Millions around the world rely on money sent by family members working in the U.S. Trump's 'big, beautiful bill' would deal them a financial blow.
Poor countries around the world are still dealing with the impact of America's foreign aid programs being essentially shut down in the early days of President Trump's second term. Now Republicans in Congress are poised to deal a smaller yet still significant blow to another crucial financial lifeline: Money they receive from loved ones working in the U.S.
Money transfers from the U.S., often sent by immigrants who came here specifically to earn cash they can use to support the people they left back home, are a vital source of income for people in developing countries around the world. Cumulatively, U.S. residents sent more than $79 billion abroad in 2022, the most recent year with available data. That's more than the federal government spent on direct foreign assistance the same year and double the amount that was sent from any other country.
The GOP's 'big, beautiful bill' includes a provision that would impose a new tax on these transfers, which are formally known as remittances. As it's currently written, the bill would place a 3.5% tax on all outbound remittances. If that rate holds, it would mean billions of dollars intended for the poorest people across the globe would instead go to the government.
The bill is still being negotiated, however, and some Republicans in Congress would like to see the rate cranked up substantially. Even if the rate does not change, the bill would still make the U.S. one of the world's most expensive wealthy countries to send money from, when you combine the new tax with the fees that banks typically charge for international transfers.
Most of the money that leaves the U.S. goes to countries with the most immigrants living here. Mexico received $52 billion in remittances in 2021, equivalent to about 4% of the country's gross domestic product. India was a distant second with $15.8 billion.
Mexican President Claudia Sheinbaum denounced the proposal last month, calling it 'an injustice' and a 'tax on those who have the least.'
While Mexico would lose the most in terms of sheer dollars, the impact would be felt most acutely in poorer nations with small economies that are heavily dependent on money from overseas. Remittances account for more than a quarter of the GDPs of Nicaragua, Honduras and El Salvador. Some of the poorest countries in Africa would also be significantly affected.
The amount of money the new tax would generate would be a drop in the bucket in the government's budget. Proponents of the proposal say its value would be much more than the revenue it would generate. Mark Krikorian, executive director of the anti-immigration think tank Center for Immigration Studies, told the Associated Press that the extra costs would help reduce the incentives that people have to travel to the U.S. illegally.
'One of the main reasons people come here is to work and send money home,' he said. 'If that's much more difficult to do, it becomes less appealing to come here.'
Critics of the plan say that, while the most severe harm would fall on vulnerable people who are already reeling from the Trump administration's aid cuts, Americans would also suffer negative consequences.
'The tax is likely to create collateral damage by imposing compliance burdens on people who are not the intended target of the tax while struggling to collect revenue from the intended targets,' Alan Cole and Patrick Dunn of the Tax Foundation wrote earlier this month.
Some financial services groups also oppose the tax because they believe it will create unnecessary and harmful hurdles for international business.
'This remittance tax provision in particular mandates a massive invasion of privacy by private businesses and the federal government on American citizens, creates undue tax burden for law-abiding Americans, reduces business revenue, complicates regulatory efforts, and hinders law enforcement,' the heads of seven lobbying groups for the finance sector wrote in a joint statement.
The 'big, beautiful bill' passed the House last month and is currently being negotiated in the Senate. The remittance tax is a relatively minor part of the massive tax and spending plan, but there are some indications that it could be the source of disagreement within the GOP caucus.
Insider reports say that some key senators are 'weighing concerns' about the tax, but it also has some strong backers. The most fervent supporters of the plan are in the House, which will have to approve whatever bill comes out of the Senate before it can become law.
