Saturday, July 30, 2011
Remittances, the Charitable Deduction, and Development in Mexico
I argue that we should use the charitable deduction to encourage increased sending of collective remittances to further development in Mexico, but that this subsidy should not apply to personal remittances. In Part I, I introduce the reader to personal remittances and collective remittances, highlighting both their economic magnitude and third parties that have an effect on each remittance process. I then discuss the charitable deduction. In Part II, I set forth my argument and the criteria used to evaluate it. I assess my proposal in light of socioeconomic studies that have been conducted on personal and collective remittances and whether each type of remittance is in accordance with tax law, theories underlying the charitable deduction, and tax policy. Finally, in Part III, I provide concluding remarks and emphasize that any proposed change to the immigration system must consider the effect on remittances.