Republican transfers tax to curb migration may bring in reverse results star-news.press/wp

Washington-Republican lawmakers moved forward on Thursday with a proposal to impose taxes on transfers in the draft glimpse of local local policy that will be legally close, the first national action of its kind seeking to curb illegal immigration.

The suggestion of taxes on the funds that migrants send to their countries of origin can pierce hole in economies throughout Central America, including one country led by a close ally of President Donald Trump. It may eventually increase the rate of illegal immigration to the United States

The small ruling on the draft law that passed the house on Thursday will impose a 1 % tax tax paid by all transfers, including American citizens. Those who use a treasurer check, money arrangement, and cash will be subject to the new tax. The transfer tax will not be collected if paid with a credit card or a discount confronted by the United States. Digital transport operations will be exempt from bank accounts and other financial institutions, along with Current currency and stablecoins. According to the legislation that is now heading to the Trump office, the tax will be achieved next January revenue of $ 10 billion over a decade.

Money transfer companies such as Western Union receive fees ranging from 5 % to 10 % on transfers sent to other countries. The tax will add this cost and reach a vital artery of aid that reaches Central America, which receives a large amount of transfers from the United States every year. Experts say it is too early to predict specific effects on deportation patterns.

But they warn that it may increase the number of immigrants trying to reach the United States

“If families are unable to cover these costs because these transfers are no longer flowing, they will have to find other ways to earn a living,” said Helen Dembestter, an immigration expert in London at the World Development Center. “This can include encouraging more long -term migration.”

“If it has an impact, he may be able to easily in the opposite direction of what (the Republicans) hopes,” said Alan Vieard, an older colleague and economist at the American Institute of Institutions.

The United States has always been the best country in the field of transfers in the world, and it is the product of a flexible labor market with abundant job opportunities. Immigrants Find jobs As workers in the field of construction, landscape, or busboys, then send money to the home. In 2022, A total of $ 79 billion I went out of the country as transfers. this About the same thing As the GDP of Uzbekistan.

Republicans defend this procedure as the brake on the illegal border crossings and a way to maintain dollars parked in the United States, the concept of taxes on tax transfers was wandering in the bloodstream in recent years. In 2023, then. JD Vance of OHIO and Reply. Kevin Hern of Oklahoma Under a draft law To impose a 10 % transfer tax. Republicans look at this as part of the broader immigration campaign.

The Senator said the Republican Party, Eric Schmidt of Missouri, who Learn the legislation Last month of the transfer tax 15 % more severe. “I think there are two reasons for doing this. One of them is a deterrent to illegal immigration, and the other is an argument for fairness. There is a lot of money on which taxes are not imposed in reality.”

The Development Bank between Americans estimated In a report in November that Central America had received $ 46 billion of conversions last year, which created three quarters of Honduras in the United States, relying on transfers to support 25 % of GDP. About 20 % of Guatemala’s economy also depends on it. For El Salvador, the number 24 %. Transfers for all three countries reached record levels in May, For all bbva research.

Half transfers to Central America Start With money in a physical location, not electronically.

Once the tax is in place, you can deal with a major geopolitical allied in Trump. El Salvador is under the leadership of President Nayeb Bokil I put It itself as a regional partner of the United States and helped the aggressive deportation of the Trump administration. Bukele has created a large prison for the accommodation of American detainees, including Kilmar Abigo Garcia, residing in the state of Maryland. Hard Conservatives like it Authoritarian rule And popularity at home to reduce violent crime significantly. Will Freeman, an expert in Latin America, has She was named her “Cuba from the right.”

This ideological bond was not formed in the Economic League. The transfer tax will withdraw $ 198 million, according to the absolute conditions of the El Salvador economy, According to a discretion From the World Development Center. This is in addition to significant discounts in other external aid that leave holes in the general budget of El Salvador and the side of other poor countries. Trump’s administration also has a 10 % global tariff that extends to El Salvador.

“It does not seem that the” close relationship “has resulted in a lot of satisfaction,” Dembestter said.

$ 400 in Guatemala

Transfers Flow through Economy to support consumer activity and commercial activity, which reduces poverty as a result. Ariel C. Ruiz Soto, chief policy analyst at the Institute of Migration Policy, to the example of a Guatemali man in Los Angeles sends $ 400 to a family member in Guatemallan Gharians in Gharanango, the average amount of transfers. This migrant is likely to pay the tax in this case because banking services in Guatemala are limited compared to other countries in Latin America.

“What they usually do with these 400 dollars, especially in rural areas, the fair share of this amount goes to daily expenses: food, education costs, and backpacks for children,” said Ruiz Soto. A family has more financial space to use money as a capital towards building wealth and staying in place.

“You see many of the houses that are built through the transfers that are sent,” said Ruiz Soto. “These are brick houses instead of wood, or three floors instead of one.”

“Differences” near the traditional houses in Salaga, Guatemala. (John Moore/Getty Pictures)

Transfers from the United States are not expected to dry as a result of the tax. In fact, cash flows to Latin America and the Caribbean Sea region Decreased During the epidemic in 2020, however, the ability of Central American governments to deal with external tremors is uneven.

In Mexico, the second largest global recipient of transfers, the tax sparked severe criticism from President Claudia Shinbom, who was called “injustice.” Mexico Received about 64 billion dollars in transfers in 2023. Transfers to Mexico, though, 4.6 % decreased in May In a possible impact on Trump’s ongoing deportation campaign.

Shinbum Declared plans on Monday To pay Mexican immigrants in the United States who pay this. However, poor countries like Guatemala lack the financial strength to support the pocket books of their citizens.

Now Guatemala’s fortunes are more intertwined with transfers. In 2024, $ 21.5 billion of transfers reached Guatemala, According to data from Guatemala Bank. The amount is weak from 2019.

Over the end

The transfer tax was The opposition slipped Among the commercial groups in the field of payment, which was afraid to push people towards the underground -underground channels and damage to the fight against money laundering.

“The transfer tax is a double tax that hurts the ordinary Americans and imposes a burden on joint activities such as sending money to a member of his family abroad,” said Benny Lee, President and CEO of the Financial Technology Association. “While the Senate version of this proposal is an improvement, we believe that the tax tax is a defective policy that will take us back.”

It also attracted resistance from Stephen Moore, former Trump assistant who is now an older colleague at the Heritage Foundation. In a letter to the members of the Republican Party Last month, it was called a “punitive double tax” that would carry a “catastrophic influence” on the American economy.

Republican Senate rewrites the tax and reduces its impact on payments across the border after severe pressure. Compared to the version that is passed to the home, the tax rate decreases from 3.5 % to 1 % and specifies that it will be applied to cash transfers.

“What the Senate has tried to do is to return to what we felt was the intention of the House of Representatives,” said Republican Senator James Lanford of Oklahoma, a member of the Senate Finance Committee. He later added: “I don’t think it increases the flow of migrants. It is a very small tax,” he added.

For the Republicans, the tax is unusual to support, since then Similar The restrictions imposed on the government on the cash flow, which is usually the contempt of the pile. “There is still a form of capital control and more now applies to American citizens as well,” said AEI.

Others want the United States to go further. “Imagine the speed that we can pay the debts with a dangerous conversion”, “conservative activist Jack Bospeek He said on Wednesday at X.