Posted on 08/20/2015 7:16:37 AM PDT by SeekAndFind
Donald Trump’s new immigration plan boldly declares that, “Mexico must pay for the [border] wall and, until they do, the United States will, among other things: impound all remittance payments derived from illegal wages.”
Would that even be possible? A Trump administration could erect a lot of legal, regulatory, and logistical obstacles to transferring money from the U.S. to Mexico. But those moves would enrage the banks and financial institutions that make money off the transfers, and probably spur interest in transfer methods that escape the attention and grasp of law enforcement.
Earlier this year, Mexico’s central bank released data indicating Mexicans abroad sent home $23.6 billion in 2014, almost all of it from the United States. Payments from workers abroad make up just 2 percent of Mexican GDP, but they can play a much bigger role in particular local economies. One study concluded that “the poorest rural areas” of the country derive 19.5 percent of their income from remittances. Whatever their economic impact, the payments are widespread: An estimated 83 percent of Mexicans who enter the country illegally send money home. But so do 73 percent of legal Mexican immigrants — making a blanket restriction on remittances virtually impossible.
Still, the U.S. government can make it extremely difficult to send money to a country. The Treasury Department has enacted a series of regulations designed to restrict terrorism financing that holds intermediary banks responsible if the money they transfer ends up in the hands of terror groups. Somalia has no functioning traditional banks, and in February, U.S. banks largely stopped servicing the accounts used by money-transfer operators in Somalia. Somali-Americans are now complaining that they have no way to send money back to their families.
Trump’s pledge to “impound” remittance payments implies seizure, an act that would face a high legal bar to clear. But the government has successfully seized money in the accounts of criminals who smuggle illegal immigrants across the border.
In the early 2000s, Arizona attorney general Terry Goddard and other state authorities suspected Mexican crime syndicates were moving money through Western Union wire transfers, and sought to seize money in Western Union accounts. The figures were mind-boggling, according to the prosecutors’ testimony: $500 million a year in Western Union payments from Arizona, and $2.5 billion a year in payments for people-smuggling overall.
But Colorado-based Western Union contended a state attorney general didn’t have the authority to review wire transfers from other U.S. states directly to Mexico, arguing that it violated the privacy of their customers and overstepped limits on the state’s search-and-seizure authority. State prosecutors countered that the wire transfers constituted payment for crimes committed inside Arizona.
In 2009, the Arizona Supreme Court agreed that Goddard had exceeded his authority when he sought records of transfers exceeding $500 from 29 other U.S. states to Sonora, the Mexican state directly south of Arizona. But the following year, the company reached a settlement with the state, granting investigators in Arizona, California, Texas, and New Mexico “unprecedented” access to records of electronic payments to Mexico.
Note that Goddard and like-minded prosecutors sought access to accounts being used by cartels and migrant-smugglers, not garden-variety illegal immigrants sending money home to their families. The company and other wire transfer companies would almost certainly balk at prosecutorial fishing expeditions designed to secure broader access to transfer records, setting up another lengthy legal battle.
Of course, where there is a will to move money across the border, there is a way. Tighter legal restrictions would likely spur immigrants to use hawala-like systems that rely on trusted networks of contacts on either side of the border, Bitcoin-style systems that operate outside the traditional financial network, or plain old smuggling of cash.
The simplest option for cracking down remittance payments may be taxation. The state of Oklahoma charges a one percent fee on all personal wire transfers of cash to accounts outside the state. The state treats the fee as withholding from state income tax, so any Oklahoma resident who files taxes eventually gets the money back. Those in the country illegally obviously don’t file state income taxes, so they never get the money back or have it credited against a state tax debt. The “wire transmitter fee” brought in $10.5 million in 2014, and $9.7 million the previous year. Wire-transfer companies in the state don’t like the tax because it increases fees.
To some Americans, Mexican workers’ remittance payments represent a fundamentally unjust financial transfer. While $22 billion to $30 billion is a drop in the bucket for the $17 trillion U.S. economy, it’s a matter of principle for these folks. In their eyes, illegal immigrants from Mexico effectively steal from the United States by entering the country, offering unethical employers a labor force that isn’t covered by wage, workplace safety, and other laws, getting paid under the table, and then sending the money out of the country.
But mitigating this perceived injustice might not require grandiose promises to “impound” the money. A simple tax on wire transfers might offer the path of least resistance.
— Jim Geraghty is the senior political correspondent for National Review.
A key question.
Obama has showed us what one man, the POTUS, can do with a phone and a pen
Don’t need no steenkin’ Congress
No steekin’ constitution either
Just a compliant or neutered press
Black market means yes, bitcoins no. Too complicated for them.
Simple, show Id to transfer money.
Ohhh, boo hoo. They would “enrage” the banks. Another straw man as to why you can’t accomplish anything. FREAKIN’ enrage them.
Sure, why not?
Why do you assume that Bitcoin is too complicated for them? It may be too complicated for them to bother with NOW, but given the choice between figuring out how to use Bitcoin and having 10% of their transfers taxed, they’d learn quickly.
I doubt it.
“Or are we going to seize money from all of them without differentiating?”
How does HELL YEA! Sound?
Uh-huh. Tell that to the innocent people who have their money seized by police without charges.
50% tax on transfers to MehHico, then.
A more effective method, that would be easier to get through the courts, would be to fine employers who have paid illegals - at a rate that would make it hard to justify hiring illegals in the first place.
RE: 50% tax on transfers to MehHico, then.
That would include Americans who would want to remit money to Mexico?
A good way to start and fairly easy to do. Start with the tax at least 25 percent of the total money transferred. Then after a few months raise the percent to 50 percent. Work on legislation to prohibit all transfer of funds without special approval from a new branch set up in the IRS.
RE: How does HELL YEA! Sound?
Sounds like punishing Americans and legal residents to me.
executive order #2 lay the ground work for Mexico to pay for the wall to be built.
I would like an EO that made O’s records public.
Add a 20% tax to anyone that do’s not have proper papers to be in the U.S. I don’t care were the funds are going there taxed as most of these funds were never taxed.
A fine of $5000.00 for every illegal found working for any employer. The second time it goes to $10,000.00 and so on tell the company is out of business.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.