Same way you seize any money. You tax it, and anyone who isn’t paying the tax is committing a felony.
Then I predict the near-instant rise of third-country remittances, i.e. sending money to Canada with instructions to forward it to Mexico. If such remittances to Canada are taxed, there are ~170 other countries to choose from, and I’m curious how a net-importer nation like the U.S. can restrict its outgoing cashflow without making a lot of people upset.
No need. Money takes longer to get there, they still have to pay, and you can bet the rates will be set not much lower than the tax. Mexico pays either way, the only question is how much of the money we get. Could be that we pay, Mexico pays, and Canada profits.
I would imagine that you would impose that tax on all international remittances. I don’t know the numbers, but I imagine that the vast majority of such transfers are to South or Central America and, of that, a significant portion is to Mexico. People are going to complain that the tax is not sufficiently narrowed to the right kind of illegal alien? Not likely.
But more practically: I don’t want to read the whole report, but apparently the average cost of sending a remittance from a G20 country is 7.5%. I assume that a third-country remittance will impose some sort of additional transaction cost. Let’s assume sending money to Mexico via Canada is 150% the one-way cost (half off for the second transfer). That’s 11%. If you impose a 2% tax, it’s still cheaper to send it directly.
I could be missing something.
Well, in 2015, remittances to Mexico totaled $24.8 billion, though that’s a worldwide total. Let’s assume ~90%+ came from the U.S., so a nice round $23 billion. Put a 2% tax on that and assuming numbers are steady, the U.S. nets ~$460 million per year. Trump has estimated the cost of the wall he has in mind at $5-10 billion, so even if the wall is built during his administration, it certainly won’t be paid off even if he gets two terms.
Better plan a bunch of bake sales, gringo.
I wasn’t taking a position on whether it would be enough to pay for a wall, just addressing the issue of how you would execute the tax “without making a lot of people upset.” (Although I don’t know why it needs to be paid off before he leaves office. The bigger problem is that increased enforcement of the immigration laws will almost certainly cause the amount of taxable remittances to drop).
I was just musing on Trump’s likeliness to leave America in worse shape than when he found it.
Anyway, are “remittances” sufficiently legally distinct that a tax could be narrowly targeted just to them? For example, unless Trump wants to put a tax on all payments made by Americans to foreigners (I get the vague impression he does, truth be told), if he tries to limit it to just remittances, than other mechanisms will quickly pop up which function like but are legally distinct from remittances, i.e. one’s old-country relatives send you an invoice for “services”, which you then pay. It’s not a remittance, it’s payment of an incurred debt!
The human ability to find workarounds where money is involved is considerable.
I’m beginning to wonder if he plans to deal with Congress at all.
So far, Trump has acted like a king. He has issued executive orders, expected everyone to follow his decrees without regard to feasibility, and now plans to build a castle wall around the nation of Trumpsylvania, as though walls are the ultimate in security.
I wonder if he’s going to install a drawbridge, or direct the National Science Foundation to build him a dragon…
I assume you tax the method of payment. You impose it on Western Union (and the like) transfers. That has the “advantage” of falling heavily on illegal aliens (who are less able to use traditional wire transfer services because they’re less able to open bank accounts). I don’t know that a remittance is a legal concept, but I assume that there is a distinction drawn between a Western Union transfer and a bank-to-bank wire transfer (if only in terms of the regulating authority), so that it can be defined relatively easily. So it would be a tax on all payments via Western-Union-Type-Methods internationally.
Depends on what you count as ‘done’, as opposed to said, also what’s ‘standard’? The main real actions so far by Trump are cabinet picks which are predominantly, though not entirely, people one could imagine a ‘conventional’ conservative GOP president also nominating. That’s especially true of what those nominees said at confirmation hearings, as opposed to how Trump critics might want to portray them, though that gets at a secondary level into saying v doing. We don’t know what they’ll do exactly on their own initiative or at WH direction.
Trump’s executive orders aren’t ones Bush wrote out in his first days, but Bush wouldn’t necessarily represent ‘standard’ GOP now, and Clinton wasn’t the same as Obama, nor the hottest issues exactly the same. But conservatives had pretty much thrown in the towel on TPP (not to mention the Bernie-ite left agreeing with Trump on that, though they don’t want to admit they agree with him on anything). The Mexico City abortion funding language went the other way from Bush to Obama so that’s same as Bush. Any likely GOP’er would have wanted to reverse the Obama position on Keystone Pipeline. Govt worker hiring freezes are standard grandstanding politics not always even limited to Republicans.
The ‘wall and Mexico will pay’ is signature Trump more than maybe anything else, but can’t actually be done via executive order and the order doesn’t really go beyond normal presidential prerogative, Congress will have to agree to funding (in the likely event the US ‘has to pay upfront’). So it’s not really ‘done’ either. But it’s an example of a particular order the other major GOP candidates probably wouldn’t have written, unless they’d had to promise to do so in order to get past Trump at some point.
Why only 2%? I would think 10-20% would be more reasonable. Or at least a sales tax rate of 5-7%.
It usually takes a few months - maybe years - before a “standard” Republican president seriously damages relations with a major trading partner like Mexico, but it took Trump less than a week.
Well, Obama should have done it according to his campaign rhetoric, but he had Austen Goolsbee reassure Canada that his anti-NAFTA rhetoric was just ‘campaign talk’.
What’s really funny reading that now is that the campaign recognized the building protectionist sentiment in the Midwest and thought that they could appease it without actually delivering in terms of real policy. I’m beginning to think more and more than Democratic deception on trade is the single biggest reason Trump is in the White House.
What’s even funnier is that back when I was a staunch free trader, one of my arguments to Democrats was that they can’t very well talk about being nice to other countries and also talk about jobs going overseas and backing out of trade deals. Democrats said at the time, correctly, that we don’t have to sell out our workers to make China and Mexico happy. So I’m at a bit of a loss as to what exactly the problem is with Trump’s trade policy. Sanders seems cool with it.
2% was Falchion’s suggestion. Does this extra tax apply to all remittances leaving the U.S. or just the ones going from the U.S. to Mexico, because if it’s the latter and you want to pay for a $10 billion wall (and its ongoing maintenance costs) in a reasonable amount of time, you’d have to tax the remittances pretty harshly, which just encourages the development of workarounds like sending through third countries.
Of course, the end result isn’t that Mexico is paying for the wall, but that Mexicans living in the U.S. (or naturalized citizens of Mexican descent or with some familial connection to Mexico) will be paying for it, taking money out of local economies.
For my part, I’d be willing to set up or invest in a re-remittance business here in Montreal, accepting transfers from anyone in the U.S. and passing them on to anywhere in the world with just enough of an additional service charge to cover my expenses plus 1 percent. I shall call my business “The FYT Company.” I leave it to the reader’s imagination to glean what “FYT” means.
The constant, whiny tweets? Although that could be said for any president, Republican OR Democrat, I suppose.
I picked 2% because (given the average fees for remittances) such a tax rate seemed to suggest that your average sender would pay the tax rather than try some sort of third-country scheme. Use a 20% rate and it would likely be cheaper to do what Bryan Elkers was suggesting. (Unless you imposed the tax on all international money transfers regardless of destination).
Good point. Taxes change incentives. 2% probably does nothing, 20% changes everything.