Donald Trump has suggested we build a wall on our border with Mexico, primarily to control illegal immigration. Since Trump made his suggestion, there has been lots of political commentary and criticism of the idea, including the recent comments of Pope Francis, which were not supportive of the idea, to say the least.
One of the more practical questions was how the wall would be funded. The answer to this seems to be in the renegotiation of various trade relationships with Mexico, including taxing the importation of U.S. market products built and assembled in Mexico. This, of course, will prove to be a very controversial and complex process, as many different political and economic equities will be in play.
This being the case, the intent here is to suggest a solution or two that allows for a more objective evaluation of the idea for a “serious” southern border wall — together with far more aggressive border security — separate from the complexities involved with trade and manufacturing arrangements with Mexico.
There are two large and yet untaxed sources of revenue that could be used to build a serious “Trump-style” wall on our southern border; and these revenue sources are suggested here because of their basic simplicity and also because taxing each can contribute to other desirable public policy goals.
To fund the wall’s initial construction and operation, two new direct taxes are suggested.
First, a tax on “remittances,” which are private cash money transfers from the U.S. to Mexico, Central America and several other recipient countries.
Another would be a tax on all “legal” sales of recreational marijuana, in whatever state — this assuming the tensions between state and federal regulatory regimes can be settled.
The annual size of these two revenue streams is substantial: Depending on which countries are included, the numbers have averaged $20 billion-$50 billion a year since 2000 for cash remittances. Legal marijuana sales are already almost $6 billion annually — and growing rapidly each year. Ten percent of these numbers, just for example, is some “real money.”
So we should think seriously about taxing them both. Not only could it quickly raise the money needed to build and maintain a “real” southern border wall, it could also operate to reduce both the financial incentives for illegal immigration (to send money back home) and the domestic demand for illegally imported drugs.
How to do it? Our Congress should first direct a comprehensive study of these and other new tax revenue options, then implement a system of direct taxes as part of a carefully managed and oversighted program.
Why are we waiting? These are both huge, and so far untapped, revenue sources that could be quickly put to work for both increased border immigration security and the control of illegally imported drugs.
Daniel Gallington served in a series of senior national security policy positions in the Office of the Secretary of Defense, the Department of Justice and as general counsel for the U.S. Senate Select Committee on Intelligence. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
