Here’s a Research Idea to Support State Taxes on Remittances

By David North on February 6, 2024

Some well-connected people in some states are starting to see the usefulness of what Oklahoma, alone, has adopted: a state fee on international transfers of money by individuals, or remittances. More on the state-by-state activities in a subsequent posting.

States can raise substantial amounts of money, usually without imposing any taxes on law-abiding voters; the proposed rate is often 1 or 2 percent of the money sent abroad. Who pays the fees? Usually it is a mix of illegal aliens, some green card holders, and some drug dealers with international sources. The fees can be used to offset state income taxes, so they cost nothing to people who duly file their state income taxes, a population that includes few in the drug trade.

Some of my readers may recall Ronald Reagan’s “welfare queens”, individuals who were said to be abusing our welfare systems; he used them as negative poster children in his efforts to trim federally funded assistance programs, for better or for worse.

I am suggesting a comparable — but solidly researched — approach to selling a remittance fee program to conservative state legislators, pointing out how some individual drug lords have used wire transfers to send their illicit profits abroad while failing to pay their state income taxes. While the collective amount of money sent overseas by illegal aliens may be more to much more than the collective amount sent by drug lords (or maybe vice versa, an impossible calculation), the drama of the transfers by the drug lords exceeds the financial movements by the illegal aliens.

So let’s look around for the international wire transfers of specific criminals in specific states to support the idea of a modest remittance tax for all such transfers.

This is easier said than done.

The first and easiest task is to identify states that have both state income taxes and GOP-controlled state legislatures. Texas and Florida, for example, have the latter but not the former, and are thus out of the running. My list of states with state income taxes and Republican legislatures, drawn from Google, follows: Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma (which already has a remittance tax), South Carolina, Utah, West Virginia, and Wisconsin.

Nebraska could be added to the list as it has a conservative but non-partisan unicameral legislature and a state income tax.

The second step would be to look at a sample of the closed case records of drug lords in each of the listed states to see if the information we want — payment of state income tax and use of wire transfers — was available in the public record. I am not a lawyer, but I suspect that in most cases it will not be in the court records as the use of wire transfers is not illegal.

The third step would be to look at current cases at the indictment and the plea agreement levels, and seek through discovery and negotiation to get the needed state income tax and wire transfer information. This would be resisted by some prosecutors as extra work for them, but these details could be very helpful in making the pro-remittance tax argument. I like the idea of drug lords being prosecuted because, among other things, they failed to pay their income taxes.

The fourth and final step would be for the remittance tax proponents to sift through the financial documents, and shape alarming case histories to dramatize their case. Two or three instances per state would do.

Topics: Remittances