3 ways Mexico could pay for the border wall

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WASHINGTON — President Donald Trump’s long-promised border wall is sure to have a steep price tag. And time and again, he’s vowed Mexico will pay for it.

Officials south of the border say they’re not interested in shelling out a single peso for the structure, which could cost more than $20 billion.

The president’s latest budget proposal earmarks $1 billion for the wall, a first installment that Trump has said will get things going before Mexico eventually chips in.

Lately, the White House hasn’t been as vocal about Mexico’s role in the project, and Senate Majority Leader Mitch McConnell has denied there’s any chance the neighboring country will contribute.

But is there any way for Mexico to fund a border wall without officials there dipping into their country’s coffers?

Tapping into money immigrants send home

Mexican immigrants sent nearly $27 billion home in 2016, according to the country’s central bank. And most of that money came from people living in the United States.

Generally, immigrants report that the money they send funds things like food, clothing, housing and education for their families. What if some of it went to building a wall on the border?

On the campaign trail, Trump said he’d change the Patriot Act and cut off a portion of remittances to Mexico unless the country agreed to pony up.

Since then, a less aggressive approach has circulated in some policy circles: taxing wire transfers, the most common way immigrants send money home.

That idea is unpopular with money transfer companies and immigrant rights advocates.

And Mexican authorities have vowed to do everything they can to ensure that no one messes with the money immigrants send.

It’s Mexico’s largest source of income — higher even than the amount of money it earns from oil exports. Even though remittances are a small portion of Mexico’s GDP, they have a big impact in some of the country’s poorest communities.

In the Mexican state of Michoacan, for example, migrant remittances made up almost 10 percent of the state’s gross domestic product in 2015, according to data from the Bank of Mexico and BBVA Bancomer.

Past proposals to tax remittances have never gotten off the ground in Washington. But at least one U.S. state has taken this approach.

In 2009, Oklahoma started charging a fee on individual wire transfers of $5 plus 1 percent on any amount of more than $500.

Since then, the measure — which applies to funds sent through licensed money transmitters like Western Union and MoneyGram — has raised more than $67.2 million for a fund at the state’s Bureau of Narcotics and Dangerous Drugs Control, according to state tax records.

Seizing money from drug cartels

Rep. Jim Sensenbrenner, R-Wis/. introduced a proposal last month titled the Build Wall Act of 2017. Its aim is to use money seized from drug traffickers to fund security at the border.

Sensenbrenner’s proposal calls for the U.S. Attorney General to study ways the Justice Department can increase assets seized from cartels. He dubbed the approach “a creative solution to a complex problem.”

Drug cartels send between $19 billion and $29 billion annually back to Mexico, according to U.S. federal officials. And using money from criminals instead of law-abiding U.S. taxpayers to foot the bill for anything sounds like an easy sell.

Authorities on the southwest U.S. border have already seized a large amount of money heading to Mexico, more than $57 million in four years, according to U.S. Customs and Border Protection.

But it’s just a fraction of the smuggled money officials believe is crossing the border — and just a fraction of the estimated cost of a wall.

Border tax

In January, Trump administration officials suggested a 20 percent tariff on imports from Mexico could be used to pay for a border wall.

The idea was floated early on in Trump’s presidency, and in some circles, it sank. After the proposal drew a swift uproar from lawmakers on both sides of the aisle, White House officials who’d touted it later said it was just an idea.

If such a plan is put into place, a vast array of items — including cars, mechanical equipment, produce and household goods — would be subject to a levy.

When it comes to exports and imports, there’s a lot of money in play. Mexico is the United States’ third largest goods trading partner, with an estimated $295 billion in imports from Mexico crossing the border in 2015.

“By doing it that way we can do $10 billion a year and easily pay for the wall, just through that mechanism alone. That’s really going to provide the funding,” White House spokesman Sean Spicer said in January.

Later that day, he sent a softer message, saying the border tax idea was intended to be just one example of paying for the wall.

“I just want to be clear that we’re not being prescriptive in saying that is the only way,” he said, “nor is the rate prescriptive.”

Critics say such a tax would punish consumers more than anyone else, it would violate NAFTA and it could spur a trade war.