A New Way to Take From the Foreign Workers

November 14, 2011

As if routine wage theft is not enough, illegal deductions are not enough, and recruitment scams are not enough, CNMI Rep. Joseph Palacios wants to tax remittances that foreign workers send to their families. The lawmaker claims that the "majority" of the money that the foreign workers earn "is sent back home."

Palacios was quoted by the Marianas Variety:
"The millions of dollars that nonresident workers have been sending home are enough to save the local economy so “we should find a way to keep at least half of [that money] here.”

. . . Palacios said he finds it “disturbing” to hear many nonresident workers claim that they have contributed a lot to the CNMI economy when it’s “not really true.”

CNMI Department of Commerce data showed that in 2010 alone, the total amount remitted by nonresident workers was more than $65 million. In 2009, the amount was $64.7 million; in 2008, it was $76.8 million; in 2007, $93.6 million; in 2006, $102 million; and in 2005, $112.6 million."
The foreign workers can do what they want with the money that they earn and they can spend the money that they earn anywhere that they decide to spend it. Who is this legislator to tell the foreign workers where to spend what they earn? Why single out the foreign workers as a way to raise revenue? The foreign workers already pay taxes on their earnings.

Instead of asking every wage earner to pay taxes, Palacios suggests sticking it to the poorest of the poor, those who on average, earn the minimum wage of $5.05 hourly. Why not implement a sales tax or a property tax? Wouldn't that be a fairer way to raise revenue?

If Palacios is so concerned that every penny earned in the CNMI stays in the CNMI, then maybe he would also like to propose a tax for all money that every parent sends to their child who attends college on the mainland; every investor who has an account off-island; and every CNMI resident who travels off-island taking their money with them to spend overseas.

The foreign workers fuel the CNMI economy by purchasing food, gasoline, and clothing. They spend money on rent, utilities, medical expenses and make numerous other purchases in the CNMI. If Palacios and others do not realize how much the 16,000 foreign workers fuel the economy, they certainly will when they exit. Should that happen, what is left of the CNMI economy will rapidly evaporate.

To Palacios, the foreign workers' years and decades of dedicated work filling thousands of jobs that locals did not have the skills to fill is not contribution enough. The insultingly low wages that employers get away with paying for professional jobs is not enough. The fact that the foreign workers paid taxes for years and even decades is not enough. This legislator wants to dictate where these people should spend their money and bleed them dry should they decide to remit some of their earnings overseas to their families.

The millions that Palacios aims to keep in the CNMI does not belong to the CNMI. It belongs to the foreign workers. If he sincerely wants to recover millions, to "save the CNMI economy" then he should go after every one of the CNMI businesses that have failed to pay taxes to the CNMI. The Tinian Dynasty alone owes $30 million to the CNMI.

His proposal is disgusting to the 1 millionth degree.

23 comments:

the teacher said...

I abhor routine wage theft, illegal deductions, and recruitment scams, but I have always favored taxing remittances here and in the US as an economic strategy for America. 20% may be a more realistic amount which may be successful to both the worker and the state. The US outbound number is considered economically manageable but the NMI's isn't. 65 million out of the NMI is twice the public school budget and that is mind boggling. We remitted 100 million a year when the garment industry still paid the local government that much, and now with the textile revenue zero and we are still sending out enough to stimulate life back into this economy, meaning our economy…not China and the Philippines. ARRA projects were being done last year largely by a foreign workforce and alien companies…think about the implications of that…it is outrageous and must be stopped. This, meaning remittances, was a primary reason for federalization. This is why US citizens must own the businesses here unless an investor paid the required US investment visa to insure his or her commitment to this economy. Money remitters are committed to another economy, which is their business, but for the NMI to prosper, we must employ all possible strategies to combat it(meaning taxation, stricter enforcement of US investor visa laws, greater enforcement of businesses hiring aliens when citizens were available, enforcement to stop the self employed including beauticians, taxis, and all others.)

Outbound earnings are one part of the problem but the other is our banks sending our deposits to Hawaii and Guam to stimulate their economies. I would hope that anyone who lives here, has their children living here, and wants to stay here, appreciates that neither situation can continue or long endure.

I also favor a property tax and sales tax for the CNMI. I would also favor an income tax if it were tied to a bill to reduce the size of the local government and eliminate the paid legislature.

This is not an emotional, political, or immigration/status debate to me, it is purely simple economics.

Anonymous said...

