier that no matter how bad Paris’ taxes were, at least the money paid for French, rather than Russian, harlots and maestros?  Remittances are worse.  Every dollar remitted by illegal aliens is a dollar ejected from the local economy, never to recirculate or be reinvested—it goes directly to Russia, or more likely Mexico, China, and Guatemala.  This reduces the velocity of money, and causes liquidity problems, particularly in small towns.

Functionally, there’s little difference between remittances and federal taxes: taxes skimmed from small towns pools in Washington DC, while remittances sent by aliens line Carlos Slim’s pockets.  It’s that simple.  And yet allegedly anti-tax organizations like the Cato Institute routinely argue in favor of open borders, not seeming to grasp the necessary implications.

It’s time we stopped speaking in jargon.  Let’s call out remittances sent by illegal aliens for what they actually are: a tax.

About Spencer P Morrison 158 Articles
J.D. B.A. in Ancient & Medieval History. Writer and independent intellectual, with a focus on applied philosophy, empirical history, and practical economics. Author of "Bobbins, Not Gold," Editor-In-Chief of the National Economics Editorial, and contributor to American Greatness. His work has appeared in publications including the Daily Caller, the American Thinker, and the Foundation for Economic Education.