00:00A new tax being pushed by Republicans should be sent to the dumpster.
00:10Hello, I'm Steve Forbes and this is What's Ahead, where you get the insights you need to better navigate these turbulent times.
00:17Buried among the tax cuts in the big beautiful bill narrowly passed by Republicans in the House of Representatives is a brand new tax, a 3.5% levy on remittances.
00:29These are funds sent by individuals, usually immigrants in one country, to people in other countries, usually family members.
00:38Millions of migrants in the U.S. send tens of billions of dollars their earnings to their families in their country of origin.
00:45Worldwide, remittances are a huge source of money for people in developing countries, running into hundreds of billions of dollars.
00:54Immigrants in the U.S. traditionally use specialty companies like Western Union and Zoom, and also financial institutions like traditional banks.
01:03The GOP bill would apply a 3.5% tax on remittances sent by foreign residents in the U.S.
01:11But the tax would also end up whacking those who are here legally.
01:16This tax provision would require firms doing the transfer to collect information about the sender, confirming they are U.S. citizens or in certain categories of residency if the sender wants a refund.
01:29It would be in the form of a tax credit, a cumbersome, time-delayed process.
01:35This new tax is punitive and an invasion of privacy.
01:39It is a form of double taxation.
01:42Many non-citizens already pay income and payroll taxes on their earnings.
01:47It's like putting a transfer tax on a payment you make to pay for groceries or other items.
01:53This exaction is regressive.
01:55Most senders have low incomes.
01:57By punishing transfers, the tax will gratuitously hurt countries like Mexico, India, and the Philippines.
02:04These and other recipient nations are U.S. allies.
02:08We want our friends to prosper, lest they fall into the hands of hostile governments.
02:13The tax is anti-family and anti-entrepreneurship.
02:17Remittances support families and often supply funds to start new businesses.
02:23The levy will encourage informal channels of remitting funds, thereby having the unintended consequence of facilitating money laundry.
02:32What is not well known is that the biggest recipient of U.S. remittances is not Mexico but India.
02:39Now this points to another factor to consider regarding this tax.
02:43Skilled foreign workers may look to countries that have less intrusive financial regulations.
02:49Indian professionals here are shocked by this tax and wonder what else is coming.
