Why Funding a US/Mexico Wall With a ‘Remittance Tax’ is a Recipe for Disaster

One of the Trump administration’s most controversial promises is to build a wall between Mexico and the US to stem the flow of migrants. The reality of how to pay for this wall is still in question, but the campaign vow that Mexico would somehow foot the bill is still in play.

By Julia Blocher, United Nations University

The current incarnation of this vow is the Border Wall Funding Act of 2017, which proposes “to amend the Electronic Fund Transfer Act to impose a fee for remittance transfers to certain foreign countries”. The underlying misconception is that remittances — money transfers made by migrants to their home countries — are an untaxed revenue stream that should be leveraged to pay for wall construction.

But remittances from the US to Mexico are already fined at around 5%. Plus, remittances are worth far more than their face value.

An extensive new study suggests that poorly conceived policies that restrict the flow of money between migrants and their home countries would have drastic, far-reaching, socio-economic consequences.

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