By Jodi Magallanes, Truth Staff
jmagallanes@etruth.com
GOSHEN -- They still queue up to send money home to parents, spouses and other family members at Intercambio Express in Goshen. But their contributions to the local economy outweigh the impact of losing that money for local investment, say the presidents of the Elkhart and Goshen chambers of commerce.
In 2003, then-Mexican president Vicente Fox said that remittances sent home by Mexicans working in the U.S. constituted the largest source of foreign revenue in the country during 2003, even more than oil, tourism and foreign direct investment: around $10 billion dollars at that time, according to the Pew Hispanic Center. Critics said he exaggerated, and other sources, including the Federal Reserve Bank of Dallas, put remittances as the third-largest source of foreign income.
The U.S. is indeed the biggest source of remittances in the world, according to research done by Dilip Ratha of the World Bank in 2005. Money earned in the U.S. goes literally everywhere. Ratha found that Mexico is the recipient of the third-largest amount of U.S. remittances, after India and China, not surprising given the large Mexican community in the U.S.
Going state by state, however, Indiana has the 18th-highest amount of money going out yearly to Latin American countries, after Texas, Illinois, Virginia and several others, according to the Congressional Budget Office. Not every business in the state suffers from this outflow, however. Banking institutions in Indiana, according to a Sagamore Institute report, make more than $21.5 million annually on transaction fees for remittances.
But opinions differ here in regard to whether the rest of the Elkhart County economy suffers from immigrants sending money home instead of spending it locally.
"Oh, it's significant," said Phil Penn, president of the Greater Elkhart Chamber of Commerce. "If people are earning money here and only spending enough to subsist, then it is taking money out of our economy. We depend on people spending money here."
The most obvious impact would be felt in any industry that supplies a non-essential product, Penn said, such as restaurants, middle- to high-end clothing stores and new cars, although the chamber has not specifically tried to gauge that impact.
The first generation of immigrants has always been big on sending money back home, said Goshen Chamber of Commerce President David Daugherty. But he feels that, while that fact does lessen the economic benefit of them being here, it probably doesn't override the fact that their presence stimulates most aspects of the economy.
"Maybe we're not growing as fast, but we're definitely growing," Daugherty said.
The CBO thinks so, too, stating in a report last year that immigrants' consumption of local products and contribution of labor "far outweighed" the reduction in purchasing power that comes about when they send money home.
And at the same time, Isaac Torres of Intercambio Express has noticed a definite downturn in business, particularly compared to a year or two ago.
"Many people first came here alone, but they have since brought their families up here with them and so now they don't send money there," Torres said.
He declined to say exactly how much money the popular money-transfer business currently sends out of the area per month or per year. However, the Sagamore Institute of Indiana's research says that in 2004, about $182 million was sent to Mexico from the state. Averaged per county, that comes to almost $2 million.
But a more significant financial concern for Goshen, at least, is the amount of local and state tax dollars that are perceived to be denied those entities each year by a tax scam.
Unscrupulous employees have been known to claim more dependents than they really have on their employee withholding forms in order to have very little money withheld from their paychecks, then do not settle up by paying income taxes at the end of the year.
The issue was addressed by the Goshen City Council last year, which began stipulating to businesses that request tax abatements that they must verify the dependents of new employees who declare more than two. Goshen and state officials concluded that literally millions of dollars per year are lost in state revenue, some of which is returned to municipalities, via this scam.