Several far-right GOP representatives — including Marjorie Taylor Greene and Chip Roy — reacted to Sheinbaum's criticisms by calling for the rate of the tax to be dramatically increased. Rep. Eric Schmitt wrote on social media that he would introduce a proposal to increase the rate to 15%. 'America is not the world's piggy bank,' he wrote. 'And we don't take kindly to threats.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hill
41 minutes ago
- The Hill
Iran's ‘proportionate response' will be set by military, envoy tells UN
Amir Saeid Iravani, Iran's ambassador to the United Nations, condemned the United States' involvement in its conflict with Israel, and said the nation's military would determine its response after President Trump on Saturday ordered the bombing of three of Iran's nuclear sites. 'The Islamic Republic of Iran has repeatedly warned the warmongering US regime to refrain from stumbling into this quagmire, even though Iran reserves its full and legitimate right under international law to defend itself against this blatant US aggression and its Israeli proxy,' he said at the United Nations. 'The timing, nature and the scale of Iran's proportionate response will be decided by its armed forces.' The United Nations Security Council held an emergency meeting on the escalating war on Sunday afternoon. Iran, the U.S. and Israel were among the nations that spoke to the attack during the meeting. Iravani described the action as the U.S. helping Israel carry out its 'vile agenda.' Israeli Prime Minister Benjamin Netanyahu thanked Trump on Saturday for directing U.S. strikes on Iranian nuclear sites. 'President Trump and I often say, 'Peace through strength.' First comes strength, then comes peace. And tonight, President Trump and the United States acted with a lot of strength,' Netanyahu said in a video on the social platform X. Iravani said the Israeli president had hijacked 'U.S. foreign policy, dragging the United States into yet another costly, baseless war.' Dorothy Shea, the interim U.S. ambassador to the U.N., spoke ahead of Iravani, and defended Trump's actions. 'Iran has long obfuscated its nuclear weapons program and stonewalled good faith efforts in recent negotiations, Madam President, the time finally came for the United States in the defense of its ally and in the defense of our own citizens and interest, to act decisively,' she said in explaining Saturday's bombing. Shea told the council that Iran, for decades, 'has been responsible for misery and countless deaths across the Middle East. Iran's government and its proxies have also killed numerous Americans, including American service members in Iraq and Afghanistan.' She accused Iranian officials of ramping up 'hostile bluster and rhetoric' over recent weeks.
Axios
41 minutes ago
- Axios
Trump floats regime change in Iran
President Trump floated the possibility of "regime change" in Iran on Sunday in a post to his Truth Social account. "It's not politically correct to use the term, 'Regime Change' but if the current Iranian Regime is unable to MAKE IRAN GREAT AGAIN, why wouldn't there be a Regime change??? MIGA!!" the president wrote. Why it matters: This is the first time Trump has raised the possibility of regime change in Iran since Israel launched its war ten days ago — and the U.S. joined with airstrikes targeting Iran's nuclear sites on Saturday. Trump has criticized the neo-conservative faction of the Republican Party for years over their support for regime changes in Iraq, Iran and other places around the world. Driving the news: The president's post is a departure from the rest of his administration, which has stressed multiple times over the last several days that its goal is to prevent Iran from obtaining nuclear weapons and that the U.S. is not pushing for regime change in Iran. Vice President Vance said on Sunday on NBC's "Meet The Press" that the administration's view "has been very clear that we don't want a regime change." "We do not want to protract this or build this out any more than it's already been built out. We want to end their nuclear program, and then we want to talk to the Iranians about a long-term settlement here," Vance said. Between the lines: An Iran regime change has become an unstated goal of the Israeli government since the war began earlier this month. Israeli Prime Minister Benjamin Netanyahu even said it could be one of the results of the war. Yes, but: There has been no significant uprising against the Iranian regime since the war began, and experts have mentioned a dynamic of rallying around the flag in Iran — even among Iranians who are critical of the regime. State of play: Trump also wrote on his Truth Social account on Sunday that the damage to the Iran nuclear sites targeted by U.S. airstrikes "is said to be monumental" and that the hits "were hard and accurate."
Axios
41 minutes ago
- Axios
"It was a headfake": Inside Trump's secret orders to strike Iran
President Trump told the world last Thursday that he would decide " within the next two weeks" whether to strike Iran. 48 hours later, B-2 stealth bombers were whizzing through Iranian airspace — undetected — on a mission to cripple the Islamic Republic's nuclear program. Why it matters: Trump remained open to aborting the mission if a diplomatic window emerged. But his public countdown doubled as a smokescreen — concealing a strike plan that was already in motion, according to multiple officials. "It was a headfake," a Trump adviser told Axios. "He knew the media couldn't resist amplifying it. He knew the Iranians might think he was bluffing. Well, everyone was wrong." "The president wanted to buy time," another adviser said. "He knew what he wanted to do. And he knows he can't look eager for war. So all the folks in MAGA urging restraint gave him some space." Driving the news: The bombing of Iran's nuclear facilities on Saturday marked the most direct and consequential U.S. military action against Iran since the Islamic Republic was founded in 1979. Trump, who praised the operation as a "spectacular military success," came to the decision to join Israel's war after months of failed diplomacy — and one last secret effort to meet with Iranian officials last week. Once Trump decided