Finance
When deciding on whether Donald Trump should build a wall, an inspection of the financial logistics for such a project would support the answer “no.”
How much is the wall going to cost?
A large deterrent regarding whether Trump should build a wall is the uncertainties surrounding such a fundamental aspect of its construction: its price tag. Although numerous times during Trump’s presidential campaign he cited an evaluation of 12 billion dollars and more recently senate leader Mitch McConnell gave a price range of 12 to 15 billion dollars, these estimations have proven to be wildly inaccurate (Drew). Per an article published by Reuters, a globally respected news outlet, a U.S. Department of Homeland Security internal report documented a price tag as high as 21.6 billion dollars (Ainsely). A price nearly 10 billion more than Trump’s initial estimation. The article even goes on to elaborate that the value was not for a fully concrete structure and did not consider the impact geographical obstacles could have on construction (Ainsely). Furthermore, in an article published by the Washington post, Bernstein Research, an investment research group, was documented as stating that Donald Trump’s wall, depending on the choice of materials, will cost no less than 15 billion dollars and as much as 25 billion dollars (Kessler). With all these estimations it seems the wall will most likely cost somewhere around 20 billion dollars, far from Trump's original 8 billion estimate.
Is Mexico going to pay for the wall?
In numerous references to his plan for a U.S. - Mexico border wall, President Trump has often claimed that Mexico will foot the bill. However, when investigating the funding options that have been considered, this is far from pragmatic. Donald's Trump options for making Mexico pay simply lack strong foundation.
Will an import tax make Mexico pay?
At one point, White House press secretary Sean Spicer raised the possibility of a 20% import tax on Mexican goods to fund the border wall. However, an article published by CNN depicts that a tax on Mexican imports would not have Mexico paying for the border wall, but instead U.S. citizens (Alford). The increased price of Mexican goods would simply be passed on from manufacture to consumer. Furthermore, the article brings up the questionable legality of such a tax and states that under World Trade Organization and NAFTA laws Mexico could sue the U.S. and be entitled to retaliatory taxes (Alford). This funding option would cause more harm than good.
Will a border- adjustment tax make Mexico pay?
Another funding option that has been considered by Trump and GOP members is a border- adjustment tax. This would be a restructuring of America’s corporate tax code and in turn allow businesses to subsidize exports and place a 20% tax on imports (Madeira). Being that the United States has a trade deficit with numerous countries, including Mexico, this in theory would generate revenue by taxing a larger sum of money (Donald). However, according to Kenneth Rogoff, a professor of economics and public policy at Harvard University, this plan could fall victim to the same legality issues as an import tax solely on Mexican goods, and if it didn’t could simply end up promoting more off-the-book practices as businesses attempted to avoid taxation (Rogoff). Additionally, even though President Trump has recently expressed support for this possible funding option, the exact means by which the plan would generate revenue is somewhat theoretical and speculative in nature and even Trump himself at one point called the idea “too complicated” (Viser). There is no guarantee the plan would actually work if implemented. Additionally, such as a 20% import tax on solely Mexican goods, if this generated revenue it would have U.S. taxpayers paying, not Mexico.
Will a taxing/withholding of remittances?
President Trump at one point mentioned the withholding/taxing of remittances from the U.S. to Mexico to pay for his wall. In this sense remittances are cash transfers from one country to another and , per a CNN article, such a plan would be threatening one of Mexico’s largest industries: Mexicans living abroad in the United States, whom resulted in 24.6 billion dollars being sent from the United States to Mexico (Gillespie). However, as stated by the head of Latin American research at Goldman Sachs, Alberto Ramos, “If you tax that money it won't necessarily stay in the U.S. It can still go to Mexico through informal channels” (Gillespie). This funding option could end up only succeeding in facilitating an off-the-book market.
If Mexico doesn't pay, who will?
With the chance of Mexico funding the border wall becoming more and more unlikely the financial burden unsurprisingly falls on the United States. This in turn entails substantial budget cuts to avoid increasing the country’s already large debt. According to the Washington Post article “To fund border wall, Trump administration weighs cuts to Coast Guard, airport security,” President Trump has already drawn up a proposal for cutting the budget of the Federal Emergency Management Agency, the Coast Guard, and the TSA and in turn increasing the Department of Homeland Security’s budget by 43.8 billion dollars of which 2.9 billion would go towards building the wall (Lamothe). Without even considering the fact that 2.9 billion is only a fraction of some cost estimations for Donald Trump's border wall, is it truly sensible for the United States to be making tax cuts in such crucial programs to fund a project whose necessity is unproven?
But could the wall pay for itself?
No, the wall is not going to pay for itself. According to an article posted by The Daily Caller, a Center for Immigration Studies (CIS) report calculated that if the border wall stopped 9 to 12% of illegal immigrants it would in turn pay for itself as a result of reducing the supposed fiscal burden illegal immigrants impose on the United States government (Stoltzfoos). However, this is a blatant example of fake news. While the CIS report did make this claim, their findings were based off a National Academy of Sciences study and individuals who conducted the study disagree with the report's author's methodologies (Brown). It is believed that he utilized inaccurate data and made uninformed assessments. Dowell Myers, a professor of public policy at the University of Southern California who was on the NAS panel, even stated, "There’s a lot of misestimates in their calculations and they don’t really lay out exactly how they did it” (Brown). If built, the wall will certainly not be a miracle cash machine.