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Mint
5 days ago
- Business
- Mint
Taxing the money immigrants send home would hurt economies here and abroad
A proposed new tax from the Trump administration would slow the flow of money that U.S. immigrants send home to their families, and that has economic implications at home and abroad. Remittances from the U.S. to Latin America totaled an estimated $160.9 billion in 2024, according to the latest research from the Inter-American Development Bank Migration Unit. Those remittances not only generate transaction fees for the largely American financial institutions that execute the payments, but they also make up between roughly 20% to 30% of gross domestic product growth in countries like El Salvador, Guatemala, Haiti, Honduras, Jamaica and Nicaragua. President Donald Trump's budget, which recently passed the House of Representatives, included a 3.5% tax on all remittance transfers made by noncitizens to accounts outside the country. That would be a double tax on many immigrants who have already paid income tax on the funds they send to family and friends abroad. 'Remittance growth from the United States could fall to half of what it was in 2024," estimates Manuel Orozco, director of the migration, remittances and development program at the Inter-American Dialogue, a think tank that aims to boost democratic resilience and shared prosperity in the Americas. In addition to the proposed remittance tax, the U.S. is experiencing slowing migration and increased deportations. Both trends could reduce the number of foreign-born individuals in the U.S., thereby also diminishing the population sending remittances home. The slowing migration trends in effect since 2023 are expected to continue this year. Morgan Stanley economists estimate that immigration will slow to 800,000 this year, down from 1 million new arrivals in 2024. That is expected to drop to just 500,000 in 2026. Deportations are also set to rise. The Department of Homeland Security reported 152,000 deportations during the first hundred days of the Trump administration. And the Supreme Court ruled last week that the Trump administration could end temporary status granted by the Biden administration to 532,000 people from Cuba, Haiti, Nicaragua and Venezuela. Remittances are a key form of support for many countries. Honduras, for example, received $9.8 billion in remittances from the U.S. in 2024, according to Orozco. The country was on track to experience 7% growth in remittances in 2025, but with the proposed tax and the projected declines in immigration, Orozco expects that the country will actually see a 9% decline instead. El Salvador is projected to experience an 8% decline, while remittances to Guatemala and Nicaragua could be down by 7%. Haiti is expected to see a 3% drop. A drop in remittances could lead to lower domestic incomes and consumer spending, as well as potentially expanding deficits, writes William Jackson, chief emerging markets economist at Capital Economics. The reduction in consumer spending could occur in the U.S. as well. Migrants typically send 15% of their remittances abroad, but that means about 85% of their incomes remain in the U.S. Last year, immigrant households held $1.7 trillion in spending power, according to data from the American Immigration Council, a nonprofit that aims to shape immigration policies. Undocumented immigrants, specifically, had about $299 billion in spending power. But if the cost of remittances increases, generally the income spent in-country tends to shrink as well, says Ananya Kumar, deputy director for future of money at the GeoEconomics Center. So this issue does affect consumer spending levels in the U.S. as well. Even countries with large economies could feel the impact of lower payment flows. U.S. remittances to Mexico—which Mastercard's research has found to be the 'single largest remittance pipeline in the world"—totaled $67.7 billion last year, according to BBVA research. India and the Philippines also rank high in remittance flows. The remittance tax would be on top of the high transaction fees that already exist when sending money across borders. Last year, the average cost of sending money from the U.S. was 6.03% during the third quarter, according to the World Bank's quarterly report. It can be challenging to determine the effects of a tax on remittances because many times these payments go underground if taxed. That makes this a 'slippery tax space," says Alan Cole, senior economist with Tax Foundation's Center for Federal Tax Policy. That could make it more difficult to administer and collect the projected tax revenues, but could also increase cartels' power as payment brokers. 'There's a U.S. national security interest in wanting to not create more friction from remittance payments," Kumar says. Americans need to stop viewing remittances as a 'burden" on the U.S. economy, but instead, should start viewing it as something that accrues advantages abroad, she adds. Write to Megan Leonhardt at
