Oklahoma has a five-dollar fee on all outgoing wire transfers under $500, according to the state’s tax commission. On transactions exceeding $500, the fee is five dollars plus 1 percent of any amount exceeding $500. So if someone wired $300 to Honduras, the fee would be five dollars. If the person wired $750, the fee would be $7.50.
That fee is a withholding against state income taxes, so when an income-tax payer files their tax returns, the taxpayer get the money back. However, about half of illegal immigrants do not have Individual Taxpayer Identification Numbers and don’t file tax returns, so they end up paying what amounts to a small tax.
Supporters of the fee say it recoups some of the costs of having illegal immigrants.
The Massachusetts Taxpayers Foundation projects the Bay State will collect $6 billion less in tax revenue in fiscal year 2020 as a result of the coronavirus pandemic.
In the fiscal year which ended on June 30, 2019, Oklahoma, a state with nearly four million people (and 85,000 illegal immigrants, according to Pew Research), collected $13,146,509.65 from its wire transfer fee.
Should Massachusetts, a state with nearly seven million people, copy the legislation as a tiny step towards fixing the state’s financial problems?
Matthew Tragesser, a spokesman for the immigration-restrictionist Federation for American Immigration Reform (FAIR), thinks so.
“The Bay State is experiencing a significant loss of tax revenues, due to COVID-19 shutdown,” Tragasser told New Boston Post in an email message. “In order to protect both the U.S. economy and American workers, Massachusetts’ political leaders should require illegal aliens to cover the costs of the schools, public transport and other services they use. And a state tax on remittances would go a long way toward accomplishing that goal.
“Ideally, illegal aliens should be prohibited from entering the U.S. and those who succeed in evading border controls should be apprehended and deported,” he added. “However, minimizing the economic toll exacted by illegal aliens is an important first step in restoring integrity to America’s porous borders.”
Tragesser said FAIR calculates that $28.8 billion leaves the U.S. economy every year in foreign remittances from illegal immigrants to other countries.
Tragesser added that he would support making people have to confirm they live in the United States legally before sending remittances as well.
However, another immigration restrictionist, John Thompson, spokesman for Massachusetts Coalition for Immigration Reform, said a wire transfer fee is not a good idea.
Thompson says the policy is a concession and is not worth pursuing. He also said people will leave the state to do remittances to avoid the fee.
“If it were up to me I would oblige employees to only hire people who are authorized to work here,” Thompson told New Boston Post in a telephone interview. “If you’re proposing this you’re conceding that illegals are living here and working here. I don’t think any part of Massachusetts is more than an hour away from another state so if it really hurt, you could take the train or bus to Rhode Island or New Hampshire.”
Alex Nowrasteh also opposes a remittance fee, but for different reasons. Nowrasteh, an immigration policy analyst at the libertarian-leaning CATO Institute, is for open immigration and low taxes.
So the idea does not sit well with him on either front.
“A tax on remittances is a very inefficient way to raise revenue,” Nowrasteh told New Boston Post in an email message. “Experience from Oklahoma shows that the tax raised an average of about $133.65 from each illegal immigrant. In Massachusetts, that would amount to about $22 million if all went well – and it won’t.”
“First, many legal immigrants would get caught up in the tax so the state would have to create a way to avoid penalizing them,” he added. “Second, many illegal immigrants will get around the tax by going to neighboring states to transfer the funds. Third, some may use other less transparent ways to transfer funds home to avoid the tax.”
