Each year, migrants send tens of billions of dollars out of the United States — often landing in cartel coffers.
That may be good for migrants and drug lords, but it’s bad for the American economy. That’s why Congress is considering a new tax on money flowing out of the country. Advocates say the tax would penalize illegal immigration, impose new costs on criminal networks, and increase government revenue, all without impacting Americans’ wallets.
Remittance outflows from the United States — when migrants send money back to their countries of origin — have steadily increased in recent years. Data from the Migration Policy Institute reveal that just over $66 billion was sent out of the American economy in 2020. That number climbed to $73.7 billion in 2021 and $81.6 billion in 2022. By 2023, remittance outflows hit nearly $86 billion.
Now, a five percent remittance tax, which is included in President Donald Trump’s “big, beautiful bill,” could penalize illegal immigration, punish cartels, and create a new revenue stream for the American government.
Federation for American Immigration Reform (FAIR) Media Director Ira Mehlman told The Daily Wire that a tax on remittances would recoup some of the money that is, in effect, exported out of the American economy.
“Many illegal aliens are working off-the-books, and therefore, no payroll taxes have been collected. Taxing the money as it leaves the country would be a way to recoup some of that revenue loss,” Mehlman said. “Even in cases where the money earned is being taxed, large-scale transfers of money to other countries have a negative impact on the American economy. Remittances essentially export money from our economy.”
“That is money that is not being spent locally, generating revenues such as sales tax, or creating new jobs in local economies,” he added.
But migrants transferring money to family members in their home countries aren’t the only ones sending money out of the American economy. Mehlman warned that cartels are known to launder drug money back to Mexico, allowing the transnational criminal enterprises to fund their smuggling operations.
He cited one Reuters investigation that found that the Sinaloa and Jalisco New Generation Cartels recruited Mexican citizens and illegal aliens in the United States to launder the illicit funds, and that cartel drug money could make up 10 percent of all remittances to Mexico. The increase in total remittances, the investigation says, has allowed the laundered funds to blend in and fly under the radar.
“Placing a fee on remittances is crucial because the more money that is smuggled back into Mexico, the stronger the cartels become,” Mehlman told The Daily Wire.
So far, Oklahoma is the only state that has implemented a remittance fee. The state charges a 1% fee on wire transfers out of the country. State residents who pay their income tax are reimbursed for any fees they incur by wiring money through a tax credit. But those who do not pay taxes, including many illegal aliens, receive no such reimbursement, allowing the state to pull in over $10 million a year.
Congressman Kevin Hern (R-OK) introduced a federal bill modeled after his state’s legislation during the 2022 legislative session. He reintroduced his bill in 2023, with the support of then-Senator JD Vance, who introduced an accompanying bill in the upper chamber. The legislation would have imposed a 5% charge on outgoing wire transfers, and directed the proceeds to be used for border security measures. The bill similarly offered tax credits for those who paid the fee, allowing taxpayers to receive reimbursement.
Hern, who serves as the Chairman of the Republican Policy Committee, told The Daily Wire that the legislative effort was an attempt to employ “every avenue available to target cartel activity and keep our people safe.”
“The cash flow from illegal immigrants in the States to their cartel partners in Mexico, Venezuela, and other countries is massive,” Hern said to The Daily Wire. It’s a two-fold win: remittance fees will help slow down the flow of those dollars to the cartels and will also create a new revenue source we can use to build the wall and secure our border.”
If Trump’s budget bill is passed as written, anyone sending money out of the country would have to pay a 5% tax. The only untaxed remittances would be those sent through a qualified transfer provider, which would be required to prove to the United States government that it authenticates the citizenship status of senders. American citizens who incur a tax on remittance payments would receive a refund in the form of a tax credit, just as Oklahomans do under current state law.
A remittance tax has also garnered the support of the America First Policy Institute, which says that the measure “deters illegal immigration and trafficking networks.”
“Imposing a fee on outgoing wire transfers makes it less desirable for illegal aliens or smuggling and trafficking networks to remain in the state,” the group wrote in a policy brief. The organization also touted a fee on remittances as an effective tool to recoup lost tax revenue.
“In many instances, the wages illegal aliens receive working unlawfully in the country is untaxed income which financially harms states. Illegal aliens also may consume other state benefits like education for their children and medical care without paying into the system,” America First Policy Institute asserted. “This fee partially recoups some of the lost state revenue caused by illegal immigration in the state.”
Mehlman explained that the policy would be most effective at discouraging illegal immigration if it is paired with a national E-Verify mandate, which would seek to prevent illegal aliens from gaining employment in the United States.
“The biggest incentive to illegal immigration is the ability to work here at a higher wage and send money home to family members,” he explained.
“The problem has been powerful business lobbies that have fought mandatory E-Verify because illegal immigration has become a source of subsidized labor for them — they get a low-wage worker, similarly skilled American workers lose out on jobs and wages, and everyone else bears the true costs of having large numbers of illegal aliens in our society.”
