Overview:
A controversial new provision taxing remittances despatched from the USA to international international locations is about to take impact early subsequent 12 months as a technique to curb undocumented immigration. Haitian American communities concern the measure may harm households depending on remittances.
Tucked between traces of authorized jargon in President Donald Trump’s sweeping new “One Massive Stunning Invoice Act” signed into legislation on the Fourth of July, is a provision with outsized affect on immigrant households: a 1% tax on worldwide cash transfers from the USA. Billed as a measure to curb undocumented immigration, the tax has sparked alarm throughout diaspora communities—particularly amongst Haitians, who depend on remittances as a lifeline for family members again house
Based on researchers on the Heart for World Improvement, the tax is prone to affect primarily Mexico, some middle-income international locations like China and India, and Latin American international locations, together with Haiti.
“[The] tax can be prone to scale back remittances despatched via formal channels (equivalent to banks and cash switch operators like Western Union by lowering the quantity despatched, as a portion is diverted in direction of the tax; and by discouraging remittances altogether,” commented in a weblog post on the tax.
Initially proposed as a 5% tax, the speed was decreased to three.5% within the Home model and additional to 1% within the Senate draft. The tax applies primarily to cash-based transfers, equivalent to these made with cash orders or cashier’s checks, whereas transfers via U.S. banks or with U.S.-issued debit or bank cards are exempt. Earlier variations of the provisions referred to as for senders who’re U.S. residents to be exempt from the tax — a measure that has since been eliminated due to implementation problems.
Remittances make up roughly 17 % of Haiti’s GDP, with greater than $3.4 billion despatched yearly to the nation, primarily from the USA.
Remittances from the U.S., particularly, make up the majority of the cash transfers. Of each $10 remitted to Haiti in 2020, a minimum of $8 got here from the U.S., in accordance with the authors of an Inter-American Dialogue report, State Collapse and the Protection of Remittance Payments: Haiti in 2024, mentioned.
“I nonetheless should pay my worker, there’s not a lot I can do different than simply settle for it,” Pierre Paul, an Amazon warehouse employee primarily based in Connecticut who sends remittances to Haiti, mentioned in regards to the tax within the new invoice.
Paul owns a Moncash workplace, a monetary providers platform, in Delmas 33 and sends $120 per 30 days to his worker through Remitly or Western Union.
“If it’s one %, it’s going to have a slight affect. The affect would have felt extra if it was six %,” Paul, 40, continued.
“What can I do? I should ship the cash anyway—my household wants it,” mentioned a girl at a CAM Switch location on the nook of Flatbush and Newkirk Avenue in Brooklyn, New York who selected to stay nameless resulting from privateness considerations.
“I’ll simply should pay the price. He’s the boss, the president.”
A double tax for Haitians
After years of sending cash to Haiti from the USA, a bunch of Haitians residing within the U.S. had been the lead plaintiffs in a lawsuit towards former president Michel Martelly, Western Union, and others over a $1.50 price on all worldwide transfers — whether or not money or digital — to Haiti.
The transfer sparked condemnation from advocates, officers and personal residents alike, calling the price an unofficial tax on the diaspora with out parliament’s approval.
The case, filed in 2018 within the U.S. District Court docket for the Japanese District of New York, accused Martelly, Western Union, CAM, Unibank, Digicel Haiti, and others of conspiring to impose charges on cash transfers and cellphone calls, allegedly beneath the guise of funding schooling in Haiti. Nonetheless, in accordance with courtroom paperwork obtained earlier this 12 months by The Haitian Occasions, a federal decide dismissed the case in June 2023, citing an absence of proof to help the claims of price-fixing or monetary mismanagement.
With the $1.50 switch nonetheless in place, Haitians are successfully dealing with a double tax on remittances, making it costlier to ship cash to family members again house.
Critics warn that the tax might push extra remittance actions into casual channels, making them tougher to trace and probably lowering the general circulate of funds to international locations like Haiti.
“They know Haitians care deeply for his or her households—they’re enjoying on our feelings to earn more money,” mentioned a person at a CAM Switch location on Flatbush Avenue, who additionally selected to remain nameless resulting from privateness considerations. He had simply despatched $800 to 2 relations and mentioned he wires cash a number of instances a month.
“For folks sending bigger quantities, this tax would possibly make them in the reduction of. If somebody sends 4 instances a month, possibly now they’ll solely ship three,” mentioned a clerk at one other CAM Switch location in Flatbush, Brooklyn, who requested anonymity resulting from job-related privateness considerations..
The availability is about to take impact on Jan. 1, 2026.
Onz Chery contributed to this report.