Why Mexico is Safer Than the U.S.

Millions of U.S. Citizens and other foreigners live peacefully in Mexico. In fact, most expats when asked, “Do you feel safe in Mexico?” will answer with, “Do you think you are safe in the U.S.?” The truth is most of those who live and work in Mexico feel much safer in Mexico than they did living back home.

Back home you probably feel safe taking the family to Disneyland in California, but would you still feel safe is you knew that the murder rate in Los Angeles is 294 persons per year or that there were 940 rapes, 11,059 robberies, and 9,464 assaults? There were 21,757 violent crimes, and 91,792 property crimes committed last year in Los Angeles alone. That’s 29.94 crimes per 1,000 residents. And the kicker is that Los Angeles is safer than 26% of the cities in the United States!

The purpose of this article is to bring attention to the statistical fact that Mexico is a much safer place to live than the United States, especially when considering the murder rates. The statistical information in this article comes from the U.S. Department of State Website where they publish deaths in foreign countries based on unnatural causes, the U.S. Federal Bureau of Investigation (FBI) Crime Statistics Analysis (both for the year 2010, which is the latest published year available).

In 2010, I listened as a friend recited what she had heard on television in her hometown of Houston, Texas, “They said on the evening news that 4,000 U.S. Citizens had been killed in Laredo this week.” She was concerned as I was living in Cuernavaca, some 750 miles south of the border, lest a stray bullet might somehow travel that distance. Yes, there was one murder of a U.S. Citizen in Laredo, not just in one week. In fact there was only 1 U.S. Citizen murdered in the entire year of 2010 in Laredo!

Of course, there were no murders of 4,000 U.S. Citizens in Mexico the previous week, and in fact there were only 112 foreign citizens who died from unnatural causes in the whole country of Mexico during the entire year of 2010, compared to 12,946 murders reported in the U.S. during the same year.

I don’t know what she heard on the television news that evening, but what she believed was far from the truth of the matter. And, it’s like this wherever I travel throughout the world. I hear similar stories recited from friends in London, Mumbai, Canada and throughout the United States. I don’t know if most of my friends have hearing problems or they are just naïve to the truth. Perhaps it is the manner in which the news media can sensationalize the reporting to make it appear that things are much more grave than the reality of the circumstances.

Keep in mind that more than 150,000 U.S. Citizens cross the border into Mexico each day. Also, keep in mind that there were almost a million foreigners living in Mexico in mid-2010. Though “almost a million” foreigners sounds like an impressive number, Mexico has relatively few foreign born residents compared to its two northern neighbors. Foreigners constitute less than one percent (0.86%) of the 2010 Mexican population, compared to 21% in Canada and 13% in the U.S. And, where do the vast majority of these foreigners live? In 2010, the states with the highest percentage of foreigners are mostly along the US border.

I dare say, that if someone were to try to single out a foreigner in Cuernavaca, they would have to search for the proverbial needle in a haystack.

The figures in the tables below came from the U.S. Department of State Website, and the U.S. Federal Bureau of Investigation (FBI) Crime Statistics Analysis.

Murder Rates

Who are the Foreigners and Where Do They Live?

Foreigners are defined as individuals born in another country, but residing in Mexico. Under this definition, children born in the USA of two Mexican parents are considered foreigners if they currently live in Mexico. So the numbers are slightly askew from what one might believe. Unfortunately, the currently available data does not enable us to separate these foreign-born Mexicans from other foreigners who were raised in other countries and moved to Mexico to follow their professions or retire. Nor can we single out how many of these foreigners are from a particular country, i.e. Canadians versus U.S. Citizens, as this information is not recorded.

Where in Mexico do most foreigners reside? The latest figures are from 2010 and the numbers have risen substantially since then. Most estimates are that the foreign population has doubled since 2010, based on the great number of FM2 and FM3 visas issued in the last 2 years. However, in 2010, Baja California had the most foreigners with almost 123,000, followed by Jalisco (84,000), Chihuahua (80,000), and the Federal District (72,000). Tlaxcala had the fewest, with just over 3,200, followed by Tabasco with about 4,500.

