Recovering Lost Tax Revenue Through Taxation of Transnational Households

57 Pages Posted: 31 Mar 2021

See all articles by Ariel Jurow Kleiman

Ariel Jurow Kleiman

University of San Diego School of Law

Date Written: May 1, 2014

Abstract

This Article addresses the difficult problem of raising revenue in developing countries with significant outmigration. Migrant-source country governments face a unique policy dilemma because emigration reduces domestic human capital and tax revenue, but simultaneously improves outcomes for migrant workers and their families. Thus, governments must balance contrasting needs to maximize government revenue while protecting the welfare of migrant worker households. I argue that migrant-source countries may find a solution to this dilemma by taxing income remitted by migrant workers to family members remaining in their home countries. If constructed properly, a tax on remittance payments could raise revenue without burdening migrant workers or restricting their freedom to migrate.

In this Article, I push back against common anti-remittance-taxation arguments based on both normative and practical considerations, with a focus on improving and updating the taxation of families separated by national borders. After surveying the tax policy instruments available in remittance-receiving developing countries, I offer a menu of policy designs through which policymakers can leverage these important inflows. Proposed policies range from an ideal case of bilateral cooperation between host and home countries to a third-best regime that seeks to harness remittance gains indirectly via consumption and property taxation.

Keywords: migration, immigration, remittances, international development, economic development, tax policy, international tax policy

JEL Classification: K34, F22, F24, F63, F66, K37, O15, O23

Suggested Citation

Jurow Kleiman, Ariel, Recovering Lost Tax Revenue Through Taxation of Transnational Households (May 1, 2014). Berkeley Journal of International Law (BJIL), Vol. 34, 2016, Available at SSRN: https://ssrn.com/abstract=3798744

Ariel Jurow Kleiman (Contact Author)

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

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