Thursday, April 06, 2006
Taxing wire transfers, and the fraudulent arguments about illegal immigration
Sending money home to Mexico is not a cheap proposition. Immigrants pay for the service and also lose money on the exchange rate.
Now, legislators in several states are proposing to tax such transactions, called remesas, or remittances, to the tune of half a percent to 8 percent.
It is hard to imagine how this legislation would work without offending just about everything that America stands for. Would such a law apply only to wire transfers to Mexico, or all countries? Would it apply to anybody, or only illegals? Would it apply to all businesses, or only those who wire money on behalf of customers? When, in the entire history of the world, has the taxing of capital flows helped the country imposing the tax more than it hurt? Why would we try to undermine the value of the United States dollar as a reserve currency, which these laws would surely do? Is there even the slightest chance that they are constitutional? Do we really hate these poor people so much that we are going to tax transactions between them?
The rationale for the law is the idea that states need to raise revenue to pay for services that tax-dodging illegals consume. This argument strikes me as pure unadulturated donkey pucky. If illegals are poor, they are not dodging very many taxes. Poor people -- illegal or otherwise -- pay state sales taxes, gasoline taxes, tobacco taxes, taxes on power, and telephones and water, just like everybody else. How would they avoid them? Poor people don't pay income taxes, because, well, they're poor, and they usually don't own property and if they do I am sure they pay the property taxes because otherwise the property is siezed and sold at auction. If illegals evade taxes to any greater degree than citizens -- which I doubt, by the way -- it is Social Security and Medicare tax. Are we really worried about lots of illegals sucking up Social Security and Medicare? With what Social Security number? And, of course, if the illegals are earning enough money to pay income taxes, it is a fair bet that they are adding enough to the economy that the indirect consequences of their activities contribute more than the social services they consume even if they evade the taxes. No tax on capital is necessary -- just prosecute illegals for tax evasion just as we would prosecute any citizen. And if your answer is that we don't do a very good job of that, you would be correct, but also nonresponsive.
I am sure that illegal aliens, like other poor people, are a burden on social services in areas where they concentrate. This isn't because they are illegal, though. It is because they are poor. Poor people are a load, which is why we should want as few of them as possible. Of all poor people, though, illegal immigrants, who have gone to great lengths and at least some peril to cross into the United States and who then do very tough work at abominable wages, strike me as the least likely to remain poor for the long haul. In general, they are struggling against their poverty in the great American tradition. We are a nation that has grown wealthy in the struggle against poverty, and should not turn our back on that successful strategy today.
I obviously think that the economic, fiscal, and national security arguments marshalled by the nativists who want to build a "wall" are invalid and disingenuous. However, I do have some sympathy for the cultural arguments. I think it would be a grave mistake for this country to accept bilingualism in its political system, and we are very close to that even now. To combat this, I would abolish bilingual education. If you immerse a child in a foreign language, he or she will learn to get along in a manner of weeks. Princeton is filled with kids from all over the world who have had to swim in English or otherwise sink, and they all swim quickly. I would require English in virtually all government transactions, except perhaps criminal prosecutions. I would create every incentive possible for immigrants to learn English, or at least cause their children to do so. I would also create a much shorter path for immigrants -- legal or otherwise -- who enlist in our military. Three years in the Marines with a clean record and distinguished service ought to earn that soldier citizenship. And it will Americanize them, too.
There is no stopping the influx of Mexicans without doing grave damage to our traditions. Even if you build a wall, they are going to keep trying to get through because we are highly unlikely to jail or shoot people who make the effort. There is no doubt that there will be more Mexicans here. So? There were a lot more Scots-Irish and Irish* here in the 19th century than in the 18th, and I'm sure that the English Americans of the day were none too happy about it. There was even a nativist political movement -- the so-called "Know Nothings" -- who exploited the fear and loathing of the Irish* (among others) in the years before the Civil War. The "Know Nothings" could not win elections on that issue so they packed it in and became, er, Republicans. We must not forget the ultimate lesson of that history: the Scots-Irish and the Irish* became the backbone of the American economy and provided the population necessary to expand west of the Appalachians, which itself was essential to American national security.
