On Wednesday the 16th I plan to go to the capital and speak about HB2677, here is what I plan to say. If you read this and can think of something major to change please leave a comment. This is my first time trying to change a law. At the end I suggest a change to the bill that would actually result in the intent being accomplished, with almost no negative side effects and a few positive ones. Here is what I plan to say.
Hello. I am Jason Dragon, I am an elected PC and State Committeeman in the Republican party. I am here to talk to you today about HB2677.
The intent of this bill is to find a way to tax people who are here illegally and use the money to build the border fence, but it fails miserably in both of these goals. I think that we do need to protect our border, and I am for building a fence but I am against this bill.
The first, and main reason that it fails is that it will tax everyone who sends money using a wire transfer service to any nation for any reason. The bill says that this is refundable, but it is only to the extent of a tax obligation. On top of the sender will need to wait up to a year so that they can file their taxes, and then they will need to keep records of these sends, and if needed will likely be required to provide these to the DOR. The majority of citizens in Arizona do not have an Arizona tax obligation due to many deductions or other credits and not enough income; all of these people will not receive a refund. In addition many other people and businesses may send money from Arizona who do not reside here, and thus will not be able to receive a tax credit.
Illegals don’t use these services. Existing state laws, designed to stop money laundering and criminal activity, already have strict ID requirements to send money using these services. They can not pass these ID requirements if they are here illegally unless they have very professionally forged documents, so the vast majority of illegal immigrants don’t send using the services this bill intends to tax. They often will hand the money a friend who can send.
As someone who has lived overseas, operated a business overseas and sends money overseas often I know that there are much easier and cheaper ways to send money than using wire transfers that this bill simply does not cover. Illegal’s and legal’s often also use these methods to send money. The most common way would be to open a bank account in the US and receive a debit card, or buy a PrePaid credit card and simply mail that card to your receiver in the foreign nation. Once they have it you simply deposit money into that account here in the US and the person in the other nation goes to an ATM and withdraws it. They also could choose to use the card at any major merchant for purchases. Because these are withdraws and not wire transfers they are not taxed. This does not even touch on the ability of people to simply mail a check or cash to a loved one overseas. Before this law even goes into effect I would bet that some smart company located in another state will offer a service where someone can send money to them and they would resend it overseas, and they only need to charge a fee slightly less than the tax charged by Arizona to get a lot of business.
The government is going to severely hamper these money transferring businesses, while other methods will prosper. The government should not be in the business of picking winners and losers.
This bill would also make our state even more business unfriendly. We would pass the burden of collecting and tracking this tax onto local businesses. We also would harm businesses that import, have overseas offices or overseas workers, taxing the money that they pay. I for one have freelance web programmers in a handful of nations in Asia, this would cost me more to pay them. I also send money every month supporting kids in Christian schools in Asia, this would cost me more to do that. I have already been contacted by missionaries who receive support from Arizona who are shocked by this bill and hope that it will not pass. I have figured that this bill would cost me about $800 per year if it passes, and the rate of 5%, as has been published in the media, would be charged.
And that leads me to the next major problem in this bill, the fact that the actual rate of the tax is not set, we should not leave ANY tax rate up to the discretion of some unelected director to decide. Where is the oversight?
Because of the complexity of international money and other existing laws this simply is not a workable bill, and it will never generate the funds needed to build a complete fence.
I don’t like to speak unless I have a solution to the problem. I have an idea of a way to amend this law to make it actually achieve the advertised goal without creating a new tax and by only targeting illegal aliens. Basically you would strike this text and replace it with text that would create a law enforcement activity, stating that during the course of law enforcement activity if someone other than a victim was discovered to be an illegal alien they would have their real and personal property confiscated. This property would then be auctioned off to generate funds to build the fence. Some protection would need to be put in there to make sure that property of a business or citizen is not swept up. You could even expand it to include people who apply for social services but are found to be here illegally. Then once the fence is built and a maintenance fund established, extra funds would go to help pay for education. Such a bill would likely be about as popular as SB1070 was. It would also function as a great deterrent to an illegal committing a crime or asking for social services in Arizona.
Thank you for your time.