I know this is way off base, especially after reading Paul Simon's own comments about the lyrics, but my interpretation had always been:
The singer in his youth comes from a white, privileged family, but he has an Hispanic friend from a family of less privilege. The crime committed is simply the fact that he is seen hanging out with his Hispanic friend. The lines about his mother spitting on the ground and getting taken to jail are an exaggerated sense of how his family and society feel about him associating with Julio.
I know this is way off base, especially after reading Paul Simon's own comments about the lyrics, but my interpretation had always been:
The singer in his youth comes from a white, privileged family, but he has an Hispanic friend from a family of less privilege. The crime committed is simply the fact that he is seen hanging out with his Hispanic friend. The lines about his mother spitting on the ground and getting taken to jail are an exaggerated sense of how his family and society feel about him associating with Julio.