Trump's remittance tax aims to slow illegal immigration by targeting the money flow
A remittance is a money transfer to another country outside the U.S., which is a common practice among immigrant workers who send part of their wages back to family in their native countries. Tens of billions of dollars in remittances are sent to other countries from the U.S. every year.
Earlier versions of the bill included higher tax rates and specifically targeted illegal immigrants sending money outside the U.S. The current version of the "big, beautiful bill," however, imposes a 1% fee only on cash transfers, not electronic transfers, sent to other countries. U.S. citizens who want to send cash to other countries will also be subject to the 1% tax.
The tax is expected to generate $10 billion in extra revenue for the federal government, according to an estimate done by Politico.
Besides generating extra revenue, Lora Ries, director of the Border Security and Immigration Center at The Heritage Foundation, told Fox News Digital that the remittance tax has the potential to discourage illegal immigration into the U.S. by making it harder to send money back home.
"Illegal aliens generally want five things when coming to the U.S.: to enter, to remain here, work, send money home (remittances), and bring family and/or have children here," she explained. "Prevent those five things, and you prevent illegal immigration and encourage self-deportation."
The administration has been pushing hard for illegal immigrants to self-deport, incentivizing them by offering to front the cost of commercial flights and providing a $1,000 stipend to those who opt to self-deport. Ries said the remittance tax could be another effective strategy besides ICE raids that could help to crack down on illegal immigration into the country and reduce the number of illegal immigrants in the U.S.
Ries said, however, that the 1% needs to be much higher to be effective.
"A 1% tax only on cash transfers does very little. The tax should be much higher and cover all types of money transfers," she said.
"Until now, the U.S. government has not touched the annual billions of dollars going out of the country, not benefiting the U.S. economy," she went on. "Remittances should be taxed to discourage unauthorized employment and its earnings."
Meanwhile, Ariel Ruiz Soto, a senior policy analyst at the Migration Policy Institute, told Fox News Digital that though he believes the remittance tax will have a significant impact, it may not be in the way the Trump administration hopes.
He argued that discouraging remittances to countries like El Salvador, Guatemala, and Honduras — where such payments account for more than 20% of the GDP — could actually drive more migration from those nations.
"If you're Honduras, if you're El Salvador and Guatemala, even a 1% tax, if it decreases the remittances, could actually be a significant toll in the development of those countries," he said. "If the remains were actually to decrease significantly, that could potentially backfire on President Trump's agenda to reduce irregular migration because he could actually make circumstances, economic circumstances in these countries more difficult and spur new irregular immigration in the future."
The House of Representatives is currently considering the Senate's version of the "big, beautiful bill."
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Last June, Gov. Wes Moore (D) issued a blanket pardon to 100,000 people in Maryland, forgiving decades of low-level marijuana possession charges in one of the nation's most far-reaching acts of clemency. The historic act, which the governor's office said forgave 175,000 misdemeanor cannabis possession and misdemeanor drug paraphernalia convictions, was praised by criminal justice reform advocates as a symbolic but meaningful step in rectifying harm done by the failed war on drugs. The Juneteenth pardons have since become a cornerstone of Moore's political pitch as he seeks a second term as governor and raises his national profile amid speculation over a potential 2028 presidential bid. A year after the pardons — which Moore has called record setting 'both in impact and scope' — their practical impact has been limited. 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Moore's historic mass pardons were intended to right the wrong of a policy that criminalized the possession and use of marijuana and disproportionately impacted communities of color, because no one should continue to suffer the ill effects of a conviction for conduct that is no longer a crime in the State of Maryland,' Elliott said in a separate statement. On Juneteenth of this year, Moore's office announced an additional 6,938 pardons that were mistakenly omitted from the original pardons. But a Maryland Judiciary spokesperson did not respond to questions about whether those simple cannabis possession charges should have been expunged under the 2023 law or if they'll be expunged now. The governor's office said they will be hidden from the court's public online database under this year's new law. Sen. Jeff Waldstreicher (D-Montgomery), who is vice chair of the Senate Judicial Proceedings Committee and helped author the Expungement Reform Act, said the intent of that bill was to include all pardoned convictions. 'If for some reason there was an error in the drafting, the legislature will unquestionably come back and remedy that error with emergency legislation that would take effect immediately,' Waldstreicher said. 'But what we should not do is allow the complicated processes between three branches of government to obscure the moral act that the governor took.' Adrian Rocha, policy director for the Last Prisoner Project advocacy group seeking to end the harmful impacts of those convicted for offenses that are now legal, said governors often use their pardon powers only in lame duck periods. 'Here we have a first-term governor who has front loaded pardons,' said Rocha, who worked with Moore's office on securing the pardons. 'It's a very strong message about where Governor Wes Moore believes his impact exists and what he wants to do with that.' Cannabis reform has been a key issue for Moore since he took office in 2023. He has often spoken about the importance of rectifying the harms done to Black and Brown communities through mass incarceration due to drug arrests. Moore's administration created a Cannabis Workforce Development Program that provides job opportunities in that industry to people convicted of marijuana-related offenses. The administration also distributes grants and loans to small businesses entering the cannabis industry through a Cannabis Business Assistance Fund established in 2023. Long before Moore was elected governor, state lawmakers also had been chipping away at the legacy of the war on drugs in Maryland, complex work requiring the cooperation of three distinctly different and constitutionally separate branches of government: the executive, the legislature and the courts. Maryland legalized medical cannabis in 2014 and Maryland voters approved the legalization of recreational use in a 2022 ballot referendum, paving the way for lawmakers to pass the Maryland Cannabis Reform Act in 2023 — which Moore signed into law. Along the way, lawmakers prioritized the purging of court records for cannabis-related criminal charges through expungement, meaning someone with such a conviction could submit a petition to the courts requesting the permanent obliteration of all related records. An expungement is the most effective tool for clearing someone's criminal record, guaranteeing it will be purged from the three places documentation of it exists: the courthouse, the Maryland Judiciary case search database and the state's central repository, which is what gets tapped during criminal background checks. But the expungement process is also burdensome and expensive for those seeking relief, often requiring the help of a lawyer. 