In 2010, the states with the highest percentage of foreigners were mostly along the US border. Baja California led with 3.9%, followed by Chihuahua (2.3%), Tamaulipas (1.9%), and Sonora (1.7%). Interestingly, the other border state, Coahuila, had relatively few foreigners, only 0.8%. Other states with relatively large percentages were either historical sources of immigrants to the USA or retirement havens like Colima (1.44%), Quintana Roo (1.40%), Nayarit (1.35%), Zacatecas (1.22%), Jalisco (1.14%) and Michoacán (1.10%).

Tabasco had the fewest foreigners as a percentage with only 0.20%, followed by Tlaxcala (0.28%), Veracruz (0.30%), the State of México (0.33%) and Yucatán (0.36%).

During that same year, some areas experienced a tremendous growth of foreigners. Surprisingly, the areas with the greatest growth were those states with relatively few foreigners in the 2000 census. Those areas were Hidalgo (up 402% over the decade), Tlaxcala (333%), Tabasco (281%), and Veracruz and Oaxaca (both with 272%). It would seem that during the previous decade foreigners who decided to make Mexico their home, didn’t want to be around other foreigners.

The Cartels

Yes, there are drug smugglers in Mexico, but if it were not for the drug users in the United States and Canada, the cartels would be out of business. And, yes, the cartels do have guns, and lots of them. You may ask, why do the cartels have guns, since gun ownership is illegal in Mexico? The U.S. Government’s Alcohol, Tobacco and Firearms (ATF) allowed the cartel to cross the border and buy guns and return to Mexico. The U.S. Government allowed this to happen for years, under the guise that they “were collecting evidence!”

Keep in mind that the business of drug smuggling into the United States is a multi-billion dollar operation. And that kind of money creates a lot of potential for violence as the cartels battle each other for control.

However, getting rid of the cartels and the smuggling points on the border is just one step and should not be the first. The first thing that has to happen is to eliminate the need for drugs in the first place. If U.S. Citizens would cease doing drugs, there would be no need and the cartels would be disbanded.

The second most important thing that has to happen is that the U.S. must rid its cities of the gangs that sell these drugs. According to the latest statistics from the U.S. Department of Justice, there are nearly 1 million active gang members in the United States, based on analysis of federal, state, and local data, and the involvement of criminal gangs in domestic drug trafficking is becoming increasingly complex. Since 2001, many gangs have advanced beyond their traditional role as local retail drug distributors in large cities to become more organized, adaptable, deliberate, and influential in large-scale drug trafficking. Much of their growing influence has come at the expense of local independent dealers and small local criminal groups who cannot compete with gangs that establish control in smaller drug markets.

In 2009, more than 900,000 criminally active gang members, who represented approximately 20,000 domestic street gangs in more than 2,500 cities, dominated midlevel and retail drug distribution in the United States. These street gangs vary greatly with respect to their ethnic or racial identities, the types and amounts of drugs that they distribute, their strength and influence, and their adaptability. Their prevalence varies geographically, with the greatest concentration of street gangs occurring in the Great Lakes, Pacific, Southeast, and Southwest Regions.

What About Those U.S. State Department Reports?

You may have seen the U.S. State Department’s travel advisories like the one below, where they advise you to pass this along in an email to all your friends.

Yes, the U.S. Government is warning people about the security situation in Mexico. This comes from a country with an immense amount of violence within it’s own borders that makes Mexico seem like a cakewalk. A country where any one and every one carries a gun. Where drugs are openly sold on street corners, and drug paraphernalia is sold in convenience stores to minors. Where according to the FBI statistics there are 35 people murdered each day in the United States and 41.8 percent of all murders are by someone known to the victim. A country where in 2010, an estimated 1,246,248 violent crimes occurred nationwide at a rate of 2.37 per minute. A country where a person can beat you senseless in front of your neighbors and walk away because he says he was intimidated and felt threatened.