Thursday that a military intervention was necessary, he tightly controlled the administration's messaging and narrowed the circle of people involved in the planning. Between the lines: As with many moments of geopolitical drama during Trump's two terms, his aides have gone to great lengths to emphasize an image of total command and decisive leadership. "This wasn't a Pentagon operation. This was a Donald Trump operation," a senior administration official told Axios. "He came up with the PR. He chose the plans. He chose the day." "He's no Jimmy Carter," the official said, referencing the last time the U.S. tried direct military action in Iran: Operation Eagle Claw in 1980, a humiliating and failed hostage rescue mission. The complexity of Saturday's Operation Midnight Hammer — which amounted to the largest B-2 strike in U.S. history — required meticulous planning from the Pentagon that likely stretched back years. Behind the scenes: In the first days after Israel launched its unprecedented attack on Iran, Trump hoped a swift nuclear deal could end the war before it escalated further. From the sidelines of the G7 summit in Canada last weekend, he began coordinating with Turkish President Recep Tayyip Erdoğan to arrange a high-level meeting between U.S. and Iranian officials in Istanbul. Trump was prepared to send Vice President J.D. Vance and White House envoy Steve Witkoff — or even travel himself to meet Iran's president, if that's what it would take to reach a deal. Vance and Witkoff had even started packing their bags, but it became clear on Monday afternoon that the meeting was not going to happen, senior U.S. official said. Iran's Supreme Leader Ali Khamenei, who was in hiding over fears of assassination, couldn't be reached to authorize the talks — and constant Israeli airstrikes made it too dangerous for Iranian officials to leave the country. "The president was ready to go forward with a strike if no diplomatic breakthrough took place. And as the week progressed, he realized that this was the case," a U.S. official told Axios. Zoom in: While still at the G7 summit, Trump gave the Pentagon the order to begin final planning work for a U.S. strike on Iran. On Tuesday, after cutting short his trip to Canada, he convened a Situation Room meeting with his top national security team. Trump pressed for details on the military plans, the reliability of the 30,000-pound bunker-buster bombs, and the potential risks of the operation. "The military and the Pentagon told the president they were sure it was going to work," a U.S. official said. On Friday afternoon, a day after suggesting the attack could be delayed, Trump gave Defense Secretary Pete Hegseth the green-light to launch the B-2 bombers. Several hours later, the stealth bombers departed their base in Missouri. Some flew west as decoys. The real strike group headed east toward Iran, according to Joint Chiefs of Staff Chairman Gen. Dan Caine. On Saturday afternoon, while still at his golf club in Bedminster, New Jersey, Trump was told the bombers were about to reach the point of no return — the moment they would go into full radio silence. The president gave the final go-ahead. Shortly after, Trump boarded Air Force One and flew back to Washington to be in the Situation Room as the first bombs hit their targets. Sitting in the Situation Room, the president saw that the media was still reporting he was undecided, a U.S. official said. That's when Trump grew confident the operation would be successful. "In the end, it was everything. The timing was right. The Ayatollah gave Trump and the U.S. the middle finger. And that came with a price," said a Trump confidant who spoke with the president in recent days. The intrigue: An extraordinarily small group of officials inside the Trump administration knew about the planned strike. "There were no leaks from the Pentagon or from the White House," a U.S. official said. Trump himself helped maintain the secrecy, using public statements to keep Washington, Tehran and the rest of the world guessing about his true intentions. On Thursday, he told reporters he would decide "within the next two weeks" whether to join the war — signaling that a strike wasn't necessarily imminent. A U.S. official said the president was willing to abort the mission at any minute if he saw a diplomatic opening, but "his instinct at that point was to move forward with a strike." An Israeli official told Axios that by the time Trump made the "two weeks" comment, he had already decided to authorize military action — and knew exactly when it would happen. On Friday night, as the bombers were already in the air, Trump appeared upbeat and relaxed at his golf club in New Jersey. "POTUS was having the time of his life. None of us had any idea that a bunch of bombers were already in the air ready to rain down hell," said one person who spoke with him that evening. What to watch: As the strike was underway, White House envoy Steve Witkoff sent a message to Iranian Foreign Minister Abbas Araghchi to make clear that the operation was a one-off and limited strictly to Iran's nuclear program, a U.S. official told Axios. Witkoff, who has remained in direct contact with Araghchi throughout the crisis, emphasized that the U.S. still seeks a diplomatic resolution — and now wants Iran to return to the table following the destruction of its key enrichment sites, the official said. Several senior Trump officials, including Vance and Hegseth, stressed Sunday that the U.S. does not seek regime change in Iran and called on the Iranians to return to the negotiating table. The big picture: Multiple factors ultimately triggered Trump's decision to green-light the strike and go where no president has gone before, advisers told Axios. The CIA, working closely with Israeli intelligence, delivered fresh assessments on Iran's nuclear progress, though skepticism remains about whether Iran had made the formal decision to build a bomb. A damning International Atomic Energy Agency report underscored the urgency. And Israel's success in degrading Iranian air defenses created a window to act. The bottom line: Trump still wants a deal with Iran — and wanted one before the bombers took off, an adviser to the president told Axios.
