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Who pays for the wall? Here's Trump's bill collection plan

The centerpiece of Donald Trump's immigration policy — construction of a huge wall along the southern U.S. border — has been hugely popular with his supporters.

But how does he plan to pay the estimated multi-billion-dollar cost to complete it?

When he initially proposed the idea, Trump insisted he would simply send the bill to the Mexican government.

"We're gonna get the wall built," Trump has told reporters. "And Mexico's gonna pay for the wall … And they're gonna be happy about it."

Mexican officials have dismissed that idea

"We are not going to pay any single cent for such a stupid wall," former Mexican president Felipe Calderón told reporters at business conference in February.

So Trump has come up with another plan, by seizing a piece of the $25 billion in remittances that flow to Mexico every year.

"Mexico must pay for the wall," according to the billionaire Republican candidate's website. "We will not be taken advantage of anymore."

In addition to seizing money transferred back home by Mexicans living in the U.S., Trump has proposed tapping other sources of revenue. (Those include raising fees on everything from visas issued to Mexican CEOs and diplomats to shipments of goods coming into the U.S. from Mexico.


For many developing countries around the world, the cash that migrant workers send home represents a major source of economic support.

Worldwide, some 250 million migrants have left home for a better life this year, a record, according to the World Bank. Those workers will send an estimated $601 billion to families back home, with developing countries receiving $441 billion, according to the bank.

The U.S. is biggest single source of those funds — with an estimated $56 billion outflow last year — followed by Saudi Arabia ($37 billion) and Russia ($33 billion). India took in the largest flow of remittances, with an estimated $72 billion last year, followed by China ($64 billion) and the Philippines ($30 billion), according to World Bank data.

Mexico took in some $25 billion last year through such personal remittances. While that sounds like a lot of money, it represents only a small fraction (about two percent) of Mexico's gross domestic product.

Those numbers likely undercount the full amount, though. Estimating the amount of money transferred by individuals to Mexico every year is difficult because official data account only for funds sent through formal channels such as banks and money transfer services, according to the Migration Policy Institute, a research group.

"Currently, no uniform and authoritative historical data on informal flows exist," the Migration Policy Institute said in a recent report. "Given the widespread use of informal remittance channels, the data should be regarded as underestimates of total flows."

Most of that money is coming from California, where more than a third of Mexican immigrants live, according to the MPI. About one in five live in Texas, and six percent live in Illinois.

For households in Mexico's poorest regions, the remittances from family members living in the U.S. represent a critical financial life line. Cutting off those remittances would hit households hardest that would least afford to lose that support.

But the overall Mexican economy is holding up pretty well, growing at about 2.5 percent a year, or roughly as fast as the U.S.

Mexico is a major oil producer, so the downturn in oil prices has hurt the energy sector. But even when crude was trading at peak prices, oil revenues represented about 6 percent of GDP.

While losing $10 billion in remittances would have a limited impact on Mexico's $1.3 trillion economy, the full price of Trump's immigration plan could be much higher.

In addition to constructing a wall, Trump has proposed large-scale deportation of all undocumented immigrants, not just Mexicans.

It's tough to estimate just how much that would cost — a lot depends on the specific details of any deportation plan. But some researchers have taken a run at the question.

In March, American Action Forum, a center-right policy institute led by former CBO director Douglas Holtz-Eakin, estimated it would take between $100 billion and $300 billion to arrest and remove "all undocumented immigrants residing in the country, a process that we estimate would take 20 years," the group said.

Once those undocumented immigrants had been removed, it would take another $315 billion in higher enforcing costs to keep them from coming back, according to AAF.

That estimate includes just the hard cost of removing undocumented workers; it doesn't take into account the economic impact that would result from the removal of some 11 million people from the labor force and the resulting loss of consumer spending.

AAF estimated the removal of so many people would shrink the pool of U.S. workers by 6.4 percent, which means that 20 years from now the U.S. economy would be nearly 6 percent smaller. That works out to a loss of $1.6 trillion in lost wages, spending and other economic activity.

To put that in perspective, the gross domestic product for Texas last year was about $1.5 trillion, second behind California.

While this impact would be felt across the country and throughout the economy, sectors such as agriculture, construction, retail and hospitality would be hardest hit, the AAF reports.

The federal government would also be a big loser if all undocumented workers were removed from the country, according to a 2013 CBO report. The CBO was asked to estimate the economic impact of S. 744, a comprehensive immigration reform bill that passed the Senate before being scuttled in the House.

Because legal workers would be entitled to a range of federal benefits, including subsidized health care, direct federal spending would rise by $262 billion over the decade beginning in 2014, the report said. Most of that would go toward paying higher health-care costs.

But the immigration reform plan spelled out in S. 744 would more than offset those costs, thanks to much higher tax collections, both because the workforce would expand and undocumented workers would now pay taxes. Those higher tax receipts would boost federal revenues by $459 billion over the same decade, the CBO estimated.

That would add a net of $197 billion to the federal budget, shrinking the deficit by that much over 10 years.

Those estimates don't include the effect of more workers paying into the Social Security trust fund, which would collect billions more in payroll taxes that would put it on a more solid financial footing.