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.

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