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Each year, migrants send tens of billions of dollars out of the United States — often landing in cartel coffers.
That may be good for migrants and drug lords, but it’s bad for the American economy. That’s why Congress is considering a new tax on money flowing out of the country. Advocates say the tax would penalize illegal immigration, impose new costs on criminal networks, and increase government revenue, all without impacting Americans’ wallets.
Remittance outflows from the United States — when migrants send money back to their countries of origin — have steadily increased in recent years. Data from the Migration Policy Institute reveal that just over $66 billion was sent out of the American economy in 2020. That number climbed to $73.7 billion in 2021 and $81.6 billion in 2022. By 2023, remittance outflows hit nearly $86 billion.
Now, a five percent remittance tax, which is included in President Donald Trump’s “big, beautiful bill,” could penalize illegal immigration, punish cartels, and create a new revenue stream for the American government.
Federation for American Immigration Reform (FAIR) Media Director Ira Mehlman told The Daily Wire that a tax on remittances would recoup some of the money that is, in effect, exported out of the American economy.
“Many illegal aliens are working off-the-books, and therefore, no payroll taxes have been collected. Taxing the money as it leaves the country would be a way to recoup some of that revenue loss,” Mehlman said. “Even in cases where the money earned is being taxed, large-scale transfers of money to other countries have a negative impact on the American economy. Remittances essentially export money from our economy.”
“That is money that is not being spent locally, generating revenues such as sales tax, or creating new jobs in local economies,” he added.
But migrants transferring money to family members in their home countries aren’t the only ones sending money out of the American economy. Mehlman warned that cartels are known to launder drug money back to Mexico, allowing the transnational criminal enterprises to fund their smuggling operations.
He cited one Reuters investigation that found that the Sinaloa and Jalisco New Generation Cartels recruited Mexican citizens and illegal aliens in the United States to launder the illicit funds, and that cartel drug money could make up 10 percent of all remittances to Mexico. The increase in total remittances, the investigation says, has allowed the laundered funds to blend in and fly under the radar.
“Placing a fee on remittances is crucial because the more money that is smuggled back into Mexico, the stronger the cartels become,” Mehlman told The Daily Wire.
So far, Oklahoma is the only state that has implemented a remittance fee. The state charges a 1% fee on wire transfers out of the country. State residents who pay their income tax are reimbursed for any fees they incur by wiring money through a tax credit. But those who do not pay taxes, including many illegal aliens, receive no such reimbursement, allowing the state to pull in over $10 million a year.
Congressman Kevin Hern (R-OK) introduced a federal bill modeled after his state’s legislation during the 2022 legislative session. He reintroduced his bill in 2023, with the support of then-Senator JD Vance, who introduced an accompanying bill in the upper chamber. The legislation would have imposed a 5% charge on outgoing wire transfers, and directed the proceeds to be used for border security measures. The bill similarly offered tax credits for those who paid the fee, allowing taxpayers to receive reimbursement.
Hern, who serves as the Chairman of the Republican Policy Committee, told The Daily Wire that the legislative effort was an attempt to employ “every avenue available to target cartel activity and keep our people safe.”
“The cash flow from illegal immigrants in the States to their cartel partners in Mexico, Venezuela, and other countries is massive,” Hern said to The Daily Wire. It’s a two-fold win: remittance fees will help slow down the flow of those dollars to the cartels and will also create a new revenue source we can use to build the wall and secure our border.”
If Trump’s budget bill is passed as written, anyone sending money out of the country would have to pay a 5% tax. The only untaxed remittances would be those sent through a qualified transfer provider, which would be required to prove to the United States government that it authenticates the citizenship status of senders. American citizens who incur a tax on remittance payments would receive a refund in the form of a tax credit, just as Oklahomans do under current state law.
A remittance tax has also garnered the support of the America First Policy Institute, which says that the measure “deters illegal immigration and trafficking networks.”
“Imposing a fee on outgoing wire transfers makes it less desirable for illegal aliens or smuggling and trafficking networks to remain in the state,” the group wrote in a policy brief. The organization also touted a fee on remittances as an effective tool to recoup lost tax revenue.
“In many instances, the wages illegal aliens receive working unlawfully in the country is untaxed income which financially harms states. Illegal aliens also may consume other state benefits like education for their children and medical care without paying into the system,” America First Policy Institute asserted. “This fee partially recoups some of the lost state revenue caused by illegal immigration in the state.”
Mehlman explained that the policy would be most effective at discouraging illegal immigration if it is paired with a national E-Verify mandate, which would seek to prevent illegal aliens from gaining employment in the United States.
“The biggest incentive to illegal immigration is the ability to work here at a higher wage and send money home to family members,” he explained.
“The problem has been powerful business lobbies that have fought mandatory E-Verify because illegal immigration has become a source of subsidized labor for them — they get a low-wage worker, similarly skilled American workers lose out on jobs and wages, and everyone else bears the true costs of having large numbers of illegal aliens in our society.”
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