Mexico's Legislature Hits Oklahoma for Tax-Withholding Scheme

By David North on April 14, 2010

The Mexican House of Representatives has called for that nation's government to boycott all goods made in Oklahoma because it is upset by that state's unique tax-withholding scheme, according to an AP dispatch.

You would think that how an American state handles its tax-collecting would be of little interest to the Mexican pols, but this is a slightly different system. If you send money by wire transfer out of state, no matter who you are, Oklahoma imposes a 1 percent state income tax withholding on the transaction. If you pay your state taxes, it does not cost you a cent.

Oklahoma, so far, is the only state with such a law, though similar legislation is being considered in Kansas, and once passed the House of Representatives (but not the state Senate) in Georgia.

The problem, in the eyes of Mexico City, is that it is intended to collect a few taxes from illegal aliens (who routinely wire money back home) as well as some drug dealers; that the tax applies to all such out-of-state transactions, including payments made by U.S. citizens to other U.S. citizens elsewhere in the U.S., apparently does not move the Mexican House members.

A Mexican congressman called the arrangement – now about nine months old – "discriminatory and immoral."

It raises about $2 million every three months and the money is used by the state government to fight drug dealers. It is a highly commendable initiative.

Were the shoe on the other foot, the howls from Mexico would be thunderous. Supposing our Congress decided not to buy goods from, say, one of Mexico's border states where thousands are being murdered by Mexico's drug lords. Our Congress could complain of the state's apparent collapse and the unchecked murders.

Mexico City would erupt with charges of colonialism, and say that our Congress was violating the sovereignty of their nation.

So far, I have not heard any voice raised in Washington telling the Mexican House of Representatives to mind its own business. Except this one.

Topics: Remittances