Business Recorder
6 days ago
- Politics
- Business Recorder
Mexicans elect their judges under shadow of organised crime
MEXICO CITY: Mexico began unprecedented elections Sunday allowing voters to choose their judges at all levels, in a country where drug cartels and other vested interests regularly seek to alter the course of justice. The government says the reform making Mexico the world's only country to select all of its judges and magistrates by popular vote is needed to tackle deep-rooted graft and impunity. 'Those who want the regime of corruption and privileges in the judiciary to continue say this election is rigged. Or they also say it's so a political party can take over the Supreme Court,' President Claudia Sheinbaum said in a video on the eve of the election. 'Nothing could be further from the truth,' she added. Critics and experts are concerned that the judiciary will be politicized and that it could become easier for criminals to influence the courts with threats and bribery. While corruption already exists, 'there is reason to believe that elections may be more easily infiltrated by organized crime than other methods of judicial selection,' said Margaret Satterthwaite, the United Nations special rapporteur on the independence of judges and lawyers. The run-up to the vote has not been accompanied by the kind of violence that often targets politicians in Mexico. But cartels were likely trying to influence the outcome in the shadows, said Luis Carlos Ugalde, a consultant and former head of Mexico's electoral commission. 'It is logical that organized criminal groups would have approached judges and candidates who are important to them,' Ugalde, general director of Integralia Consultores, told a roundtable hosted by the Inter-American Dialogue. Carlota Ramos, a lawyer in the office of President Claudia Sheinbaum, said that while the risk of organized crime infiltrating state institutions was real, the new system allowed greater scrutiny of aspiring judges.
LeMonde
7 days ago
- Politics
- LeMonde
Mexicans elect their judges under shadow of organized crime
Mexico began unprecedented elections Sunday, June 1, allowing voters to choose their judges at all levels, in a country where drug cartels and other vested interests regularly seek to alter the course of justice. The government says the reform making Mexico the world's only country to select all of its judges and magistrates by popular vote is needed to tackle deep-rooted graft and impunity. "Those who want the regime of corruption and privileges in the judiciary to continue say this election is rigged. Or they also say it's so a political party can take over the Supreme Court," President Claudia Sheinbaum said in a video on the eve of the election. "Nothing could be further from the truth," she added. Critics and experts are concerned that the judiciary will be politicized and that it could become easier for criminals to influence the courts with threats and bribery. While corruption already exists, "there is reason to believe that elections may be more easily infiltrated by organized crime than other methods of judicial selection," said Margaret Satterthwaite, the United Nations special rapporteur on the independence of judges and lawyers. The run-up to the vote has not been accompanied by the kind of violence that often targets politicians in Mexico. But cartels were likely trying to influence the outcome in the shadows, said Luis Carlos Ugalde, a consultant and former head of Mexico's electoral commission. "It is logical that organized criminal groups would have approached judges and candidates who are important to them," Ugalde, general director of Integralia Consultores, told a roundtable hosted by the Inter-American Dialogue. Controversial contenders Carlota Ramos, a lawyer in the office of President Claudia Sheinbaum, said that while the risk of organized crime infiltrating state institutions was real, the new system allowed greater scrutiny of aspiring judges. Rights group Defensorxs has identified around 20 candidates it considers "high risk," including Silvia Delgado, a former lawyer for Sinaloa Cartel co-founder Joaquin "El Chapo" Guzman. Fernando Escamilla, who is seeking to be a judge in the northern state of Nuevo Leon, was a lawyer for Miguel Angel Trevino, a former leader of the Los Zetas cartel, renowned for its brutality. Another aspiring judge, in Durango state, spent almost six years in prison in the United States for drug crimes. Voters will choose around 880 federal judges, including Supreme Court justices, as well as hundreds of local judges and magistrates. Another election for the remainder will be held in 2027. Candidates are supposed to have a law degree, experience in legal affairs and what is termed "a good reputation," as well as no criminal record. There are indications that many voters may stay away, in part due to the complexity of the exercise. The judicial reforms were championed by Sheinbaum's predecessor and mentor Andres Manuel Lopez Obrador, who frequently clashed with the courts.