'These systems are complicated, they're cumbersome, there's paperwork,' said Heather Warnken, executive director of the Center for Criminal Justice Reform at the University of Baltimore School of Law. 'People who have been held back and marginalized by their convictions are facing even greater barriers to be able to engage with these systems.' Advocates have championed laws that mandate automatic expungement of certain charges. It's the only way to truly give people a clean slate and second chance, said Del. David Moon (D-Montgomery), one such advocate. Auto-expungement was a key component of the Maryland Cannabis Reform Act of 2023, which, in part, ordered the Department of Public Safety and Correctional Services to purge misdemeanor cannabis charges from the central repository. But officials from the Maryland judiciary have told lawmakers that auto-expungement is a financial and resource burden, prompting the General Assembly to instead use a method called 'shielding' in reform laws. Shielding hides criminal records from the public-facing Maryland Judiciary Case Search database — a form of relief that is simpler to achieve. But it does not include the destruction of records at the courthouse or from the central repository. Waldstreicher expressed frustration with the Maryland Judiciary for its reticence to commit to auto-expungement policies. 'The judiciary continues to plead poverty when it comes to their ability to expunge records,' Waldstreicher said. The governor's office said in a statement that administration officials chose to shield the charges the governor pardoned rather than expunging them because shielding 'provides many of the same benefits of an expungement, and does so without requiring that the individual take any action.' The governor's office added that auto-shielding was done 'using existing state resources' and 'without flooding courthouses with expungement petitions.' To completely purge their charges, those who were pardoned will still need to apply for expungement. Of the 100,000 people Moore pardoned, just 700 have taken that extra step, the judiciary said. It's not clear if those expungement applications were for the cannabis possession or paraphernalia charges. But the gap highlights the legal and administrative hurdles faced by people hoping for a clean slate in a state that disproportionately arrests and imprisons Black people Officials in Moore's office and criminal justice reform advocates said they've known since the June 2024 pardons that clemency was just the first step in a multipart plan to bring relief to those charged with acts that are no longer crimes in Maryland. Since then, the administration has worked to bring additional relief. The Maryland Expungement Reform Act expands expungement eligibility to three additional misdemeanor criminal charges: driving without a license, cashing a bad check and possession of a stolen credit card. Additional charges that were written into the original bill but later killed by lawmakers included resisting arrest, making a false statement to an officer and counterfeiting drug prescriptions, the latter of which would have given expungement eligibility to those who became addicted to opioids often originally prescribed by doctors. Most important to advocates, the new law overturns a 2022 Appellate Court of Maryland ruling that barred expungement for anyone who had violated their probation, even if the underlying charge was eligible under state law. The appeals decision originated with the case of a man, called Abhishek I. in court documents, who had pleaded guilty to low-level theft and was sentenced to probation. But he violated that probation when he was later arrested for marijuana possession, serving four days in jail. When he applied to have his theft conviction expunged a decade later, a judge denied his request, ruling that Abhishek's probation violation meant he had not satisfied the terms of his sentence and, therefore, was not eligible for expungement. Abhishek's attorneys unsuccessfully appealed the decision, with the Maryland appeals court ruling that the state's expungement laws at the time did not clearly address probation violations. The Expungement Reform Act provides that clarity by defining the satisfaction of a sentence as 'the time when a sentence has expired, including any period of probation, parole, or mandatory supervision.' Under that part of the law, which goes into effect in October of this year, a probation violation cannot automatically undermine an expungement application. Warnken called the governor's support for the Expungement Reform Act a 'game changer' that helped the Abhishek reform succeed. Aside from the Expungement Reform Act, all other expungement proposals died in committee during the most recent legislative session. Among other changes, those bills sought to make all criminal charges eligible for expungement and auto-expunge certain charges. When asked about his pardons and follow-up legislation earlier this year, Moore told reporters that he believes it is the 'responsibility' of the government to 'make sure that we're not just putting in laws that make sense in theory, but then we're also putting the supports in place to make people actually believe that redemption and efficient governance can be a reality for them as well.' 'Sometimes when you pass a really important piece of legislation or do things that I think are good, important, you still have to come back and make adjustments to make sure that it's being done correctly and being implemented properly,' the governor said. Warnken said the next frontier of cannabis reform in Maryland should include expanding relief — through pardons and legislation — for those with low-level, nonviolent criminal charges related to marijuana. 'The power of the pardon and the forgiveness is so profound and absolute, but it's not going to wipe it away from the record searches,' she said. 'These are all just steps and we have to keep going. We can't just take victory laps.' Katie Shepherd and Erin Cox contributed to this report.
