Mexican government opposes remittance provision in Trump tax bill

The House Republican bill to enact President Trump’s domestic policy agenda contains a provision that has prompted opposition from the Mexican government — a tax on cash payments sent by non-U.S. citizens to family members in their home countries.

The payments, known as remittances, would be subject to a 5% excise tax that would encompass more than 40 million people, including green card holders and nonimmigrant visa holders, such as people on H-1B, H-2A and H-2B visas. U.S. citizens would be exempt. 

In a May 13 letter to the leaders of the House Ways and Means Committee, Esteban Moctezuma Barragán, Mexico’s ambassador to the U.S., urged Chairman Jason Smith and Ranking Member Richard Neal to reconsider the proposal. 

“We respectfully urge you to reconsider this section of the legislative proposal, and we remain available to continue dialogue on the matter,” wrote Barragán and Robert Velasco Alvarez, Mexico’s chief officer for North America. 

Spokespeople for both Smith and Neal did not respond to a request for comment.

In April, President Trump hinted at a crackdown on remittances, announcing in a Truth Social Post that the administration was “finalizing a presidential memorandum to shut down remittances sent by illegal aliens outside of the United States.” But details on the presidential proposal were unclear. 

The remittance tax provisions in the bill have become an international flashpoint. Mexican President Claudia Sheinbaum has also criticized the plan and urged Republican lawmakers to reconsider it. 

At a press briefing this week, Sheinbaum warned that the proposal “would damage the economy of both nations and is also contrary to the spirit of economic freedom that the U.S. government claims to defend.”

“Remittances are the fruit of the efforts of those who, through their honest work, strengthen not only the Mexican economy but also the United States’, which is why we consider this measure to be arbitrary and unjust,” she said. 

An estimate by the Center for Latin American Monetary Studies, which is cited in the letter, found that Mexican migrant workers sent on average 16.7% of their labor income as remittances. 

“In other words, more than 80% of the income generated by this community remains in the U.S. economy,” the letter says. 

The Joint Committee on Taxation estimates, however, that the proposal would generate a little more than $1 billion in tax revenue in fiscal year 2026, and rise to about $3 billion by 2034.

In the letter to lawmakers, Barragán said the proposal would amount to double taxation, “since migrants already pay taxes in the country where they work.” 

“Imposing a tax on these transfers would disproportionately affect those with the least, without accounting for their ability to pay,” he added and also warned of other unintended consequences. 

“Many migrants might seek informal or unregulated means to do so, complicating oversight and control of these financial flows. This would not only reduce the expected revenue but also increase risks related to financial security, tax evasion and money laundering,” he wrote.

Barragán has been meeting with lawmakers in recent days and discussing the matter with them. On Tuesday, he hosted a dinner for members of Congress, including Texas Rep. Tony Gonzalez, whose district spans the length of much of the state’s border with Mexico and is home to many migrant workers. House Foreign Affairs Committee Chairman Brian Mast and Florida Rep Maria Elvira Salazar attended the dinner. 

Salazar said, when asked about the proposal, she was still assessing the legislation and who exactly it will affect, noting that banks already charge fees for such transactions. 

“I just want what’s fair, what’s just and what’s Christian,” she said. 

Separately, Barragan met with Pennsylvania Senator Dave McCormick and also discussed the remittance measure. 

Representatives for the electronic payment transfer industry also expressed concern that this proposal would harm vulnerable communities. 

“Such a measure would harm the most financially vulnerable consumers, undermine small businesses, disrupt critical financial regulations, and weaken law enforcement’s ability to combat illicit activity,” the Electronic Transactions Association wrote to Smith and Neal.

The group also added, “Taxing remittances will distort behavior and could drive consumers toward unregulated, underground channels in an effort to avoid the added cost.” 

Pete Villasmil contributed to this report.