These reports are generated at the U.S. Embassy in Mexico City. They are written by government workers who before being transferred to the U.S. Embassy in Mexico City made a normal government paycheck. However, once in Mexico the perks add up to near double their salaries and they do not want to lose these funds. The average salary paid to U.S. Embassy staff is $64,000 per year, which is double to that of their Mexican counterpart’s salary of $32,231. However, along with the salary, comes the per diem perk, which currently adds an extra $109,500 a year to their salary for a total income of $173,500 per year. And, the more violent report that they can spin on the region in which they work, the higher the per diem.

If they lived as well as most professionals in Mexico it certainly wouldn’t cost them more than $32,231 a year. That means that they can bank away as much as $141,269 a year. If they can stretch it out to 10-years, which is not uncommon, they will have a tidy little nest egg of a little over $1.4 million plus interest. Quite an incentive to write sensationalism that will guarantee more money in their pockets. Here’s a good question to ask, “of all the workers in the U.S. Embassy that are walking around with all that money, how many have been murdered or kidnapped and held for ransom?”

$17 Trillion Dollars

The U.S. Government is $17 trillion dollars in debt! Being in debt, I suppose will force some to take drastic action in an attempt to climb out. I don’t think anyone would doubt that.

The statistics published by the U.S. Federal Bureau of Investigation, say that every day 150,000 U.S. Citizens cross the border into Mexico every day. Why not? It’s a lovely place and other than a few cities along the border, and especially at night, it is a safe haven for those looking for a more tranquil lifestyle.

And, yes, there is the money factor. Living in Mexico can be much less expensive than living just about anywhere in the United States. They also report that there are upwards of 1-million U.S. Citizens living and working in Mexico. This means that they are spending their money in the grocery stores of Mexico, not the U.S. They are going to the movies, the ballet, enjoying the concerts by major stars, again spending their money in Mexico, not the U.S. There are millions of U.S. Citizens vacationing in Mexico each year, enjoying the beautiful beaches, the hikes into the mountains, shopping in the malls in major cities, where they can buy the same products that are available back home, but at a fraction of the cost.

The problem for the U.S. Government is how to stop all that money, the taxes that could be collected in the U.S., the labor taxes that are not collected, and more, from leaving the United States. I know of only three ways to make that happen.

1. Stop all U.S. Citizens from crossing the border

2. Mount an advertising program that would make U.S. Citizens not want to cross the border

3. Tax U.S. Citizens on money they spend in Mexico

If you know of another way, I’d like to hear it. Let’s discuss these three for now.

Stop the Border Crossings

It’s very difficult to completely shut down the crossings at the border and maintain relations with Mexico. It is a little like telling your child that they can’t go to Johnny’s house. That will only make them seek another way to visit with Johnny, because they like Johnny.

Advertising Campaign

Mounting an advertising program that would make U.S. Citizen not want to cross the border sounds plausible. When Katrina wiped out much of New Orleans and the tourism market declined, the U.S. Government spent billions to rebuild the area and bring back tourism. When the British Petroleum oil spill kept tourists off the beaches along the Gulf Coast, the U.S. Government chipped in millions of dollars into an advertising program to bring the tourist back. The list goes on. If you live in a tourist area where U.S. Citizens and others spend a lot of taxable money, the government will move to get those tourist in your door. It’s been working for a lot of years and working well.

In knowing that it works so well, why would the U.S. Government not employ the same concept, but in reverse, to keep people from crossing the border and spending all that money in Mexico rather than in Muscle Shoals or New Orleans. Well, they are! All they have to do is send press releases to every major news source stating that travel in Mexico is unsafe. Is it working? Not with seasoned travelers, and expats who live in Mexico and know the truth. But, the occasional tourist seems to be swayed and thus the Travel Advisories are partially working.

