This New Tax Could Stop Illegal Immigration And Keep Money From Cartels; House Republicans’ Remittance Tax Is Going Up Against the Money Transfer Industry

This New Tax Could Stop Illegal Immigration And Keep Money From Cartels

Advocates say a remittance fee could boost the economy without hurting American citizens.

Each year, migrants send tens of billions of dollars out of the United States — often landing in cartel coffers.

That may be good for migrants and drug lords, but it’s bad for the American economy. That’s why Congress is considering a new tax on money flowing out of the country. Advocates say the tax would penalize illegal immigration, impose new costs on criminal networks, and increase government revenue, all without impacting Americans’ wallets.

Remittance outflows from the United States — when migrants send money back to their countries of origin — have steadily increased in recent years. Data from the Migration Policy Institute reveal that just over $66 billion was sent out of the American economy in 2020. That number climbed to $73.7 billion in 2021 and $81.6 billion in 2022. By 2023, remittance outflows hit nearly $86 billion.

Now, a five percent remittance tax, which is included in President Donald Trump’s “big, beautiful bill,” could penalize illegal immigration, punish cartels, and create a new revenue stream for the American government.

Federation for American Immigration Reform (FAIR) Media Director Ira Mehlman told The Daily Wire that a tax on remittances would recoup some of the money that is, in effect, exported out of the American economy.

“Many illegal aliens are working off-the-books, and therefore, no payroll taxes have been collected. Taxing the money as it leaves the country would be a way to recoup some of that revenue loss,” Mehlman said. “Even in cases where the money earned is being taxed, large-scale transfers of money to other countries have a negative impact on the American economy. Remittances essentially export money from our economy.”

“That is money that is not being spent locally, generating revenues such as sales tax, or creating new jobs in local economies,” he added.

But migrants transferring money to family members in their home countries aren’t the only ones sending money out of the American economy. Mehlman warned that cartels are known to launder drug money back to Mexico, allowing the transnational criminal enterprises to fund their smuggling operations.

He cited one Reuters investigation that found that the Sinaloa and Jalisco New Generation Cartels recruited Mexican citizens and illegal aliens in the United States to launder the illicit funds, and that cartel drug money could make up 10 percent of all remittances to Mexico. The increase in total remittances, the investigation says, has allowed the laundered funds to blend in and fly under the radar.

“Placing a fee on remittances is crucial because the more money that is smuggled back into Mexico, the stronger the cartels become,” Mehlman told The Daily Wire.

So far, Oklahoma is the only state that has implemented a remittance fee. The state charges a 1% fee on wire transfers out of the country. State residents who pay their income tax are reimbursed for any fees they incur by wiring money through a tax credit. But those who do not pay taxes, including many illegal aliens, receive no such reimbursement, allowing the state to pull in over $10 million a year. —>READ MORE HERE

House Republicans’ Remittance Tax Is Going Up Against the Money Transfer Industry

The sprawling tax package unveiled Monday includes an international money transfer tax opposed by financial service providers and supported by one of the bill’s biggest critics.

House Republicans’ sweeping tax proposal includes a 5% tax on some international money transfers known as remittances, setting up a lobbying battle for the industry groups representing companies that carry out those transactions.

But even budget hawks who have issues with the bill have said they support a remittance tax targeting people who are in the U.S. illegally. And as Republicans clamor to find billions of dollars to cover tax and border priorities, removing the provision could be difficult for its opponents.

People working in the U.S. send tens of billions of dollars in remittances to friends, relatives or others in foreign countries each year, according to the World Bank. Trade groups representing companies that send money abroad sent a letter last week urging the Ways and Means Committee against including a remittance tax in the mega-bill, but to no avail.

The Ways and Means Committee touted “new fees on remittance payments from illegal immigrants to outside the U.S.” and carved out an exception for transfers sent “by verified U.S. citizens or U.S. nationals,” although who that term includes is not clearly defined and subject to change as the House debates the bill. The proposal also includes a refundable tax credit for excise taxes paid by taxpayers with Social Security numbers.

The provision is less drastic than previous remittance tax proposals. Then-Sen. JD Vance and Rep. Kevin Hern proposed a 10% fee on remittances in 2023, and The Heritage Foundation in January floated a 50% tax on outbound transfers unless the sender first proved their legal status.

Several trade associations who signed onto the letter criticized the remittance tax proposal in the “One, Big, Beautiful Bill” text released Monday. The industry argues the fee would harm small businesses and vulnerable communities, burden companies and undermine law enforcement’s ability to track illicit financial crime.

“We oppose the inclusion of the provision, as it will negatively impact consumers, especially low- and moderate-income ones, from sending money to loved ones,” Scott Talbott, an executive vice president at the Electronic Transactions Association, which represents the payments industry, told NOTUS. —>READ MORE HERE (or HERE)

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