The Remittance Fence

02/14/2006

The National Center for Policy Analysis did an item today called The Remittance Fence [February 14, 2006 ]

A new state proposal asks voters to approve construction of a security wall along the Mexican border and pay for it via a new tax on wire transfers from Arizona to foreign countries.
The measure is under consideration by the state Legislature and has the support of Republicans in favor of tougher border security and immigration controls. GOP sponsors include State Reps. Russell Pearce and Rick Murphy and state Sens. Dean Martin, Ron Gould and Thayer Verschoor.

The ballot question asks voters to approve a Mexican border wall to be constructed by the state government. It piggybacks on federal plans to construct border walls and security fences along the 2,000-mile southern border.

Mexican immigrants and nationals working in the United States sent $20 billion back to Mexico in 2005, according to the Federal Reserve Bank in Dallas.

The proposed ballot question would assess a new 8 percent tax on international money transfers from Arizona.

Those funds would be used construct the wall and pay for other border security efforts.

They base it on a story in the Business Journal titled Bill calls for Mexican border wall paid for by tax on foreign money transfers, [February 8, 2006, By Mike Sunnucks.Password may be required]

There are three points about this:

Politicians are starting to see the need for a wall.
State politicians are starting to act, because they are tired of waiting for the federal government to do so.
They are proposing to make the illegal immigrants actually pay taxes, which will tend to make illegal immigration less attractive.

This last point is what Ed Rubenstein called A Supply-Side Solution For Illegal Immigration, in January, 2004, citing Jack Kemp’s mantra: “Generally speaking, if you subsidize something, you get more of it and if you tax it you get less of it.”

UPDATE

A reader writes:

Dumb question: Can states tax remittances to foreign countries? Wouldn’t the banks and other companies that handle remittances claim that Arizona is usurping the authority of the federal government, and obtain prompt injunctive relief from a federal judge? Taxing remittances is certainly a great idea (I'd set the rate closer to 99.9%) but I’m afraid that Congress might need to impose the tax.

I’m hoping the legislators have thought of that, but yes, it might run into problems under Article One, Section 10, of the Constitution, the basic idea of which is that States aren’t supposed to run their own foreign policy or impose their own customs duties.

I would note that the part about not fighting their own wars includes the exception "unless actually invaded, " and that, as Bob Park has been pointing out for years, Article IV, Section 4 promises that the Federal Government "shall guarantee to every state in this union a republican form of government, and shall protect each of them against invasion;" .

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