There's another party to this mess: the contract workers. Many thousands chose to work for those low wages or no wages. When you make an adult decision like moving from the PI to another country you stick with that adult decision. They do send money back home which BTW is taxed in the PI by the absolutely corrupt Philippine Government. Human beings or labor units as you call them are harvested there for deportation overseas. Stop that and you'll stop the abuses. Any "abuses" which occurred here in the CNMI pale in comparison to other countries. Saudi Arabia beheads maids. Singapore whips them. God only knows what happens to them in Malaysia. You also need to stop treating them like children, mothering them. These adults are grownups that need to make adult decisions about their lives and their financial situation. If you overstay or VISA, work illegally in the PI you face serious consequences like prison, fines and deportation. They will deport a US Citizen without batting an eye.

Green Cards for All! said...

The proposal is clearly unconstitutional, a windfall to the first attorney who challenges it in federal court.

Presumably House Legal Counsel John F. Cool or Joseph L.G. Taijeron, Jr. will soon set Rep. Joseph Palacios straight.

Wendy Doromal said...

Teacher: You do not know how much money residents also spend off-island or send off island. It must be in the millions. Why not tax that money? The proposal is to tax the poorest of the poor because there is a record of the money (THEIR HARD EARNED MONEY) that is sent through remittances. It is in no way the CNMI's money. It belongs to the workers. These people work for hardly anything to put their children and relatives through school so they can have a chance at a better life and job. They are already taxed on their wages. This is especially disgusting because there is the implication that these people are only in the CNMI to bleed dry. There is no give and take relationship between the foreign workers and the CNMI government. IT IS ALL TAKE. It is sad that people think that it is okay that the foreign workers should not be working to advance themselves or their families, but only to benefit the CNMI. This is the same government that allows employers to routinely steal wages from them with no consequences. This is appalling.

Remittances was not a primary reason for federalization. Show me one piece of documentation to back that.

What does this proposal say? It just adds to the argument that the CNMI regards the foreign workers only as tools to profit and nothing more. The CNMI already has cheap labor from them to fuel the economy. They are already taxed but the CNMI wants to tax them again. The CNMI would punish them for going without necessities so that they can send their own money to support family members. In order to remit money these foreign workers go without enough food or medicine, or give up something else because they make so little that they can barely survive. The CNMI would tax the poorest of the poor instead of proposing a fair revenue raising tax such as a property or sales tax.

This is not simple economics. It is reverse Robin Hood. It is unethical. It is immoral. The CNMI will not prosper as long as it continues to try to do so on the backs of the poorest of the poor.

Let the karma flow. . . .

Wendy Doromal said...

3:34 I bet you would tell a rape victim, "You made the adult decision to be on that street."

You are right. The problems with the system start in the home countries. Richer countries could have assisted third world countries to build their economies, but haven't done so, partly because to do so would dry up the source of cheap labor used to fuel their economies.

Abuses are abuses and should not happen anywhere. It makes no sense to try to justify an abuse in the CNMI by saying that they are worse somewhere else.
No one is talking about what happens anywhere else, but in the CNMI on U.S. soil. Deflective arguments offer no solutions.

Anonymous said...

so much for the argument that these GW have no home to return to. Sending most of their money back to someone in thier home country means they do have someone there they can return to. I can't wait for the first one to use that argument in deportation court. I am sure Western Union has records that can be gotten with a summons. Either that or testimony under oath that they don't have anything to return to but they sent their money somewhere. Remittance to Mexico from mexicans living in the US is the second largest source of income for MExico. I agree with teacher, thanks for opening our eyes........

Anonymous said...

i dont believe american locals they are out of human being.its not an christian way.where is the all catholic/ etc fathers who is the champion of religion.why dont they come up for same religion people.may be they busy in party in restaurant.humanity can teach by perfect religion. seems like all religion father are corrupt like politicians.too bad for all christian /etc religions. amen

Anonymous said...

Yeah, tax the very people who have no voice in the government so they can't make any objection. Good plan. Nice American plan. (sarcasm) I hope every last OCW leaves the CNMI. Let's see how much revenue it can raise then.

Anonymous said...

Noni 8:36 Do the math. $65 million divided by about 22,000 foreigners (workers and investors) would average to about $3,000 a person or about $250 a month. But considering investors probably send hundreds of thousands themselves through remittances, the average workers pays much less out. Just because a worker sends money to help a relative pay tuition or to help other family members doesn't mean that the worker has a home there. Your argument has no legal standing and isn't logical. What an a**hole you are.

