House of Representatives Approves Bill of 3.5% Tax on Remittances

The US House of Representatives has approved a bill that includes a 3.5% tax on remittances sent by foreign residents to their countries of origin. The measure represents a reduction from the initial proposal, which sought a 5% rate. The bill, part of a broader fiscal package championed by Donald Trump, will now proceed to the Senate, where it is expected to be debated by the Republican majority with the aim of securing final approval before July 4.

Trump has referred to the legislation as “the Big, Beautiful Bill.” It passed the House with a slim 215–214 majority after an intense overnight session. Conservative Republican lawmakers, who initially opposed to the bill due to concerns over the rising federal deficit, held several meetings with the White House before reaching a compromise.

The bill’s inclusion of the remittance tax has triggered concerns from various sectors. In Mexico, the Mexican Institute of Finance Executives (IMEF) warned that such a measure could negatively impact the state-level GDP in regions heavily reliant on remittances. Critics argue that this tax could push money transfers into informal or illegal markets, potentially opening new opportunities for organized crime groups.

Aside from the remittance tax, the bill contains several contentious provisions. It extends Trump-era tax breaks and introduces new exemptions, including those related to tips and purchases of vehicles manufactured in the United States. It increases funding for border management and enforces stricter immigration policies. The legislation also proposes cuts to food assistance programs and healthcare initiatives like Medicaid and Medicare. Another element involves raising the cap on deductions for state and local taxes, a sticking point in negotiations among lawmakers.

According to estimates from the Congressional Budget Office (CBO), the bill would add US$2.4 trillion to the national debt over the next decade, which is already above US$36 trillion. To balance this spending, the bill seeks to reduce funding for social programs by more than US$1 trillion over the same period. Analysts have warned that the legislation could impose cuts of roughly US$500 billion on Medicare, raising concerns about its long-term sustainability. Furthermore, the CBO projects that around 8.7 million people could lose Medicaid coverage if the bill becomes law.

Trump and House Speaker Mike Johnson have defended the proposed cuts by stating they are intended to eliminate benefits for undocumented immigrants exploiting the system. However, the Medicaid restrictions have fueled internal divisions within the Republican Party. Conservative members have pushed for more immediate and aggressive cuts, while moderates have expressed unease over how the changes might affect their districts. These disagreements nearly delayed the bill's approval, prompting Trump to meet personally with hesitant legislators at the Capitol and later invite them to the White House. After hours of negotiation, undecided members eventually shifted their votes in favor of the bill.