Bill to Make Mexicans (and Others) Pay for Border Wall Languishes

Legislation to impose fee on international money transfers has gained little momentum in Congress

With the Mexican government unlikely to send a check to Uncle Sam to pay for President Donald Trump’s proposed border wall, an Alabama congressman proposes the next closest thing — billing individual Mexicans (and other foreigners).

Rep. Mike Rogers (R-Ala.) in March introduced the Border Wall Funding Act of 2017. It is a simple idea: The federal government would impose a 2 percent fee on all money transfers from the United States to Mexico, Central America, the Caribbean, and South America. He estimates the fee would raise more than $1 billion a year.

The measure would put a significant dent in the cost of the wall and — in a roundabout way — maintain Trump’s campaign promise of making Mexico pay for it since money transfers to Mexico account for a significant percentage of the so-called remittances sent south of the border.

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“That was my principle all along,” Rogers told LifeZette. “That’s the beauty of this and the whole reason why I gravitated toward [it]. Because the president never said he’d make the Mexican government pay for it. He said, ‘I’m going to make Mexico pay for it.’ Well, that’s exactly what my bill does, is that Mexico and the other South American countries that are breaching our border are the folks responsible for paying this fee.”

Yet there has been little movement on the bill since Rogers introduced it. It currently sits in a pair of subcommittees of the House Judiciary Committee, with no scheduled hearings.

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Rogers said lawmakers are waiting for the White House to decide on a specific set of funding sources. He said be believes his bill has a good chance to be included in a larger package. And he added that he hopes the president tackles other issues first, such as tax reform and a proposal to rebuild roads, bridges, and other infrastructure.

“Once this wall and the funding gets put on the House and Senate floor, the politics in this place are going to explode,” he said. “Not just across the aisle, either. Within the Republican Party, as well as with the Democrats.”

Remittances Abroad Total Almost $135 billion
Although estimates vary, experts agree that migrants living in the United States send an enormous amount of money back to their home countries. Rogers derives his $1 billion revenue projection from the World Bank estimate of $54 billion in remittances sent from the United States to the countries named in his legislation.

An estimate of 2016 data by the Inter-American Dialogue, a think tank specializing in Latin American policy, shows an even higher amount. It pegs total remittances to Mexico and 19 countries in Central America, South America, and the Caribbean at $69.397 billion. At that level, a 2 percent tax could raise more than $1.3 billion.

“It would also have the effect of fulfilling [Trump’s] campaign promises. It has a lot of built-in advantages.”

If Rogers were to expand the scope to all remittances sent abroad, the take would double. The World Bank estimates that money wired by people living in the United States to the rest of the world totaled almost $135 billion in 2015. That would yield more than $2.5 billion, even after allowing money-transfer companies to keep 5 percent of the money withheld, as the bill provides for.

The idea has won praise from advocates of tougher immigration enforcement. Ira Mehlman, a spokesman for the Federation for American Immigration Reform (FAIR), noted the group of foreigners wiring money to their home countries includes a larger number of illegal immigrants, many of whom are earning money under the table and not paying taxes. It also is money that does not circulate in the American economy, he added.

“This certainly should be a factor in how we formulate immigration policy,” he said.

[lz_table title=”Sending Money Home” source=”The Inter-American Dialogue”]2016 remittances from U.S. subject to proposed tax*
Mexico,$27 billion
Guatemala,$7.2 billion
Dominican Republic,$5.4 billion
Colombia,$4.9 billion
El Salvador,$4.6 billion
Honduras,$3.9 billion
Peru,$2.9 billion
Ecuador,$2.6 billion
Jamaica,$2.3 billion
Haiti,$2.2 billion
All Latin America,$69.4 billion
* Proposal to levy 2 percent fee on money transfers to Mexico/Caribbean/Central America/South America

Steven Camarota, director of research at the Washington, D.C.-based Center for Immigration Studies, said one concern would be how much potential tax could be lost due to people avoiding it by sending money through the mail or using other methods. The higher the rate, he said, the more it would push people away from services such as Western Union.

But even a 1 percent tax on just Mexico-bound remittances would add up quickly, Camarota said.

“It does seem possible you could raise a couple of hundred million a year,” he said. “It would also have the effect of fulfilling [Trump’s] campaign promises. It has a lot of built-in advantages.”

Rogers agreed that making wire transfers too expensive would hurt money transfer businesses and said he rejected suggestions from colleagues to make the fee higher for that very reason. But he said 2 percent is small enough that it probably would not deter most people.

Bill Faces Uphill Climb
Rep. Mo Brooks (R-Ala.), who signed on as a co-sponsor of the legislation, said he does not know why top leaders in the House have not been more enthusiastic about the proposal to another bill he has co-sponsored — the EL CHAPO Act. That is an acronym for Ensuring Lawful Collection of Hidden Assets to Provide Order, which would use assets seized from drug cartels to pay for the wall.

“You’ll really have to ask House leadership why they’re not pushing more border-security legislation that could make a significant difference,” he said.

Rogers said he believes the bill would have overwhelming support if brought to the House floor as a stand-alone measure. But he said it could get trickier as part of a larger package.

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Even if the bill passes the House, Brooks said, he is pessimistic about its chances of ever passing the Senate, since it is subject to a Democratic filibuster.

“From a procedural standpoint, as long as the Senate has the 60-vote rule in place, we will have no constructive border-security legislation reaching the president’s desk,” he said.

Mehlman, of FAIR, said taxing money transfers to foreign countries to improve border security likely is far more popular with the public than among legislators.

“It’s an idea that most Americans would embrace,” he said. “A lot of things don’t seem to be catching on with this Congress … They haven’t earned the moniker ‘do-nothing Congress’ for nothing.”

(photo credit, article image: Tomas Castelazo)

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