The question should not be whether we can keep out Mexicans, but what we should do about the rising Hispanic culture in this country? Can we create a system under which Mexican immigrants are happy to fly the Star-Spangled Banner, sing our songs, join us in our wars, think of Washington, Franklin, Jefferson and Adams as "founding fathers," and otherwise honor our great traditions? I think we can, but we have to let go of the twin sins of nativism and unthinking "multiculturalism" to do it.
CWCID: Lucianne, for the link.
UPDATE: Austin Bay's column yesterday sounds many of the same themes. I recommend it.
UPDATE: Fausta has some thoughts on Americanization.
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*Corrected, per the redoubtable ScurvyOaks.
11 Comments:
By 
ScurvyOaks, at
Thu Apr 06, 11:37:00 AM:
Brilliant, TH. From my vantage-point in Dallas, which of course has a large hispanic, immigrant population, I couldn't agree more.
Just one bone to pick. If I remember correctly, the Know-Nothings objected to the Irish, not the Scots-Irish. The former were Roman Catholic; the latter were mostly Protestant. There were lots of Scots-Irish who came to America in the 18th century (including some of my ancestors). As the 19th century progressed, the percentage of immigrants from Ireland who were Scots-Irish became much smaller. This shift correlated with the rise of nativism in the US.
By Dr. Demarche, at
Thu Apr 06, 12:48:00 PM:
TH:
Good post, I wouldn't worry too much about losing readers. As far as taxing remittances goes those who are now wiring money would just find another way to send it- such as opening a US bank account and sending an ATM card home for withdrawals on the other end. Several national banking chains have made this very easy to do by accepting the Mexican matricula consular as proof of ID. As for illegals soaking up social benefits, it is not that hard to get a social security number, and the cards have no security features, nor can the holder's ID be verified.
The larger problem is the impact on local resources which are not federally reimbursed, such as emergency room care or growth in local school districts. The impact made by admittadly poor illegals at this level can be devastating to border communities.
Your closing questions sum up the key issues quite nicely, it remains to be seen if anyone in DC is listening.
By 
, at
Thu Apr 06, 03:21:00 PM:
I wouldn't call the economic arguments against taking in massive amounts of illegal aliens "invalid." They do drive down the wages of low-skill jobs, although, as the Post pointed out this morning, if they weren't taking such low wages it's uncertain if employers would raise wages that significantly. And in terms of other effects, my understanding is it's about a wash-- whatever savings we get in reduced prices, which are apparently minimal, are just about offset by the increased cost of social services. Particularly on local governments and school systems, as your other post noted.
I also believe you are overly pessimistic about moderating the flow of illegal aliens from Latin America. Until the past decade, the numbers were much smaller. All that changed was the economic climate in Latin America worsened, partially because of the effects of NAFTA.
Frankly, I am far less concerned about "protecting our traditions," which honestly sounds like the quibbling of anachronistic history professor, than I am about managing the growth of our nation's population. We cannot absorb half of Latin America without destroying most of what is wonderful about our nation. Beyond encouraging Americans to use birth control, managing our borders is the one government policy where we can actually make a difference.
We ought to try, hopefully by fostering economic development in Latin America and by having employers check the backgrounds of potential employees through a simple, effective and mandtory system
By Joshua, at
Thu Apr 06, 09:38:00 PM:
This comment has been removed by a blog administrator.
By Joshua, at
Thu Apr 06, 09:41:00 PM:
Good post, TH.
At our group blog, the Optimates, I've argued (here and (here) that unrestrained illegal immigration is both a cultural and economic issue.
I am seriously concerned that illegals granted amnesty without any real embrace of our American traditions will not be Americans. They will be foreigners permanently living in America. This will do much violence to our history of classical liberalism.
