The Hispanic Caucus of the U.S. Congress issued a strong warning against the Republican proposal to impose a 5% tax on remittances sent by immigrants from the United States, stating that the measure would be “discriminatory, economically harmful, and socially counterproductive.”
In a letter addressed to House Speaker Mike Johnson, the 24 Latino lawmakers in the group urged the rejection of the proposed tax, emphasizing that remittances are not luxuries but essential resources for covering basic needs such as food, housing, education, and healthcare in the recipients’ home countries.
A “Punitive and Regressive” Policy
This proposed remittance tax would “disproportionately targets immigrant communities, undermines economic ties with the hemispheric neighbors,” the letter states. Lawmakers explained that this policy would create a two-tiered system, exempting U.S. citizens while penalizing legal residents, temporary workers, and visa holders, including migrants with H-1B, H-2A, and H-2B statuses.
“It is discriminatory in practice and punitive in effect,” they warned, noting that the measure would directly affect over 40 million people, many of whom hold essential jobs in sectors like agriculture, healthcare, infrastructure, and technology.
Regional Economic Impact
According to the World Bank, U.S. residents sent over $93 billion in global remittances in 2023, with more than $65 billion going to Mexico alone, according to data from the Banco de México. Across Latin America and the Caribbean, over $160.9 billion was received, with significant flows to Guatemala, El Salvador, Colombia, and the Dominican Republic.
The Inter-American Development Bank (IDB) reported that these transfers grew by 9% last year, underscoring their importance not only for family consumption but also as seed capital for entrepreneurship, infrastructure, and economic resilience in vulnerable communities.
“The proposed tax is morally shortsighted and fiscally reckless. It will only worsen irregular migration by cutting off a crucial lifeline for millions of families,” the letter states. It was also sent to Senate Majority Leader John Thune.
Support for Claudia Sheinbaum’s Stance
The members of the Hispanic Caucus also supported the position of Mexican President Claudia Sheinbaum Pardo, who has labeled the measure unjust and a violation of bilateral agreements.
“She’s right. This tax would not only burden struggling families, but it also weakens binational efforts to reduce irregular migration. If the remittance flow stops, more people could be driven to migrate out of desperation,” the lawmakers warned.
A Call to Defend Communities
The group highlighted that the International Monetary Fund (IMF) has recognized that in many low- and middle-income countries, remittances account for 20% to 30% of GDP, as is the case in Haiti, Honduras, and El Salvador. Cutting off that flow would have devastating humanitarian and economic consequences.
“We strongly urge the rejection of this provision. Our laws should strengthen communities, not punish them. This proposal is a betrayal of our identity as a nation of immigrants, builders, and bridge-makers,” concludes the letter, signed by lawmakers including Adriano Espaillat, Alexandria Ocasio-Cortez, Jesús ‘Chuy’ García, Norma Torres, Raul Ruiz, Linda Sánchez, Sylvia García, among others.
Related: ‘It’s an Injustice,’ declares President Claudia Sheinbaum on Possible U.S. Tax on Remittances
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