The Hispanic Caucus in the United States Congress has mobilized to stop the remittance tax proposed by the administration of Donald Trump. About twenty congressmen has sent a letter to Mike Johnson, the leader of the House of Representatives, the legislative body that debates the fiscal reform raised by the Republican. Legislators indicate the rate of shipments abroad as “a bad policy that betrays a country of immigrants and builders.” From getting ahead, the 5% tax can affect some 40 million people in the country. Not only to undocumented, but also permanent residents who are in the country with H-1B, H-2A and H-2B work visas. The Americans would be exempt from paying this tax.
Signed by 24 of the 43 Democratic congressmen of Caucus, the letter advocates a resource that has been a common practice for millions of immigrants in the United States. Legislators consider remittances not only a humanitarian support, but also a lever for economic development in low and medium income countries. In 2023 about 93,000 million dollars were sent abroad, according to the World Bank. “These were not for frivolous expenses, but for food, clothing, education and housing in countries where these needs are sometimes out of reach,” said congressmen.
Remittances are economic pillars for countries such as Haiti, Honduras and El Salvador. The money sent from abroad can represent between 20 and 30% of the GDP of these nations. “Interrupting this flow is not only morally poor, but fiscally reckless. Only irregular migration will exacerbate in the western hemisphere,” the congressmen warn. Among them are Alexandria Ocasio-Cortez, Joaquín Castro and Chuy García. Most signatories represent districts of Texas and California, the two most populated states in the country.
Trump’s proposal has the support of several Republicans, who control the two Congress cameras. The president’s party is not a monolith. This was demonstrated on Friday, when the internal fissures bogue the project process in the commissions of the House of Representatives. The congressmen will resume the dialogue on Monday, with the most extreme faction of the right demanding greater cuts and control of the deficit.
Remittance tax has not only caused discomfort in Congress. The concern has transcended the borders and has opened a new front in the relationship between the United States and Mexico, a country that received 65,000 million dollars in remittances last year. The Mexican president, Claudia Sheinbaum, has condemned the initiative ensuring that she is harmful to both countries. The issue adds to a complex bilateral relationship already damaged by the commercial war caused by tariffs, migration and fentanyl traffic from Mexico.
“Experts and ancient migrants have long noted to limit remittances will worsen the migratory flow that Republicans in Congress say they want to attend. When money stops arriving, the desperation of people will make them start the dangerous path to the north,” warns the letter.
The Trump initiative began to gain strength in December, weeks before the tycoon returned to the White House for his second presidency. It is not the first time that Trumpism tries to carry out the measure. He considered her during her first administration, but the idea was discarded by the many obstacles that peeked over their implementation. Countries like Saudi Arabia and Ethiopia have already encountered the problems that this type of barriers carry remittances.
JD Vance, today vice president of the United States, is the author of a proposal to set a Remittance Tax. He presented it in 2023 when he was still a senator for Ohio. His project, however, set a 10% commission for each shipment of money abroad. The tax would be intended for a trust used to strengthen border control. Vance proposed fines of up to half a million dollars to those who try to mock the tax through secondary markets. Many experts have warned that the new fiscal measure can foster parallel systems so that remittances continue to reach their destination.
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