Border skirmish: Tancredo Proposes Remittance Taxes

[R. A. Hettinga]

<http://www.denverpost.com/cda/article/print/0,1674,36%257E33%257E2236033,00.html>



The Denver Post



Border skirmish
Rep. Tancredo's proposals for immigrant remittances draw First Data Corp.
into public policy debate
 By Aldo Svaldi
 Denver Post Staff Writer


 Sunday, June 27, 2004 -

 First Data Corp. chief executive Charlie Fote and Rep. Tom Tancredo,
R-Colo., are both the grandsons of Italian immigrants and consider
immigration a critical public policy issue.

 Their views just happen to be polar opposites.

 First Data, based in Greenwood Village, earns billions of dollars a year
from its international Western Union money transfer business.

 Tancredo, a Littleton Republican who represents the 6th Congressional
District in which First Data has its headquarters, has built his political
career on ideas to control immigration.

 He recently proposed taxing remittances - the billions of dollars that
workers send each year from the United States to their families and friends
in Mexico and other countries. Such a move could have hurt First Data's
business.

 Tancredo quickly backed off the trial balloon of remittance taxation and
now recommends that U.S. foreign aid be offset by the money that workers in
the U.S. send abroad. Fote and First Data oppose that proposal, as well.

 Meanwhile, First Data employees have formed a political action committee
that is funding pro-immigration candidates, including Tancredo's Democratic
opponent in the fall election.

 The political action highlights how First Data, once content to remain a
behind- the-scenes player, is strategically and openly inserting itself
into the immigration debate.

 "In the end, political support is a matter of choice, and we will support
the individual who we believe best reflects the interests of our business
and this district," Fote said in an e-mail to The Denver Post.

 Tancredo counters that his intent with the remittance tax proposal was not
to harm First Data, which employs 2,700 people locally and expects to pull
down $10 billion in revenues this year.

 "Really and truly, it had nothing to do with them," Tancredo said. "I did
not purposely do anything to hurt their bottom line. Nobody was talking
about taxing Western Union or First Data."

"Voices weren't being heard"

 The skirmish with Tancredo is just one in a series of moves by First Data
to shape the country's ongoing public policy debate over immigration.

 "We selected immigration reform as our jumping-off point because it's an
issue that's important to a very large customer group, and we felt their
voices weren't being heard," Fote said.

 First Data is Colorado's biggest company by market capitalization, valued
at $38.5 billion. It provides back-end transaction processing for more than
3.5 million merchants and has the country's largest ATM and debit-card
network.

 It's the world's largest provider of money transfers - through its Western
Union subsidiary - with 188,000 agent locations in 195 countries.

 In March, Fote spoke at the National Press Club and unveiled a new $10
million First Data Empowerment Fund to help immigrant communities and
foster an "enlightened" discussion of immigration.

 Fote argued at the time for more humane treatment of immigrants and for
eliminating the backlog in families wanting to move to the U.S. legally.

 Fote is personally hosting a series of immigration reform forums across
the country, including sessions in Chicago on July 21 and in Denver on July
22.

 The company is testing a Business Information Clearinghouse in Denver to
assist Latino entrepreneurs and is working on initiatives to teach families
in developing countries how to leverage the funds they receive from
relatives abroad.


STATE OF REMITTANCES


 About 10 million Latin American- born workers in the U.S. send a total of
$30 billion back to relatives each year. Here's how much is sent from the
top 10 states.

 California: $9.6 billion
 New York: $3.6 billion
 Texas: $3.2 billion
 Florida: $2.5 billion
 Illinois: $1.5 billion
 Georgia: $947 million
 North Carolina: $833 million
 Arizona: $606 million
 Virginia: $586 million
 Colorado: $544 million

 Sources: Bendixen & Associates, Inter-American Development Bank
 The moves have earned accolades from immigrant groups, who point to First
Data as the only Fortune 500 company willing to take a public stand on the
subject.

 "First Data is very courageous and proving to be a gallant leader in our
community," said Polly Baca, executive director of the Latin American
Research and Service Agency in Denver. "They are addressing one of the most
critical issues in our state and nation."

 Baca said that First Data has brought various sides of the immigration
debate together without trying to push the dialogue in a predetermined
direction.

 But one direction that First Data's side of the dialogue will most likely
never go is toward Tancredo's position of stronger limits on immigration to
the U.S.

 Tancredo proposed placing a 5 percent tax on remittances last month after
reading a Washington Post article detailing how individuals in the U.S.
send $30 billion a year in remittances to Latin America.

