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The proposal threatens the families of migrants and the economies of their countries of origin
What does the proposal say?
Section 112105 of the House Ways and Means Committee’s budget reconciliation package proposes to establish a 5% tax on remittance transfers.
The tax on remittance transfers would only apply to remittances sent by non-citizens. All migrants, regardless of their immigration status, would have to pay this tax.
Remittance transfer providers would have to enter into an agreement with the federal government to act as a "qualified remittance transfer provider" and would be able to verify a person's citizenship when initiating the transfer.
What would be the impact of the bill?
The proposal could affect more than 40 million people in the U.S. that send money to their families’ back in their countries of origin. The measure also affects at least 40 million families that cover basic needs with the work product of their migrant family members.
The money sent through remittance transfers helps safeguard the well-being of people in the countries of origin, helping to meet their basic needs, and in many cases, creating access to education, opportunities to start businesses, have a roof over their heads, and invest. Remittances discourage migration.
By adding a tax to remittances, the money that people would receive in the countries of origin would be reduced, while some people may choose to send less or send remittances through unauthorized or unregulated channels. The tax on migrants' remittances will have a significant impact on the economies of the countries of origin, some of which depend on them, such as:
Remittance transfer providers, such as Western Union and Remitly, would also see an increase in their operating costs due to the added responsibility of verifying the citizenship of each person making such transfers. In addition, by choosing to use unauthorized channels for remittances, providers will lose revenue generated by transaction fees they already charge.
It does not pertain to a private company to be verifying the citizenship of a person in order to provide a service. It is not just about another requirement and the responsibility of transferring the withheld tax to the government, but it is also about the purpose and sense of this measure and of assigning this responsibility to thousands of employees of private companies.
