By C. David Pugh
03 March 2016 (Raleigh) – After winning seven of the eleven Super Tuesday Primaries, Donald Trump (R-New York) is the pre-eminent favorite to win the Republican Party Primary battle and become the party’s nominee for President in the fall.
This is not news.
The always controversial Mr. Trump has based a good bit of his appeal on his approach to immigration which can be summed up in seven words: build a wall on the Mexican border. Moreover, he also said he’ll “make them [The Mexican Government] pay for it”.
Naturally, the Mexican Government scoffed at the idea. As recently as Thursday March 3rd, the Mexican Finance Minister, Luis Videgaray rejected the proposal,stating:
"Under no circumstance will Mexico pay for the wall that Mr. Trump is proposing," he said. "Building a wall between Mexico and the United States is a terrible idea. It is an idea based on ignorance and has no foundation in the reality of North American integration."
The Dirty Little Secret in Mexico / American relations is that Mexican immigrants send billions of dollars a year to relatives south of the border. In 2013, the latest figures available, it was estimated that some $22 Billion USD went to Mexico. Taxing remittances at a 50% tax rate would yield something like $11 billion USD.
And $11 billion will buy an awful lot of fencing.
But a significant tax on remittance would do something else: disincentify those who come here to work just so they can send money back home. If half of what they send ends up in Federal coffers instead of loved ones hands, they may not come here in the first place.
To point out how just important $22 billion is to the Mexican economy, consider this fact: PEMEX, Mexico’s state owned petroleum monopoly generates a tick less than $70 billion in tax revenues to the government. About 30% of the Mexican budget is funding by PEMEX. Doing the math finds that remittances constitute something like 10% of that number.
Imagine if American nationals sent the equivalent of 10% of the US Federal budget back to the states every year. For 2016, that figure would be $352.5 Billion USD.
The ripple effects of such a move would be immense. For example, it’s axiomatic when they leave, the US labor pool will shrink and wages will need to rise. That’s an iron clad law of economics.
So I’m sure those industries and employers who pay these people are right to be horrified that the Federal Government will actually incentify these people to go home. And the Mexican Government is right to be horrified that Mr. Trump wants to build a wall with money used to mollify their impoverished citizenry. I’m sure they don’t want unemployed millions to return home with time on their hands (and perhaps revolution in their hearts).
The Progressive Left needs a permanent underclass as constituents, both as the foundation of their powerbase and the underpinning of the sense of moral superiority. The Rockefeller Republican class needs cheap labor to mow their lawns and clean their houses. Everybody else that works – or who wants to work again – see Mr. Trump’s Wall for what it is: a mechanism to shrink the workforce and raise wages. And if he can build it with Mexican money, so much the better.