The Scoop
Financial institutions are looking to stir up resistance to a Republican proposal to tax cash that migrants send to family members in their home countries ahead of a House vote expected this week.
The provision’s inclusion in the GOP’s massive tax and spending bill caught many in the sector off-guard. Text of the bill released last week would require banks, credit unions and other companies that process so-called remittances to collect information on the sender that confirms they are a US citizen or US national so they can receive a tax credit for 5% of their transaction.
Vice President JD Vance sponsored similar legislation as a senator, and Trump signaled in a Truth Social post last month that he sought to “shut down” the payments altogether. But “this came totally out of nowhere,” said one cryptocurrency executive, who was granted anonymity to discuss the legislation candidly.
Now, “everyone’s just trying to figure it the f*ck out,” a lobbyist said.
House Financial Services Chair French Hill, R-Ark., has directed Republicans on his committee to onpass concerns to House Ways and Means Chair Jason Smith, R-Mo., whose tax-writing panel drafted the language, four people familiar with the talks told Semafor Monday. Smith’s office declined to comment.
Lobbyists argue the proposal would be incredibly complicated for financial institutions to stand up. They also say that it could spur more customers to use cryptocurrency — plus set a dangerous precedent when it comes to government collection of customer data.
“This is the government surveillance they all say leads them to oppose a Central Bank Digital Currency,” a second lobbyist said. Many conservatives have resisted a CBDC because they say it would enable the party in power to track Americans’ purchases.
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Fiscal hawks are pushing hard for their conference to bring down the bill’s price tag, so slashing a provision that raises money is a tough sell. The Joint Committee on Taxation estimates that the remittance tax could raise more than $22 billion between 2025 and 2034 — though there’s a chance that number shrinks if customers pivot to using cryptocurrency, since some of those transactions could be excluded.
The same conservatives who back this tax are also supportive of efforts to deter undocumented migrants from coming to the US — and striking that citizenship language from the bill could make it harder to win their support. House leaders will need almost every Republican’s support to advance the bill this week ahead of their self-imposed deadline of Memorial Day.
It’s not just the financial sector that’s pushing back. Mexico’s ambassador to the US sent a letter to House tax writers last week urging them to “reconsider” the idea, which the official said would “disproportionately affect those with the least.” He also warned that it could encourage migrants to seek “informal or unregulated means” — like crypto — to evade the tax.
“It’s hard to see this as anything other than a way to harass legal immigrants and increase government surveillance,” Norbert Michel, vice president and director of the Cato Institute’s Center for Monetary and Financial Alternatives, said.
“For relatively little tax revenue, it will make it harder for families to keep their income, discourage hard working people from improving their lives and becoming Americans, and add yet another layer of regulation on financial services companies and law-abiding taxpayers,” Michel added.