House Republicans are looking to impose a tax on remittances as part of President Donald Trump's priority bill, potentially impacting the economies of many families and countries that largely depend on the money sent from the U.S.
Concretely, the bill would impose a 5% tax on such transfers and be aimed at people who are not U.S. citizens. That means those reached would include over 40 million people, including green card holders and nonimmigrant visa holders, The Associated Press explained.
It is not the only such effort by Republicans. Trump recently announced that he is finalizing a memorandum to "shut down remittances" sent by people living in the country unlawfully.
Mexican President Claudia Sheinbaum cautioned against the move, calling on GOP lawmakers to reconsider. She said such a decision "would damage the economy of both nations and is also contrary to the spirit of economic freedom that the U.S. government claims to defend." Over $65 billion reached the country as remittances last year, according to Bloomberg Linea.
"Remittances are the fruit of the efforts of those who, through their honest work, strengthen not only the Mexican economy but also the United States', which is why we consider this measure to be arbitrary and unjust," Sheinbaum added.
Other countries with heavy emigration to the U.S. are also heavily dependent on remittances. It represents over a quarter of Honduras and Nicaraguas' GDP (25.9% and 27.6%, respectively), 23.5% of El Salvador's GDP and almost 20% of Guatemala's (19.5%).
Manuel Orozco, director of the Migration, Remittances, and Development Program at the Inter-American Dialogue told the outlet that the measure would have a negative impact on the U.S. He added that "some senders would find ways to send money differently, through unauthorized channels and others would send less." That latter scenario, he added, could incentivize people to migrate given a more dire economic situation.
However, proponents of the measure argue that many people migrate to the U.S. to find work and send money home. Making it more complicated, they say, would reduce incentives to migrate.
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