The $150 Billion Drain On The U.S. Economy
A little talked about byproduct of mass immigration into the United States is the staggering amount of money that leaves the economy every year through remittances. The term “remittance” refers to money that is earned in the United States, but is then transferred to family members, friends, or business associates who live abroad. Most commonly, these transfers originate from foreign-born workers or those U.S. citizens who still have family residing in another country.
A recent study by the Federation for American Immigration Reform (FAIR), found that the United States remits approximately $150 billion to other countries each year. In stark contrast, the U.S. receives only $6.6 billion from other countries, leading to a total “remittance deficit” of nearly $145 billion annually.
FAIR reached this figures by examining the most recent bilateral remittance data released by the World Bank.
Mexico receives the most inremittance payments by far, almost doubling China, the second highestrecipient. The “Northern Triangle” of Central America (El Salvador, Guatemala,and Honduras) receive a combined total of more than $16 billion. These threecountries rely remittances to the extent that between 10-20 percent of theirtotal GDPs are made up of these payments.
The study also notes that roughly $28 billion in remittances stem from illegal aliens who are currently working in the United States without authorization. Those remittances impact local businesses the hardest because those consumers who send their earnings to other countries obviously decrease the amount they can spend domestically.
Furthermore, it harms state and local governments as well since they will not be receiving the sales or consumption taxes that would result if remittance payments were instead spent in local economies on goods and services. So while those who send a good portion of their paycheck abroad still take part in publicly funded services, like public education, roads and emergency services, they pay less in the sales and excise taxes that commonly fund these programs.
Remittances are almost entirely a net-loss to the U.S. economy. So while the discussion of whether or not money sent abroad by immigrants should be taxed or limited is a highly controversial topic, it’s a fact that the practice leads to billions of dollars leaving the U.S. economy every year. And it is important that the economic impacts of remittances on U.S. citizens be considered when discussing whether or not it’s wise to continually increase the number of foreign-born workers flowing into the United States.