Anonymous said...

if I send money to someone in my home country, remember it isn't a couple bucks it is a majority of everything I earn then yes I do have a place I can go. that person can take me in if I have to leave. All this talk of people being like a stateless person who has no ties left in the land they left is bull. Lately it seems like a lot of these arguments that have been used to garner sympathy keep getting shot full of holes. There are two weeks left, even the consulates know what is going to happen. Be prepared, we haven't heard anything from USICE about what is coming but i am sure they have plans. either way sitting at the beach or in tin shack with no job is not going to get anyone any sympathy here on the island or in the halls of congress. make your own decision but be prepared to suffer the concequences when you overstay and are ineligible to get any status or when deported may mean not having a chance to come back for 10 years or more...... thems the facts whether we like it or not...

Anonymous said...

Ron we bet your wife sends money to your in-laws/relatives in the Philippines teach her your chambernomics wacka-wacka!! nobody even listens to your non-sense anymore just shut up! you disgrace your wife everytime you write about this very long blah.. blah.. blah..

Anonymous said...

Spend your money on bribes right here at home instead of bribing in the Philippines. Palacios certainly knows how his bread is buttered / what the score is. Sure, this proposed "law" is clearly illegal, but when has that stopped a CNMI bill that sounds good to the masses? Makes a good match for the "labor regulation" bill. (By the way, there's a deviously clever backdoor way to legally tax international remittances, but I'm not going to give them ideas by posting it here!)

the teacher said...

"Ron we bet your wife sends money to your in-laws/relatives in the Philippines teach her your chambernomics wacka-wacka!! nobody even listens to your non-sense anymore just shut up! you disgrace your wife everytime you write about this very long blah.. blah.. blah.."

I have never told my wife what to do and shes a citizen that doesn't need to ask me. I would be of the opinion that giving money to the hopeless make them dependent on your charity and renders them unable to take care of themselves or survive without that money. The situation in PI is at crisis because the number one GDP is people, so if I had the love you claim for your homeland, I would be more critical of the governments policies than a private citizens opinions. PI is overpopulated and can't feed themselves or operate the government without remittances and rice from Thailand...and Thailand just tightened the noose with there rice export price ceiling. I would love to see PI prosper but there are limits to what one private citizen can do.

the teacher said...

Noni 8:36 "Remittance to Mexico from mexicans living in the US is the second largest source of income for MExico"

I didn't realize it was that much...thanks for the reminder. No wonder Americans are so angry about immigration issues.

PS Wendy, I sent a long response to your 7:39 comments???

Wendy Doromal said...

Hi Ron

I don't see any other comments from you. Can you re-send it?

Anonymous said...

First of all these people are citizens of another country. They must give up their Filipino Citizenship to become US Citizens. If I lived in the PI for ten years I would not want to give it up no matter how hard I worked. What does that tell you? You defend the Philippines yet encourage people to cast aside their allegiance.

Anonymous said...

3:54 Stupid argument, and by the way Filipinos can maintain dual citizenship.

Anonymous said...

3:54

Green card holders do not have to become U.S. citizens. They can remain permanent residents.

Anonymous said...

taxing the remittances will be double taxation if not triple taxation. whatever take home pay we earn are already net of income taxes, and the remittances companies are paying gross revenue taxes. isn't it enough that what we earn is from blood & sweat? isn't it enough that we contribute to the island by paying taxes in all the goods, produce that we purchase? we pay fcc taxes when we pay our phone bills & cable bills. maybe next time you'll thinking of taxing us for the air that we breathe. tax you!

the teacher said...

I agree with Green Cards for All that this is a moot discussion as this has been tried other places and is likely unconstitutional. I do think the CNMI and the US should have the right to protect the economy and control the outbound flow of currency by all reasonable tactics available, including some type taxation, stricter enforcement of foreign, tougher immigration and investor visa rules and strategies, etc.

Wendy said “You do not know how much money residents also spend off-island or send off island. It must be in the millions. Why not tax that money?”

Yes this is true everywhere but presumably committed residents earn an equal amount to what they export…as that is what keeps their economy functional. I favor a property tax and sales tax here, and would also favor an income tax if it were tied to a bill reducing the size and costs of our local government and legislature.

“Remittances was not a primary reason for federalization. Show me one piece of documentation to back that.”