At the same time, I think there is an economic case here: do we really think wages aren't affected at all by illegals or hypothetical 'guest workers'? I would also point out, as has Mickey Kaus at his blog, that there are plenty of underemployed American citizens (many of them urban and black, but many rural and white) who are passed over in favor of illegals. It is not nativism to point that out.
By , at
Thu Apr 06, 10:11:00 PM:
if i was king for a day.....
dear senator,
i commend you for taking the immigration issue head on. however, i must say, i think politicians complicate the issue by trying to cover too many constituent agendas. sometimes simplicity is actually the real solution. occam’s razor. in fact, the “rant” below that i left on a web site on march 17th is, i believe, the only remedy to a perplexing problem. in fact, if you analyze every provision of the house and senate bills they have no chance of enforcement without tearing this country apart. actually, they have no chance, whatever the penalties. Barbara Jordan’s immigration report should be our lesson or senator reid's 1993 attempt.
http://www.drudgereportarchives.com/data/2006/04/05/20060405_155358_flash1hr.htm
please remember that at the time this was written it was directed at other comment posters, not you sir. it follows below:
—– go after the companies that employ the illegals? send the illegals back? penalize the ones that stay?
we are all dreaming. i have lived in california for 30 years. thousands, and i mean thousands, of small businesses hire and use millions of illegals everyday. trust me, short of a new black booted gestapo they are staying employed. any law passed to enforce some sort of penalty will probably never make it out of the court system. think prop 187 etc. so stop pulling your own chain thinking some legislation out of washington is going to change anything on the ground. send them back? assuming we could get the authority to do it (this too will sit in the courts until we are the new, new mexico) the police, national guard or military etc will not do it short of becoming some new SS. even the criminals that we should be deporting will just walk back in, led by their favorite coyote for $3,000, unless we have a fence from san diego to brownsville.
10-15 million well organized people-and they are very organized, are staying. so get over it. part of the solution is to stop adding to the size of the group. we have to build a fence before we contemplate any other measures. don’t listen to anyone who says fences do not work. they have other agendas they are not willing to discuss. ie vincente fox, among others, is against the fence
.
15 million illegals are easy to assimilate over twenty years–and guess what, despite the headlines, they want to be assimilated. but it can only work if no more are added to the mix. the folks that think the 15 million illegals are going anywhere are simply delusional. we let them in and now they are here for good. there are no laws, past , current or in the future that are going to change that. no doubt, there will be folks who get on soapboxes and pretend to write new legislation to solve the problem. the sooner we all act like adults and realists the sooner this divisive issue can be put behind us. do any of you actually think that the illegals are going to be rounded up and sent back to mexico etc? do you think funding is going to be cut to cities who harbor them? you have to be kidding. the bong smoke is clouding your vision.
the absolute best that we can accomplish within current law is to build a fence so the problem doesn’t get any bigger. a fence is cheaper and more efficient than salaried border patrols in the long run. this fence may work.
http://www.weneedafence.com/images/Fence_Idea.jpg
after that, then we can deport the bad guys during a 10-year green card period on the way to their citizenship. that’s right, their citizenship. 15 million people are not going to continue to live here as second class illegals forever without bringing the whole country down. why? because as certain as the sun comes up in the morning, 15 million will be 30 million in 25 years without a fence. we need to get our arms around these kinds of numbers. when barbara jordon put her immigration committee together in 1990 there were two million illegals. we need to seal the border and make them citizens just like the irish, italians, germans, jews etc who came before them. the fact that they got here illegally is irrelevant. they are here, get over it. they are not going to sign up for any two step convoluted green card, maybe you will- maybe you won’t, get at the end of the line samba dance. we are not going to collect any back taxes based on real/imaginary cash transactions from folks who have barely two nickels to rub together. it will cost more to collect it. the hatred and resentment it will engender will be long lasting –not to mention the crime and violence. we might be able to get a very small citizenship fee. that will pay for the fence.
