We've posted about remittances to Mexico in the past. It's a big number and the top source of cash for Mexico after oil and tourism revenues. It's US$ 63 billion, a lot of money, to say the least. It's also a lot of money leaving the U.S., specially from towns and communities that could use the funds to support local services.

So Mexico is not happy that the U.S. is considering a tax on remittances. I'm assuming that it will be a fee on the transfers. Let's see what they are thinking in Mexico via El Pais:

Remittances, one of Mexico’s main sources of foreign currency, are now in the crosshairs of U.S. tax policy. A U.S. House of Representatives committee on Wednesday approved a proposal to impose a 5% tax on remittances. Although Democrats rejected the bill, Republicans unanimously supported the initiative from their caucus. If implemented, more than 40 million people would be affected, including permanent residents and holders of non-immigrant visas; only U.S. citizens would be exempt. For Mexico specifically, this would represent a blow of at least $3.25 billion annually.

Alongside President Donald Trump’s anti-immigration policies, this new proposal to increase taxation on remittances has emerged. In addition to the bill, the U.S. president has previously stated he is finalizing a presidential memorandum to “end remittances” sent by illegal immigrants residing in the United States. The House aims to pass the proposal around May 26. The Senate, also with a conservative majority, must approve the bill. Lawmakers hope Trump will sign it into law by July 4. If ratified by both chambers, the new tax would take effect in 2026.

My guess is that it will be on the so-called "big beautiful bill" and it should be. In Mexico, they are saying that this is double taxation on Mexicans. Up here, many are calling it capital flight. It is indeed both and something else. Many of these countries have become addicted to "remittances" and the funds are a lifeline for many Mexicans supported from abroad.

It also keeps the Mexican government from having to make tough decisions in the energy and agricultural sector. And it encourages the same government to rely on illegal immigration.

So absolutely tax remittances. It's about time.

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Image: Pexels/Jonathan Borba