Remittance tax in ‘one big, beautiful bill’ to have major impact on immigration

The Senate’s “big, beautiful bill” includes a provision that has sparked controversy and debate among experts and lawmakers alike. This provision is a tiny 1% tax on international cash transfers, known as a remittance tax, which experts believe will have a significant impact on immigrants working in the U.S.

Remittances are money transfers sent to other countries outside the U.S., commonly practiced by immigrant workers who send a portion of their earnings back to their families in their home countries. Every year, tens of billions of dollars are sent from the U.S. to other countries through remittances.

Previous versions of the bill targeted illegal immigrants sending money abroad and proposed higher tax rates. However, the current version of the bill imposes a 1% fee only on cash transfers, not electronic transfers, sent to other countries. This tax also applies to U.S. citizens who wish to send cash internationally.

The estimated revenue generated from this tax is $10 billion, according to Politico. Lora Ries, director of the Border Security and Immigration Center at The Heritage Foundation, believes that this tax could discourage illegal immigration by making it more challenging to send money back home.

Ries explains that illegal immigrants typically seek to enter and remain in the U.S., work, send money home through remittances, and bring their families or have children in the country. By targeting these key incentives, such as remittances, the government could potentially reduce illegal immigration and encourage self-deportation.

The administration has been actively promoting self-deportation by offering to cover the cost of commercial flights for illegal immigrants who choose to leave the country, along with a $1,000 stipend. Ries suggests that the remittance tax could complement these efforts and contribute to reducing the number of illegal immigrants in the U.S.

However, Ries believes that the current 1% tax rate is insufficient and should be higher to have a more significant impact. She argues that all types of money transfers should be taxed to deter unauthorized employment and earnings.

On the other hand, Ariel Ruiz Soto, a senior policy analyst at the Migration Policy Institute, believes that while the remittance tax may have a significant impact, it could unintentionally worsen economic conditions in countries heavily reliant on remittances. This could potentially lead to increased migration from those nations, contrary to the Trump administration’s goal of reducing irregular immigration.

As the House of Representatives considers the Senate’s version of the bill, the debate surrounding the remittance tax continues to unfold. It remains to be seen how this provision will shape immigration policy and impact immigrant workers in the U.S.