 "If the report is correct, even a small levy on remittances could generate
millions or even billions of dollars for things like better border
enforcement," Tancredo said in May.

 Fred Niehaus, First Data's senior vice president of public affairs, said
Tancredo's tax proposal surprised the company and challenged its interests.

 Tancredo said that he doesn't design policy based on the interest of any
single company, even if that company is the largest in his district.

 "We don't do business that way," he said. "We don't go to corporations
first and say I am thinking about this. You try to think about what is best
for the country."

 However, Tancredo has shelved that plan in favor of a legislative proposal
that would reduce U.S. foreign aid by the money a country receives in
remittances.

A blessing or a curse?

 More than 60 percent of the 16.5 million Latin American-born adults living
in the U.S. send money back to their home countries about once a month,
averaging about $240 per disbursement, said Sergio Bendixen, a Florida
pollster who researched the topic for the Inter-American Development Bank.

 Of the $30 billion total estimated to be sent by those individuals
annually, about $544 million comes from Colorado, Bendixen said.

 By comparison, USAID, the agency responsible for directing foreign
assistance, requested $805 million in next year's budget for the entire
region.

 Bendixen argues that remittances benefit both the countries receiving them
and the U.S., a position that First Data supports.

 "The only way you are going to curb illegal immigration to the U.S. is to
foster the economic development of Latin America," he said.

 Tancredo disagrees, and argues that remittances actually encourage illegal
immigration. There are an estimated 8 million illegal immigrants in the
U.S., according to the U.S. Census Bureau.

 In some countries, money transfers represent the largest or second-largest
source of national income - even ahead of tourism, Tancredo said.

 Nations that get large flows of money from abroad have less motivation to
address high unemployment rates and to foster economic self-sufficiency,
Tancredo said.

 As a result, he says, those foreign governments encourage workers to cross
the U.S. border illegally and drain billions of dollars from the U.S.
economy.

 Executives at First Data's Western Union, which transferred 14 percent of
the $151 billion in global remittances last year, see it differently.

 It's a key reason why First Data Corporation Employees for Responsible
Government, the political action committee, was launched a month ago,
Niehaus said.

 The committee has raised $22,500 so far, with contributions given to
candidates including President Bush; Rep. Chris Cannon, R-Utah; Sen. Ted
Kennedy, D-Mass.; and $2,000 to Tancredo's Democratic opponent this fall -
Joanna Conti.

 Conti calls First Data's support "very significant" and criticized
Tancredo's stance on immigration issues.

 "This is his crusade, not the district's crusade," Conti said. "Our
immigration policy is broken. Most people would agree that we need to
return to a more sensible policy."

 Conti most likely stands little chance of winning a district where 46
percent of voters are registered Republicans and just 23 percent are
registered Democrats.

 Tancredo handily beat his Democratic opponent Lance Wright in the 2002
election, winning two-thirds of the vote.

 That may be why Tancredo doesn't view Conti as a threat to his serving a
fourth term and takes First Data's overt opposition in stride.

 "I live in a live-and-let-live world," Tancredo said. "I want them to do
what they need to do. I have to do what I have to do."

A risky endeavor

 Niehaus admits that First Data's reputation could suffer if the
immigration reforms backed by the company fail.

 While corporations may take public policy positions that serve their
interests, they don't often confront public officials in the open.

 "It is rare that you hear about these things coming out and happening,"
said Katie Kimberling, director of operations at Wilson Research Strategies
in Oklahoma City.

 Larry Sabato, director of the nonpartisan University of Virginia Center
for Politics, said a company wouldn't challenge a sitting member of
Congress lightly.

 "When you challenge a politician who has significant power in the majority
caucus, which Tancredo does, you are taking a chance," he said.

 Shareholders could balk at the company's activist position, and so could
people who agree with Tancredo's stance.

 Corporate America isn't behind enforcing existing immigration policies,
said Craig Nelsen, director of ProjectUSA, a group opposed to accepting
foreign identification cards to open bank accounts in the United States.

 "There is no money in enforcing immigration law," Nelsen said. "It is all
in the other side, in circumventing it, increasing it or turning a blind
eye to it."

 Fote counters that immigrants strengthen the U.S. economy, diversify the
social fabric of society and must be treated fairly.

 In the past, First Data has focused primarily on growing its business, but
it now is in a position where it can advocate for its customers, who often
have no one to take their side, Fote said.

 "Sure, we risk criticism from those people who disagree with our work in
the area of immigration reform," Fote said. "We're prepared to face that
criticism, but the fact is we believe what we're doing is the right thing
to do."



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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
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