Directo a Mexico

Little known to most Americans, but widely used by illegal aliens, a U.S. banking program is helping to funnel billions of dollars out of this country.

Launched in 2005 under the reign of G.W. Bush, “Directo a Mexico” provides low-cost banking services to immigrants, both legal and illegal, allowing money earned in the U.S. to be funneled to foreign nations.   These annual “remittances,” as they’re called by analysts, topped $33.4 billion in 2016 and reached  $104 billion last year.   But the practice didn’t start with Bush; it has been a lifeline for the national economies of many countries since the 1960’s.

“Remittances,” as they are called by analysts, are essentially a tax-free transfer of wealth.  It is money that is not circulated through the U.S. economy to purchase goods and services, create jobs or build businesses.  Nor are those funds subjected to sales taxes, excise taxes, restaurant taxes, etc. And since a large portion of the illegals work off the books no payroll taxes are ever collected.   The loss tax revenue that could be used to pay for a large number of public services consumed by illegal and legal aliens is staggering.  

Every year immigrants, both legal and illegal send close to $150 billion to other countries.  That amounts to more than 24% of the total amount remitted from host countries worldwide.  Mexico is the primary beneficiary, receiving just over $30 billion in 2017.  In comparison, Americans residing abroad only send home around $6.6 billion, meaning the US economy lost a net of $144.5 billion just in 2017.

According to the Center for Immigration Studies, tax credits received by illegals and wage write-offs that U.S. companies claim in their illegal employment cost the Treasury $296 billion over a 10 years period.   In addition, lost tax revenue yearly amounts to around $30 billion and that comes on top of wage losses to legal workers of about $118 billion.

Many on the left, with support from academia,  claim “remittances” act as a privately funded foreign aid program that costs taxpayers nothing while allowing residents of developing countries to pay for basic necessities and improve their living condition; fund education for those trying to climb out of poverty, or help finance and support income generating activities. 

Naturally they aren’t going to mention the profoundly negative results on American taxpayers and developing economies.  Large infusions of foreign cash into developing economies often increase exchange rates. That means U.S. dollars suddenly buy significantly less of the local currency.  Increased exchange rates also tend to result in inflation, diminishing the purchasing power of local currency and raising prices.  They also act like a welfare program, disincentivizing participation in the labor force.  Let’s face it, if your financial needs are being met by a benefactor, why pursue job training or seek employment?

And, unlike government-sponsored foreign aid, remittance payments are not invested directly into physical and societal infrastructure programs, and they rarely come with any conditions. Recipients of remittance payments are free to use their foreign cash in any way they see fit.

The Federal Reserve acknowledges that most of the billions sent to Mexico are sent by illegals even though there are federal laws against this.  Title 8, subsection 1324(A) of the U.S. Code expressly make it an offense to “engage in a conspiracy to commit or aid or abet” illegal aliens. 

Michelle Malkin, author of Open Borders Inc.: Who’s Funding America’s Destruction warns that “not only should President Trump fulfill the promise that he made many months ago to tax remittances but he should shut down this Federal Reserve program as well.” 

Remittance taxes are common in many nations but currently, only one state in the U.S. does this and that is Oklahoma.  In Fiscal Years 2016 and 2017, the Sooner State brought in $13 million by taking wire transfers at 1%.  If all states had a remittance tax it would keep up to $1.5 billion circulating through the U.S. economy.  That money, in turn, could have been used for roads, schools, infrastructure upgrades, etc.

Another appropriate measure would be to prohibit the transfer of money abroad by anyone who is an illegal and require foreign nationals to prove they have authorization to live and work in the U.S.

It is bad enough that American taxpayers are being asked to provide welfare for foreign nationals in the United States.  But it only  adds insult to injury when our state, local and federal governments allow income that could be taxed to reduce some of the costs associated with unchecked mass migration, both legal and illegal, to flow out of the U.S. economy and into foreign pockets.

Although remittances are one of the least discussed aspects of U.S. immigration policy, they create some of the most serious negative effects associated with unchecked mass migration. They siphon off a large chunk of the capital that drives U.S. businesses and that generates tax revenue for state/local governments. And there is no evidence that this money eventually makes its way back to the U.S. economy, either directly or indirectly.

It is time the government took steps to protect our economy.  For far too long American taxpayers have been expected to pick up the tab for our flawed immigration policies that put the interest of immigrants ahead of U.S. Citizens.  As Nancy Pelosi reminded us recently “No One Is Above The Law.”  I presume that includes the Federal Reserve.

Source:  Bank Job:  How the Fed Aids Illegal Aliens, Immigration Reform;  The United States Loses $150 Billion Annually in Remittances, FAIR;  Report: Illegal immigration costs $296 billion in lost taxes, Washington Examiner

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