Republicans Propose a 5% Tax on Immigrants’ Remittances
It would affect the families of millions of immigrants in the USA
Mexico calls the initiative a “discriminatory injustice,” which will also affect families in many countries.
HAVANA TIMES – A legislative proposal introduced by Republicans in the US House of Representatives has sparked a wave of criticism both nationally and internationally. Known as the “Only, Great and Beautiful Bill,” it proposes, among other measures, the imposition of a 5% tax on remittances, which would highly affect Mexico but also families around the globe who depend on money sent by family members.
Its direct effect on the Cuban economy deserves separate analysis. While it’s true that remittances are the country’s second-largest source of income—behind the export of medical services and ahead of tourism, some analysts believe that 95% of the money is now being sent through informal networks, which could avoid the new tax.
If the bill is passed—labeled as extreme and toxic by Democrats—it would affect more than 40 million immigrants in the US, including holders of green cards and work visas such as H-1B, H-2A, and H-2B. US citizens, however, would be exempt from the tax.
The initiative, led by Congressman Jason Smith, is part of a broader legislative package aimed at implementing several of President Donald Trump’s campaign promises. In addition to the remittance tax, the bill includes tax cuts, partially funded by reducing subsidies for clean energy and other fiscal adjustments.
Some experts point out that most remittances are sent by workers who already pay taxes in the United States. A study by Americans for Tax Fairness indicates that immigrants, including the undocumented, contribute over $650 billion in taxes annually. Imposing this tax on remittances could be considered double taxation.
The proposal already caused a 2.5% drop in Western Union’s shares on Tuesday. The company is the largest international money transfer agency, with a presence in more than 200 countries. It has also been met with concern in several Latin American countries, especially Mexico, which received $64.745 billion in remittances in 2024, representing nearly 4% of its Gross Domestic Product.
Mexico’s President, Claudia Sheinbaum, called the initiative a “discriminatory injustice,” arguing that Mexican migrants already contribute significantly to the US economy through tax payments and consumer spending. According to Sheinbaum, 80% of Mexican migrants’ earnings remain in the US, directly benefiting its economy.
The Mexican Senate, in an unusual act of bipartisan consensus, issued a letter of protest. From Guatemala and Honduras to Colombia, governments expressed concern about the devastating effect this measure could have on communities that rely on monthly remittances of $200 or $300 to feed a family or send a child to school.
In many Latin American communities, these funds are essential for daily sustenance and local development. A reduction in remittance flows could push more people to migrate irregularly, worsening the migration crisis that the measure seeks to address.
House Speaker Mike Johnson has expressed his intention to pass the legislative package and send it to the Senate before Memorial Day, May 26. However, strong opposition is expected from Democrats and some Republicans concerned about the economic and social implications of the measure.
First published in Spanish by 14ymedio and translated and posted in English by Havana Times.
I think it should be 7% to reflect the costs of services these worker often get as they are often paid in cash or to a corp account both in Canada and the United States and often get gov programs like health care in the U S because lower declared income in many states. there are other ways to send the money