Tucked deep within former President Trump’s sweeping spending bill lies a proposed 3.5% tax on remittances — a move experts warn could have devastating consequences for global economies and American communities alike.

In a June 6 media briefing hosted by American Community Media, leading scholars and advocates dissected the implications of the plan, arguing that taxing remittances would destabilize low-income countries, endanger immigrants, and even backfire on U.S. interests.

“Remittances have been a lifeline for migrants and sending communities for decades,” said Ariel Ruiz Soto, senior policy analyst at the Migration Policy Institute. “Any disruptions — short-term or long-term — will have a disparate impact not only on the migrants and their families but on their communities and cities here in the U.S.”

Ruiz Soto pointed out that countries like Mexico and Guatemala rely heavily on remittances for essentials like food, healthcare, and education. “In places like Guatemala, remittances make up around 20% of GDP. If this money disappears, families suffer — and ironically, it may spur the very migration the Trump administration wants to curb,” he said.

Helen Dempster of the Center for Global Development provided sobering data. “In 2023, remittances made up 41% of Tonga’s GDP, 39% in Tajikistan, and over 26% in Honduras,” she explained. “This tax could cause a 5.6% drop in remittance flows — for countries like El Salvador and Liberia, that’s a double blow when combined with recent foreign aid cuts.”

The plan also raises questions about legality and data privacy. Dr. Manuel Orozco, Director at the Inter-American Dialogue, cautioned that requiring remittance agencies to verify a sender’s citizenship status opens the door to surveillance and fraud.

“There is not a single private entity in the U.S. authorized to collect information about your citizenship status,” Orozco said. “This policy would create national security vulnerabilities, and possibly expose both immigrants and U.S. citizens to identity theft.”

Beyond the economic and security risks, Ana Valdez, President and CEO of the Latino Donor Collaborative, emphasized the moral failure of such a tax. “It’s a penalty on the American Dream,” she said. “Immigrants are buyers, builders, and economic contributors. Taxing them for supporting their families is both economically indefensible and morally wrong.”

Valdez also highlighted the ripple effects already taking shape. “Banks like Wells Fargo and Bank of America are reporting increased cash withdrawals by immigrants,” she said. “This fear is already affecting our economy — and the tax hasn’t even passed yet.”

As the bill awaits Senate review, experts urged the public and lawmakers to take notice.

“More than half of the legislators didn’t even read this amendment,” Orozco warned. “We need education, not fear-based policy.”