Taxing on Foreign Investments

And the U.S. Government could tax those U.S. Citizens who spend money in Mexico, but how. They can’t track all that money easily. So they have come up with another ploy. They passed a law requiring any U.S. Citizen that resides abroad to file a U.S. Income Tax Return each year on their worldwide income and pay taxes on the money earned in that country! And, its against the law to give up your U.S. citizenship in order to avoid U.S. taxes!  Therefore, if you aren’t filing your U.S. tax return,  the statute of limitations on tax collections will not run out and your tax return obligation (and perhaps the taxes you owe) only grows greater as each year passes.

U.S. Permanent Residents (green card holders) as well as U.S. Citizens must report each year their income earned anywhere in the world. That means your U.S. income tax return must include:

  • Foreign dividends
  • Rental Income Earned Abroad
  • Foreign pension income
  • Foreign capital gains or losses on stocks, bonds, real estate
  • Foreign royalties
  • All other foreign income

If you earn money while in Mexico you have to pay taxes to the U.S. Government on that money. If you use the money to buy property, such as home, and later sell that home you have to pay taxes on the gain from the sale of the home. If you rent the house out, you have to pay U.S. taxes on that income. In other words any money in the bank in Mexico is going to be taxed at the prevailing U.S. tax rate. You will be required to fill out Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).

Sanctioning Money Laundering

You may have read recently about the millions of dollars in drug money that was invested in San Antonio, Texas and wondered why the Mexicans would bring their drug money to the United States and invest it here, where they would supposedly be required to pay taxes on the gains. Well, the truth of the matter is that it is difficult to get that drug money back into Mexico and also that they pay only a small margin in taxes on the illicit money in the United States. It becomes a tremendous fountain of almost free flowing money if invested properly.

There are several unique rules applicable to non-U.S. Citizens, non-U.S. residents and foreign companies that own real estate situated in the U.S. Congress passed most of this legislation nearly 20 years ago known as the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”).

Generally, a non-U.S. Citizen (e.g., a Mexican Citizen who resides in Mexico or outside the U.S.) who does not have (1) U.S. source income or U.S. source income “effectively connected” with a trade or business,6 and (2) does not stay in the U.S. for the “183” days test per year, does not have to pay taxes to the U.S. Government. Consequently, prior to the enactment of FIRPTA, a foreign investor could purchase real estate in the U.S. (e.g., a bare tract of land that had development potential) for USD$ 100,000 and sell it for USD$ 300,000. The U.S. would generally not tax the Mexican Citizen on the USD$ 200,000 gain. If a U.S. Citizen were to have that same USD$ 200,000 gain, they would have to pay income tax on the gain. Congress passed FIRPTA because it thought foreign investors were receiving more favorable tax treatment on some of their U.S. real estate investments than U.S. residents.

FIRPTA created a completely different tax method by which non-U.S. residents are taxed upon their gains derived from ownership in U.S. real estate. FIRPTA also imposes a mandatory withholding mechanism by which part of the tax must be withheld by the buyer (or third party withholding agent) immediately upon the sale or disposition of the U.S. real property interest.

For example, assume MEXICOMPANY, S.A., lends Mr. Martinez USD$ 500,000 pursuant to a promissory note to purchase undeveloped real estate in San Diego, and MEXICOMPANY, S.A. takes back a security interest in the real estate (i.e., a mortgage). Assume, further, that the terms of the promissory note require Mr. Martinez to pay MEXICOMPANY, S.A. 50 percent of the appreciation of the real estate based upon annual appraisals of the undeveloped property. This type of loan arrangement would likely be deemed an “equity kicker” and thus would likely require MEXICOMPANY, S.A. to pay FIRPTA tax upon the sale or exchange of the promissory note.

The marginal tax rate for foreign investment in the U.S. is currently 10%. What a deal! This allows drug dealers to invest their illicit funds in the United States – which is what is normally called Money Laundering.