The Star
16-05-2025
- Business
- The Star
From boom to bust in the Darien Gap
THE face of US President Donald Trump flashes on the flat screen TV that Luis Olea bought with the money he earned ferrying migrants through the remote Panamanian jungle during an unprecedented crush of migration. The Darien Gap, a stretch of nearly impenetrable rain forest along the border with Colombia, was transformed into a migratory highway in recent years as more than 1.2 million people from around the world travelled north toward the United States. They brought an economic boom to areas that are hours, even days, from towns or mobile phone signal. Migrants paid for boat rides, clothing, meals and water after gruelling and often deadly treks. With that burst of wealth, many in towns like Olea's Villa Caleta, in the Comarca indigenous lands, abandoned their banana and rice crops to carry migrants down the winding rivers. A file photo of the riverbank where hundreds of migrants used to disembark daily, after crossing the Darien Gap on their journey north to the United States. — AP Olea installed electricity in his one-room wooden home in the heart of the jungle. Families invested in children's education. People built homes and more hopeful lives. Then the money vanished. After Trump took office in January and slashed access to asylum in the United States, migration through the Darien Gap virtually disappeared. The new economy bottomed out, and residents newly dependent on it scrambled for options. 'Before, we lived off of the migration,' 63-year-old Olea said. 'But now that's all gone.' Migration through the Darien Gap soared around 2021 as people fleeing economic crises, war and repressive governments increasingly braved the days-long journey. While criminal groups raked in money controlling migratory routes and extorting vulnerable people, the mass movement also injected cash into historically underdeveloped regions, said Manuel Orozco, director of the migration, remittances and development programme at the Inter-American Dialogue. 'It became a business opportunity for a lot of people,' Orozco said. 'It's like you've discovered a gold mine, but once it dries up ... you either leave the area and go to the city or stay living in poverty.' Olea, like many of the Comarca, once survived by growing bananas in the jungle next to Villa Caleta, near the Turquesa river flowing near the border with Colombia. When migrants began to move through the region, he and others invested in boats to pick up people in the town of Bajo Chiquito, where migrants arrived after their brutal trek. The boat pilots, known as lancheros, would transport migrants to a port, Lajas Blancas, where they would take buses north. Pilots like Olea would earn up to US$300 a day, far above the US$150 a month many had made from crops. The work grew so lucrative that towns along the river struck a deal to take turns transporting migrants, so each community would have their share. Olea installed solar panels on his tin roof. He elevated his house to protect belongings from floods, and bought a water pump and a television. He now watches Trump talk about tariffs on CNN en Espanol. The money connected him, and Darien communities, to the world in a way that had not existed before. While some residents saved their cash, many more were left reeling from the abrupt drop in migration, said Cholino de Gracia, a community leader. 'The worst part is that some people struggle to eat, because without any income and no supermarkets here, what can people buy?' de Gracia said. Olea has started growing bananas again, but said it will take at least nine months to yield anything. He could sell his boat, which now sits unused, but conceded: 'Who's going to buy it? There's no market anymore.' Pedro Chami, 56, another former boat pilot, gave up on his crops. Now he sits outside his home carving wooden pans. He hopes to try his luck sifting through river sand for flecks of gold. 'I'm trying this to see if things get better, see if I can buy some food,' Chami said. 'Before, I would always have my US$200 a day without fail. Now, I don't even have a cent.' At the height of the migration, Panamanian authorities estimated that between 2,500 and 3,000 people crossed the Darien Gap every day. Now, they estimate around 10 cross weekly. Many more migrants, mainly Venezuelans, have started to travel south along Panama's Caribbean coast in a 'reverse flow' back home. The Gulf Clan, the criminal group that profited from the northward migration, now scouts the coast to see if it can make money off migrants going the other way, said Elizabeth Dickinson, a senior analyst for International Crisis Group. Lajas Blancas, the river port where boats dropped off migrants after their jungle journey, has been transformed. It once bustled with crowds browsing stalls selling food, SIM cards, blankets and access to power banks for charging phones. Now the port and makeshift migrant camp are a ghost town, lined with signs advertising 'American clothes' written in red, white and blue. Zobeida Concepcion's family, living on their land, is one of three that haven't abandoned Lajas Blancas. The 55-year-old said most who sold goods to migrants have packed up and headed to Panama City to look for work. 