Friday, August 10, 2018

A way to pay for the Wall?


President Trump is struggling to get Congress to appropriate sufficient funds to build the wall he wants along our southern border.  I thought Oklahoma's experience with a remittance tax might hold promise for that.

Oklahoma ... collects 1 percent from all out-going, out-of-state, person-to-person wire transfers of money; many of these transfers are remittances from illegal aliens in Oklahoma to their relatives in their homelands. It is the only state to do so.

. . .

Oklahoma tax officials told us a year or so ago that 96 percent of the wire transfer fees are not used as income tax credits — so the great bulk of the funds are additional revenues to the state, all taken from people who do not pay their state income taxes.

This should be a dream for politicians — 96 percent of this funding source is being collected from people who are tax cheats and who cannot vote.

. . .

It continues to puzzle me why state legislatures, particularly Republican-controlled ones, do not tap into this golden, if not huge, source of funds.

Similarly, why doesn't Congress adopt this procedure? It would bring in at least one to two billion a year in a tax on a non-voting population. The tax, ideally, would be imposed only in those states that do not have such a system — thus protecting Oklahoma from any revenue loss.

There's more at the link.

The author's suggestion makes an awful lot of sense to me.  If so large a proportion of the remittance tax is never claimed back as a tax deduction - making it clear that most of those making such remittances are illegal aliens and/or tax cheats - then why not apply it in every state?  It could also be increased from its present 1% to double or triple that.  There's a source of income that might help pay for the border wall within a reasonably short space of time, without taking anything away from current taxes or expenditures.

Peter

9 comments:

Unknown said...

I think this is a good idea, but I have to quibble about one point.

"If so large a proportion of the remittance tax is never claimed back as a tax deduction - making it clear that most of those making such remittances are illegal aliens and/or tax cheats "

This could simply be because it can be claimed as a deduction only if one itemizes deductions, and the people don't have enough other deductions to make itemizing worthwhile (or even possible). We need more data before we can claim that the people making the remittances are illegal aliens or tax cheats. I agree that it's likely, but a lack of reclaiming as a tax deduction isn't nearly enough evidence.

dave said...

Unknown beat me to it. As an Oklahoman, I didn't know about it, and would never have thought to check. I've never seen the line for it on my income taxes, and my accountant (who is so close a friend as to be family) has never mentioned such a thing.

Sorry, but you've committed a non sequitur there.

dave said...

Also, it's a credit, not a deduction. Credits are dollar-for-dollar reductions in tax owed; deductions merely reduce your taxable income.

Old NFO said...

Interesting...

McChuck said...

I'd like to point out that this is a direct tax on interstate commerce. What would you think of road blocks at the State line, where they take 1% of all the cash found in your car?

Of course, the Feds could quite easily do this. It's perfectly legal for them to tax transfers out of the country.

Aesop said...

Bah. 1%. Pikers.

Tax remittances at the highest federal rate, plus the state rate, on transmission. That'd run 37-48%, 24/7/365, depending on the state in question.

If you're a legal filer, you'll get the money back.
If not, you deserve the bite anyways.

Squawk all you want about Big Government, and I'll join your parade and subscribe to your newsletter, but squashing illegal aliens at every turn is the express job of big government, and wire remittances headed out of the country are overwhelmingly the proceeds of illegal employment by illegal aliens, in contravention of immigration, labor, and revenue laws from start to finish.

They'll thus be forced to either take the money back in person, necessitating another lottery run at getting back, or else have to spend the money here, for goods and services.

Win-win.

You'd also pay for that big, beautiful wall in about a year, without any further effort from congress whatsoever.

Letting Western Union et al know that they could expect quarterly IRS audits for compliance would preclude shenanigans from them or the state governments as well.

The Democrat hasn't been born that would pull the feed bag off of government's nose, not even for illegal aliens/future voters.

Billll said...

If you want more of something, you subsidize it. If you want less, you tax it. A big tax on wire transfers would make it unprofitable for illegals to work in a given state, thus lowering their population there. States are allotted representatives in proportion to their total population, regardless of that populations status, thus California reputedly has 3 or 4 representatives on account of their large population of illegals alone. Thus a state that drives out its population of illegals runs the risk of losing a rep come the next census.

Current value of illegals is 1 rep/about 700,000 illegals.

A very high tax on money transfers would almost immediately generate a lucrative business in money smuggling and probably draw the attention of the cartels. A more modest tax, say 4-5%, less whatever amount the states decided to take, would probably work much better as Arthur Laffer would be quick to point out. States with punitive tax rates on international wire transfers would quickly find out that money is being transferred to other stated, tax free, from which it is then transferred to Mexico at a much lower rate. Ask NY, Il, and CA how those high tax rates are working out. The exodus seems to begin somewhere around 8%.

Also be careful how this is set up. Legitimate businesses transfer money all the time and catching a big company in a met intended for illegals will get a well-funded primary challenger come next election.

As Lazerus Long observed: "Money and beauty go where they're most appreciated."

Aesop said...

The cartels are already smuggling money.
It works part of the time.

The cost to do it for 30M illegals would be prohibitive, and amount to about the same amount as the above-noted tax rate.

In short, either way, Pedro loses half the value of his labor off the top. And BTW, the overwhelming bulk of that money is for family to pay off the outstanding balance to the cartel that smuggled Pedro here in the first place, so it'd just as easily be burnt up as sent overseas.

It would be as well that all individuals wiring cash overseas had to transact the affair at the desk of the State Department, showing legal status here, to legitimate entities there, and move it under ITAR regulations.

If all that raises anyone's draconian hackles, my condolences, but you're 50 years too late; build the d***ed wall, and start shoveling illegal aliens back over it via steam shovel drag line, and we can talk.

You either take your country back, or you give it up.

Joseph Huston said...

This was what Trump said he was going to do to make Mexico pay for the walk when he was still a candidate, on the advice of Kris Kobach, who I hope will be the next governor of Kansas.