The Senate’s proposal, dubbed “One Big Beautiful Bill,” plans to implement a small tax on international cash transfers, referred to as a remittance tax. This could significantly affect immigrants working in the U.S., according to experts.
Remittances typically involve migrant workers sending money back to families in their native countries, and millions flow out of the U.S. annually. Earlier drafts of this bill suggested higher tax rates, particularly targeting illegal immigrants, who were noted for sending considerable amounts. The current version, however, introduces a 1% fee only on cash transfers, excluding electronic transfers, and this also applies to U.S. citizens sending cash abroad.
Government forecasts estimate this tax could yield around $10 billion in extra revenue.
Lora Ries, who leads the Heritage Foundation’s Border Guard and Immigration Center, commented that this remittance tax might deter illegal immigration by complicating the process for those intending to return home. She shared insight into why individuals migrate, mentioning that they typically aim to settle in the U.S., work, and send money back home, among other things. Altering these factors could potentially hinder illegal immigration.
Additionally, the administration is incentivizing illegal immigrants to “self-deport” by offering them a $1,000 salary for those who choose to leave voluntarily, factoring in the expense of flights. Ries noted that the remittance tax could complement stricter immigration enforcement methods.
However, she argued that for this tax to be impactful, it would need to be higher than just 1%. She expressed concern that simply taxing cash transfers won’t address the extensive remittances that currently leave the country without benefiting the U.S. economy.
Ariel Lewis Soto, a senior policy analyst at the Institute for Immigration Policy, pointed out that remittance taxes could inadvertently foster migration from countries like El Salvador, Guatemala, and Honduras, where such payments make up a significant portion of their GDP. He cautioned that even a small tax could worsen the economic conditions in those nations, counteracting efforts to curb irregular immigration.
As discussions continue, the House of Representatives is deliberating its own take on the Senate’s “big and beautiful bill.”