Correctly, one of the three stated reasons for federalization was to reduce the CNMI dependence on foreign labor and reduce that number to zero. Every economic report that I have ever read mentioned to economic problems with the CNMI; that foreign nationals were working jobs that citizens wouldn’t work due to low wages, and the outbound flow of our earned income abroad. Or as I reported it in a summary of an economic report in 2010:

[CNMI residents face four serious economic problems. First, about 50 percent of NMI residents send earnings abroad as remittances, undoubtedly the highest percentage on the planet. While the Philippines survive by receiving money, the CNMI has an extraordinarily high percentage of people remitting their income abroad. Second, our banks send our depositors money to other shores to stimulate their economies, chiefly Guam and Hawaii, instead of investing where the wealth originated. Third, foreign workers are willing to accept jobs below prevailing wage, making local citizens unable to compete for jobs that they should be performing. This increases our numbers receiving U.S. aid. The recent austerity measure reduced government workers hours by 10 hours a pay period, or 12.5 percent of NMI government employees yearly economic wealth is lost. Lastly, illegal foreign businesses operate here without a U.S. investor visa and send their profits off island as well, strengthening their East Asian homelands but paralyzing the CNMI. Some of these businesses will close before 11-2011, but most will lose the authority to operate in 2014 when their E-2C visa expires unless they upgrade to a US investor visa, which is highly unlikely. The new investor visa regulation state that the 2014 date may not be extended even if the transition period is]

The sides on the federalization issue seem blurred or skewed but my opinions on the matter haven’t changed at all. I was against CNMI “status” as it would create a horrific situation in the NMI especially for young citizens. That would keep wages de-facto depressed for ages on supply/demand even if the minimum wages increase. Now workers are asking for parole in place, even worse than CNMI status and privately the administration wants it bad so than can continue to keep workers in servitude, and for the same reason they created the umbrella permit.

Like it or not, if the CNMI has one marketable economic opportunity, it is an abundance of cheap labor and an ability to recruit much more, highly skilled H-1s for a shockingly low prevailing wage rate.

Wendy Doromal said...

Ron,
The US Congress introduced the federal legislation for specifics reasons and not one of them was because foreign workers send remittances abroad. You are quoting an economic report that was specifically prepared to boost Fitial's anti-federalization lawsuit. It is an independent report that was written after the law was introduced.

Taxing the poorest of the poor is wrong no matter how you spin it.

Of course everyone wants all graduates to be employed, all unemployed residents to be employed. It is not the fault of the foreign workers that the governor wrote the labor law to build the CNMI economy on the back of cheap labor and brought in tens of thousands of aliens to work in conditions a step above slavery. His plan to pour cheap labor into the CNMI to fill his pockets (as VP of Tan) hurt the residents and the nonresidents in too many ways to list here. That is no reason to continue to stick it to the foreign workers. They remain victims in this scheme.

The U.S. should give all of the legal, long-term foreign workers permanent residency and FREE them.

You wrote this in 2009:

My ancestors and many others boarded crowded ships and journeyed to America. Each had a different story to tell. The central theme may have been similar though, as each had hope for a new and better life for them and their family.

Guest workers here have exhibited unimaginable patience and have a claim to America that no other immigrants before them can boast. They can be proud that they have served their time. They have worked, labored, and toiled to build a part of America. America is a country of immigrants. No immigrants before them were brought to US soil with promises of work in America, and now, in many cases 20 years after their arrival, they still do not have working status in America. They do not have the freedom to change employers. They do not have the freedom to travel or move. They do not have the right to bring their family, including spouses and children to live beside them. They are a separate class of immigrant. They did not illegally cross the border into America. They are officially veterans of the Northern Mariana Islands, and whether they are Filipino, Bangladeshi, Chinese, or other, no immigrant group before them, not my ancestors or anyone else’s anywhere, can boast what they can.

Slave driving big business anti-federalists here like to change the subject when talking about the facts of their case. They like to change the subject to the impoverished situations in their country of origin, or tell about the US immigration issues in the SW and Florida borders. That is misleading, deceptive, and completely irrelevant to their story and their case. Remember, no immigrants, can boast what they can.

I can assure you, that every decent American that knows this story is proud of their contributions to America. I can assure you, that every decent American aware that you have long been denied unalienable human rights is outraged and we hope that justice, no matter how slow, will prevail here.

I believe the US should grant improved status or green cards for our long abused guest workers. I will never veer from the belief that they have already earned the right to an unobstructed path to US citizenship. Remember, no immigrants in U.S. history, not my ancestors or anyone else’s anywhere, can boast the accomplishments they can.

the teacher said...

And I still agree, but America and Americans apparently don't. From a purely economic standpoint, an improved status with travel rights makes sense, a parole in place or CNMI only status does not. Talking improved status in a worldwide depression will be a tough sell.

Wendy Doromal said...

Ron: The majority of American have no problem with 16,000 legal aliens having permanent residency. We both agree that CNMI-only status is a continuation of the two-tiered society and continues the problems. Parole-in-place is only good as a temporary hold until the US Congress can act.