i’ll make a prediction. if a secure fence is not erected at this time we will have this cicrle jerk again in twenty years and the number then will be 30 million along with their 25 million children who will be citizens. then the problem will be this
http://photos1.blogger.com/blogger/4786/105/1600/Aztlan.jpg
not because of some dark conspiracy but because of differing birthrates. we need to start seeing the world as it is, not as we hope it would be.
riddle me this……… you folks who hide behind the thin veneer of “but its illegal”…..
who broke the bigger law? the folks who risked life and limb to get here or the politicians/bureaucrats who failed to enforce the state and federal laws to protect and seal the borders? conference after conference, committee after committee since the 70’s recommended closing the border with a fence. it was left open. we need to get past this “illegal” designation. they are here and they are staying. no amount of convoluted gestapo, stalinist, nativist jib jab from the left or the right is going to change that. remember, 15 million are really over 40 million when you throw in their supporters and the larger hispanic community in general. start getting serious. the idea that the newly unemployed “illegals” you would create, with these new ridiculous remedies, are going to go home in numbers is absurd. the part we are not getting is this– it’s their country now. millions of them already have their own small businesses, families, homes etc.
crack down on the people that hire them? again we are just not getting it. we are cutting our nose off to spite our face.
just remember this at all times–if you were them–young, poor and starving for a life– you would have crossed the border if it was left open. we caused this problem. we left the border wide open with a huge 2000-mile long honey-pot on the other side. i’m honest enough to admit it, i would have pushed you out of the way as i scrambled across!
here’s the real pathetic reality—virtually every congressman/woman and the president are against sealing the border. they are more worried about our image with the world, mexico and imaginary votes they may or may not get. they fudge the debate with economic/impact studies that look good but mean nothing. it is all props. read the fine print in the bills being considered.
so, you still think we are going to start solving the illegal immigrant problem inside the US while we can’t rally the consensus to close the border where the illegals enter? put down the bong, you’ve had one hit too many.
and finally to the race baiters……
the “fence” sole purpose for existence is to secure the border from illegal immigration from primarily latin america. the fact that latin america is hispanic is strictly a coincidence. if canada was a third world country i would propose the same fence. for two hundred years we controlled immigration with quotas per immigrant group. i believe jimmy carter was the moron who changed this. the chief reason for quotas was for assimilation purposes–language, culture etc…. mexico encourages illegal immigration as an outlet so as to avoid the hard choices that it should be making to rectify a pathetic economic model it inherited from the spanish. there is a reason that english speaking colonies/nations have done better than spanish or french. every time you seduce a young hispanic to flee his country you further enslave the tens of millions they leave behind.
we have to frame this discussion within the bounds of what we can do, not what you would like to do. modern america is a very complicated legal system etc…. using existing ‘green card’ laws that have already been vetted combined with our existing right to build the fence, will put an immediate end to most of the problem. the fact that it may aid and abet the war on terror is a bonus. after that we can go through the psychic trauma and emotional healing of all the why’s, wherefore’s and finger pointing that always comes when we recognize WE PERSONALLY CREATED THIS PROBLEM — the “illegals” are only the symptom!!!!!!!
enjoy your salad tonight..............
By , at
Thu Apr 06, 10:22:00 PM:
since i posted my original rant on march 17th--three weeks ago--30,000 more illegals of all stripes have walked across the border!
By LonewackoDotCom, at
Fri Apr 07, 12:22:00 AM:
I'm not necessarily in favor of taxing remittances. However, unlike you I am not a supporter of illegal immigration.
It would be very easy to greatly reduce illegal immigration, and doing so wouldn't harm our traditions. In fact, it would strengthen one of our main traditions: enforcing the laws rather than looking the other way. While we do border enforcement, we hardly do any workplace enforcement, and that's where it's really needed. (And, some illegal immigrants only come via Mexico, not from it.)
The rest of your post really goes off the deep end. I'd strongly suggest learning more about this issue. Let me humbly suggest my site as a form of research.
