Proposed remittance tax would disrupt money flows from the Bay Area to Latin America

Not yet subscribed? Click here to sign up for our weekly emails. 

The Weekly Dispatch

Community-powered immigration news from the Bay Area.

---

Welcome to El Tímpano’s Weekly Dispatch. I’m Erica Hellerstein, senior immigration, labor and economics reporter.

While the past several weeks have been dominated by headlines about protests, ICE raids, and immigration court arrests, today’s edition turns to an issue that’s flown under the radar — but could deal a major blow to Latin American economies and the loved ones of many immigrant communities in the U.S.

Tucked deep inside House Republicans’ sweeping tax and spending bill is a provision that, if approved, would impose a 3.5% tax on money sent from immigrants in the U.S. to other countries.

These transfers — known as remittances — play a critical role in the global economy.  According to the World Bank, remittances totaled $656 billion globally in 2023, roughly equivalent to the GDP of Belgium. The U.S. was the single largest source of these funds, with $93 billion sent abroad last year.

The economies of many immigrants’ countries of origin depend on this flow of money. Mexico received around $66 billion in remittances in 2023 — second only to India. Guatemala brought in $19 billion, and El Salvador and Honduras each received about $8 billion. In El Salvador, remittances made up a staggering 20% of the country’s GDP, according to UCLA’s North American Integration and Development Center.

The proposed tax would divert hundreds of millions of dollars from countries that rely on these transfers — impacting local economies and the families who depend on them. Mexico is projected to be hit hardest, losing an estimated $2.6 billion annually under the 3.5% levy, according to the Center for Global Development. Guatemala could lose nearly $700 million. Those losses translate to real consequences for households — and have sparked fears, including from Mexico’s president, that the tax could deepen financial instability and drive more migration to the U.S.

These concerns are far from abstract. Many Latino and Mayan immigrants in the Bay Area regularly send money home to family in Mexico and Central America. If the tax goes through, they’ll feel the effects firsthand — and so will their relatives. Nearly two dozen newsletter readers polled via SMS said they send remittances to Mexico; six said they send money to Honduras; two to El Salvador; and two to Peru.

“I’m sending money to Mexico to pay my mom’s rent,” one subscriber in the East Bay told us via SMS. “I’m worried about the tax because I don’t know if that would decrease the amount I can send.” Another community member said their mother in Guatemala uses the funds to buy medicine for her illness. “Horrible,” added an immigrant who sends money to El Salvador. “It will be harder to help families.”

Please give our Ear to the Ground section a read to hear directly from Bay Area immigrants about how such a tax could impact themselves and their family members living abroad.

PS – For the next few weeks, I’ll be on leave and my colleague Ximena Loeza will be taking over. You’ll see me back in your inboxes in late July!

Ear to the Ground

El Tímpano’s text messaging (SMS) service reaches 6,000 Spanish-speaking immigrants across the Bay Area. We asked our subscribers if they send money to loved ones outside the U.S. and how a tax on remittances might affect them. Here are a few of their responses:

Sometimes I send remittances to my sister in Guatemala for my mother’s health, since she suffers from diabetes and is elderly.

Sí, a veces mando remesas a mi hermana en Guatemala para la salud de mi madre, ya que ella sufre de diabetes y ya es mayor de edad.

–Berkeley resident 

Yes, remittances are sent to Mexico, and with this tax, I would be forced to send less to my relatives.

Sí, se envían remesas a México y con este impuesto me vería obligado a enviar menos a mis familiares.

–Hayward resident 

I sent [remittances] to Mexico and it would affect me because I have to send money to my parents every 15 days since they are elderly and they depend on what I send them.

Yo envió [remesas] a México y me afectaría porque tengo que enviarle dinero a mis papás cada 15 días ya que ellos son personas de la tercera edad y dependen de lo que les envío.

–Oakland resident 

I send [remittances] to Mexico, and it would affect my economy because everything is increasingly more expensive and my husband has been out of work since December 3, so I would no longer send with the same frequency.

Yo envío [remesas] a México, y afectaría mi economía porque cada vez está todo más caro y mi esposo está sin trabajo desde el 3 de diciembre, entonces ya no enviaría con la misma frecuencia.

–Oakland resident 

Yes, I send [remittances] to Guatemala. My family there will not have the same income they expect.

Sí envío [remesas] a Guatemala. Mi familia allá no tendrá los mismos ingresos que esperan.

–Oakland resident 

Copyright © 2025 El Tímpano, All rights reserved.
You are receiving this email because you expressed your interest, online or in person, to receive updates from El Tímpano.

Our mailing address is:

El Tímpano

P.O. Box 420442

San Francisco, CA 94142