'When Donald Trump won, everything came to a screeching halt,' she said. Concepcion's family sold water, soda and snacks and even temporarily opened a restaurant. With the earnings, she bought a new bed, washing machine, refrigerator and three big freezers to store goods sold to migrants. She started to build a house with her husband. She said she's unsure what to do next, but has some savings. She'll keep the freezers, too. 'I'm going to save them for whatever comes,' she said, with future US administrations in mind. 'When another government enters, you never know what opportunities there will be.' — AP
Kuwait Times
10-05-2025
- Politics
- Kuwait Times
Inconvenient diplomat: The Washington's man in Havana
HAVANA: Over the past decade since the United States and Cuba restored ties US diplomats on the Caribbean island have walked a diplomatic tightrope. Their every move is scrutinized by Havana for signs of support for critics of communist rule. Cubans who meet with the representative of the island's arch-foe, which has toughened its six-decade trade blockade since President Donald Trump returned to power, also risk the ire of the authorities. Yet the new US chief of mission in Cuba, Mike Hammer, seems unfazed as he crisscrosses the country of 9.7 million, meeting with dissidents and splashing pictures of the encounters on social media since taking the post in November. It's a sharp contrast to his more discreet predecessors. Cuba, which restored ties with the United States in 2015 after half a century of hostility, has accused Hammer of an 'activist' approach to his mission. 'I travel around Cuba because, as a diplomat with over 35 years' experience, I know... that it is very important to understand a country and its people,' Hammer said recently in a Spanish-language video posted on the embassy's X account. In the message he also invited Cubans to contact him to request a meeting and to suggest places he should visit. A former ambassador to Chile and the Democratic Republic of Congo, Hammer arrived in Cuba in the dying days of Joe Biden's presidency. In the past six months, he has met dozens of dissidents, human rights activists, independent journalists, church leaders and families of jailed anti-government demonstrators, most of whom are under close surveillance. At every turn, the affable diplomat presses for the release of political prisoners, quoting Cuban nationalist hero Jose Marti on the need for a republic 'that opens its arms to all.' In February, he travelled to the eastern city of Santiago de Cuba to meet opposition leader Jose Daniel Ferrer, who had just been released from prison under an eleventh-hour deal with Biden. Cuba agreed to free over 500 prisoners in return for Washington removing the island from a list of state sponsors of terrorism. On his first day back in office Trump tore up the deal by putting Cuba back on the terrorism list. Havana released the prisoners nonetheless but last month sent Ferrer and fellow longtime opposition leader Felix Navarro, whom Hammer also met, back to prison, for allegedly violating their parole conditions. Hammer has also shown solidarity with Berta Soler, leader of the Ladies in White rights group, who has been repeatedly arrested for trying to attend mass dressed in white, which the government considers a dissident act. On April 13, Hammer accompanied her to a Palm Sunday church service in Havana. Soler, 61, was briefly detained afterwards, triggering condemnation from Washington of Cuba's 'brutish treatment' of its people and its attempt to 'intimidate US diplomats.' Avoiding more sanctions Michael Shifter, senior fellow at the Inter-American Dialogue think tank in Washington, said Hammer's style signaled a change in tack under Trump's Secretary of State Marco Rubio, the son of Cuban immigrants who is fiercely critical of the island's leadership. 'Ambassador Hammer has instructions to make visits with greater frequency and visibility,' Shifter said. Cuba's deputy foreign minister Carlos Fernandez de Cossio last month lashed out at Hammer, accusing him of 'being an activist that encourages Cubans to act against their country.' Another senior foreign ministry official accused Hammer of flouting the historic rapprochement deal struck by his former boss, ex-president Barack Obama with his Cuban counterpart Raul Castro. For Cuban political scientist Arturo Lopez-Levy, professor of international relations at the University of Denver, the problem facing Cuba is how to 'keep the embassy open without it becoming a platform for subversive activities.' Shifter said he expected Cuba to show restraint. The island is struggling with its worst economic crisis in 30 years, marked by shortages of food and fuel, recurring blackouts and a critical shortage of hard currency. As a result, Havana has 'an interest in avoiding even tougher sanctions,' Shifter said. - AFP