By , at
Fri Apr 07, 02:05:00 AM:
lonewacko,
based on your comment i'm not sure you read my awfully rant. perhaps you fell asleep.
to recap---
complete closure with a fence of the entire border. not re-inforced as some say(that's code for leave it open)
i am very much against illegal immigration that's why, unlike most everybody else, i want a fence. however the next question that then logically follows is what to do with the 15 million that are already here. this is where i disagree with you in the strongest of terms. i accept the reality of what we caused by leaving the border open for 30 years.i want to close the border and move on.
tonight when you sit down and eat your dinner, off their labor, we'll discuss how you hate the food they have been picking for you for thirty years. why don't we start by fining your nativist butt for eating all that illegal food you have been consuming.
you are just not ready to admit that you , like all the rest of us, have helped cause the problem. like most politicians you want to blame it on some one else.
By , at
Fri Apr 07, 03:34:00 AM:
tigerhawk-
If illegals evade taxes to any greater degree than citizens -- which I doubt, by the way -- it is Social Security and Medicare tax.
The Columbus, OH Public schools were spending just over $10,000.00 per student per year in 2002. At the same time, about 1/3 of all eighth graders never received a diploma- and for the children of "illegals", this percentage was 47%.
It's estimated that about 5% of all CPS students are children of illegals(about 3500 students). Thus, we'll spend over $17 million every year for the next 8-9 years in failing in all attempts to educate the 'dropouts' among this group; then we'll also get to pay for the results of this failure--- more food stamps, more Aid to Dependent Children, more "school breakfasts", more "CHIPs"(Children's Health Ins. Programs), more "cost-shifting" by health providers with over-extended ERs, more "Children's Services" dealing with more abuse by more dysfunctional parents, more "Law Enforcement" leading to more "Prisons and Corrections", et cetera ad nauseum.
For Ohioans, the yearly combined total of Federal, State, and Local taxes is over $11,000 per capita.
Please explain how these honest, hard-working, illegal immigrants working at "under-the-table" wages(averaging less than $25k/yr) in "jobs American's won't do" are generating enough productive economic activity to justify the massive increases in social spending that are required to support the 40% of illegals who are unemployed. You said it yourself- they don't pay the taxes that fund these programs --because they're poor.
Side Note: Even if you build a wall, they are going to keep trying to get through because we are highly unlikely to jail or shoot people who make the effort.
Consider this minor 'substitution'- Even if you outlaw marijuana, cocaine, and oxycontin, they are going to keep trying to get marijuana, cocaine, and oxycontin because we are highly unlikely to jail or shoot people who make the effort.
I can agree that a wall will not stop all the illegals from attempting to come here or that it would even be more than 'marginally' effective(much like the "War on Drugs")- but, the evidence clearly shows that our Gov't would be quite happy to "jail or shoot people" should they suddenly decide that it was a priority(the War on Illegals?)...
For "reality", please see 300,000 non-violent offenders imprisoned and Cory Mayes for a look at the depth of our government's dedication to "The War on [Some] Drugs".
By , at
Fri Apr 07, 08:51:00 AM:
Amen to the cultural arguement. I, too, am skeptical of the national security/economic arguements against immigration. However, seeing the Mexican flag at pro-immigration rallies really made me question my past assumptions.
My grandfather came over from Italy, served in WWII, built a good life for his family, and would cry when anyone sang "America the Beautiful." That's the immigrant experience that can I relate to.
I had an immediately negative reaction to seeing the Mexican flag at the pro-immigration rallies and thought even less to the apologists who stated that there are plenty of foreign flags at Columbus Day and St. Patrick's day parades. What they don't consider is that none of those events are dedicated to the American experience. Hell, I carry Mexican flags proudly during Cinco de Mayo.
I would have thought that American flags would have been the most obvious choice for a pro-immigration rally. Now I worry that we're not assimilating immigrants enough and we'll end up with generations of people in America who have no loyalty and who don't cry when someone sings "America the Beautiful."
207guy
