President Trump proposed a 20 percent tariff on imports from Mexico in order to pay for the wall he plans to build on the southern border. It is assumed that the 20 percent tariff is a negotiating starting point. A tariff is a tax on imports which will make a product more expensive and favor domestically produced goods over imports, while raising revenue for the government of our country.

Tariffs were a major government revenue source during the eighteenth and nineteenth centuries but today we are a low tariff country, with a few exceptions. Other countries protect their domestic industries by charging heavy tariffs and some as much as 100 percent.

A tariff helps those companies and countries that can supply goods most cheaply, presumably because they are more efficient, but some governments provide their companies with export subsidies in order to allow them to reduce the selling price of their goods on foreign markets.

Dan Lombard argued that “a 3% transit tax over three years would pay for a wall.” Infuriated by the economically illiterate commentators who claim that the tariff would be passed on entirely to the consumer, Lombard said that a $700 washing machine crosses the border with a price tag of $400, but time transit charges, warehousing expenses, sales commissions, overhead markup, and profit are added onto the $400 price, pricing the washer at $700 but the tariff is applied onto the $400 price tag. Customers will pay a certain amount more for that brand produced in Mexico but the company that makes the washing machine “will absorb the cost as the price of doing business.”

What exactly does Mexico export to us?

According to government trade data, Mexico exported $295 billion worth of goods to the U.S. in 2015: autos (74 billion), electrical machinery (63 billion), machinery (49 billion), agricultural products (21 billion), fuels (14 billion), plastics (17 billion), optical and medical instruments (12 billion).  In the agricultural products category Mexico exported to the U.S. corn, soybeans, dairy products, pork and pork products, beef and beef products.  

On January 27, 2017, President Trump tweeted that “Mexico has taken advantage of the U.S. for long enough. Massive trade deficits and little help on the very weak border must change, NOW!”

A trade deficit with Mexico is the excess of our imports over exports. U.S. goods trade deficit with Mexico was $58 billion in 2015 and U.S. services trade surplus with Mexico in 2015 was $9.2 billion. Mexico was the third largest supplier of goods to the U.S. in 2014 and supplied services in transportation, travel, and intellectual property (software).

U.S. foreign investment in Mexico totaled $107.8 billion in 2014 by nonbank holding companies, manufacturing, and finance/insurance.

Texas Congressman Louis Gohmert told Fox News that billions of dollars had been appropriated for a virtual wall on the southern border during the Bush administration but Janet Napolitano disregarded Congress and “we let her get away with disobeying the law.”  

According to the Daily Caller, “The transition team is planning big spending negotiations with Congress, which will include money for the wall.” President Trump “plans to make Mexico pay for the wall directly or indirectly by increasing fees on visas and border crossing cards, enforcing trade tariffs and taxing money transfers abroad.” The pre-cast concrete wall will be 35-50 feet tall, costing an estimated $8-$12 billion. Of the 2,000 mile border with Mexico, 650 miles are already fenced and illegals have no problem climbing the existing barrier. 

It is obvious to any traveler that Mexico must repair their own country and must stop using the United States as their social security blanket at the expense of American taxpayers. Drug cartels operate across the border back and forth unimpeded, and illegals send home billions of dollars of untaxed money to Mexico.

As many have suggested, a tax should be levied on money wired to Mexico via Western Union, Money Gram, etc. On the average, money wires are only charged a service fee of $10.99 to transfer a few hundred dollars.

Most illegals, who do work hard and long hours, request to be paid in cash which means that they evade paying state and federal income taxes, Social Security taxes, etc.  At the same time, they benefit from our free medical care and other forms of welfare. As they consume goods and services in this country, they do pay sales taxes.

Some Illegals pay tax via ITIN (Individual Taxpayer Identification Number) also known as W7. The earned income tax credit they receive based on reported income on W7 is far greater than the actual state and federal taxes they pay. Some even claim children who are not even theirs or do not reside in the United States. Tax refunds amount to $4.2 billion according to a 2011 audit by the Treasury Inspector General for Tax Administration. 

Let’s assume that the 11 million illegal aliens that apparently have not grown in numbers in 20 years since the MSM has championed their cause, send home south of the border $1,000 per month, a sum total of one billion untaxed income earned while illegally in the U.S., a cool $12 billion a year. Some may send less, some may send more. To save money, several illegals rent one apartment and use one common van as transportation. The money sent to Mexico support their families left behind for years and helps them save for building a nice home.

Michael Savage made the argument on his radio show that you cannot and should not deport law-abiding illegals (although when they cross the border of another country illegally, technically they are not law-abiding), that only criminal illegal aliens should be deported. Quoting data from the Government Accountability Office, 25 percent of the prison population is made up of illegal aliens and “criminal illegal aliens are arrested on the average 7 times.” 

One of the reasons Savage cited for not deporting “law-abiding” illegals was that many work diligently and very hard in construction and in restaurants. “Who is going to wash the dishes,” he asked rhetorically. “And who is going to pick the crops? You?” This argument is weak as humans no longer need to pick crops, there are machines that can pick any kind of crop – back-breaking manual labor is no longer necessary. 

The assumption is also made that millions of low-skilled Americans who are unemployed are either too educated for the job, lazy, or are unwilling to work in the restaurant business or construction industry.

But, for every illegal alien who is gainfully employed, if they are not here alone, he has a wife and children at home who are dependent on Medicaid and some or all of the thirteen U.S. Welfare Programs, costing American taxpayers plenty. And anchor babies make their parents eligible to stay in the U.S. and eventually the extended family.

The welfare programs include:

    • Negative income Tax (Earned Income Tax Credit or EITC, and the Child Tax Credit)
    • SNAP (food program, formerly food stamps, but is now a debit card which is often abused)

 

  • Housing assistance

 

    • SSI (cash to low-income individuals)
    • Pell Grants (up to $5,500 in grants to students from low-income households)
    • TANF (cash for individuals moving from welfare to work)

 

  • Child nutrition

 

    • Head Start (pre-school program to low-income families)

 

  • Job training programs

 

  • WIC (healthy food to pregnant women and children up to five years of age)
  • Child care (block grants to states and private agencies who administer child care programs to low-income families)
  • LIHEAP (Low Income Home Energy Assistance Program for heating and cooling)
  • Lifeline (Obama Phone) – discounted phone service to low-income individuals.

Savage argued that Americans must tread lightly in withdrawing these benefits to Mexicans as it would destabilize their economy and would create a vacuum of financial support of the population, leaving it open perhaps to a country like China to become the Big Brother provider which might not be in the best interest of the United States.

Even though Democrats and their leftist cohorts are lobbying against the southern border wall, and shrieking that it cannot be built, that it is inhumane, that it is being escalated anyway, that it would take a long time to build, and states like Texas, California, and New Mexico are rightfully Mexico’s anyway, they build tall security armed fences around their mansions and properties. The wall worked for China and it works for Israel. A former Mexican president even went as far as saying that Mexico is wherever there are Mexicans. However, if anyone crosses their borders illegally, they go straight to jail.

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