THE REMITTANCE TAX: A NEW BORDER AGAINST MIGRANTS

This editorial by Mario Patron appeared in the May 29, 2025 edition of La Jornada, Mexico’s premier leftist daily newspaper.

A week ago, the United States House of Representatives approved the tax plan promoted by Donald Trump, which includes imposing a 3.5 percent tax on remittances leaving the country. While awaiting Senate approval of this plan—which originally contemplated a 5 percent tax— is scheduled for July 4, concerns remain about the impact this onslaught will have on migrants in the neighboring country, on remittance-receiving families in Mexico, on the economies of both countries, and on the bilateral relationship between Mexico and the United States. Remittances play a very important role in the national economy.

Since 2015, remittances from the migrant population in the United States to their families have become the country’s main source of foreign currency income, surpassing oil revenues. According to the World Bank, Mexico is the second-largest recipient of remittances in the world, and depending on the source, remittances are estimated to account for between 3.5 and 4 percent of the national GDP. Furthermore, remittance income increases annually in the country, with an average growth of 7.8 percent between 2019 and 2024, according to a BBVA study.

According to the Bank of Mexico, remittances in 2025 reached their highest level in seven years for the first quarter, with a total of $14.269 billion received. They are estimated to represent an average of 27.6 percent of quarterly household income. However, to better understand the role remittances play in our economy, it is necessary to distinguish their differential effects by region. The states that receive the most remittances in Mexico are Michoacán, Jalisco, and Guanajuato; however, to determine their specific weight, a comparison must be made based on the size of each local economy.

Accordingly, Chiapas, Guerrero, and Michoacán are the states most dependent on remittances, representing 15.9, 13.8, and 11.1 percent of the state’s GDP, respectively, according to the Bank of Mexico. A Citibanamex study highlights that remittance income is equivalent to 16.8 percent of the country’s total payroll, but in states like Chiapas, this proportion rises to 52.7 percent of the state’s payroll; Guerrero and Zacatecas follow with 50.8 and 47.7 percent, respectively. This high proportion demonstrates the importance of remittances to the family economy compared to income earned from local employment. With this brief analysis, we can anticipate that the impact of the remittance tax will not be minor.

Recently, the Ministry of Finance and Public Credit estimated that this tax measure could have a 3 percent impact on GDP. However, it is expected that the measure will not only impact Mexico but will also be felt by the United States domestic market itself. While the tax may result in fewer remittances to Mexico, it could also mean sending larger amounts to maintain the income of family members in our country and, consequently, a smaller dollar balance for residents in the United States, which will reduce spending capacity in the neighboring country.

Beyond the macroeconomic figures, attention must be paid especially to the impact on the daily dynamics of families, especially those in the most precarious situations whose subsistence depends on remittances. A report published by Amapola, an independent news outlet in Guerrero, describes how the economy of the Zotoltitlán community depends on remittances from abroad, as all families have a relative in the United States. In this community, farm work is primarily for subsistence and considered a secondary source of income, as day laborers are paid around 450 pesos per day, while day laborers in US agricultural fields are paid $18 per hour.

Cases like that of Zotoltitlán are repeated in many other parts of our territory, especially in the south. If the prohibitionist measures of the U.S. government already complicated the entry and residence of Mexicans in the U.S., now the boom resulting from migration is becoming more complex, with a considerable decline in family income. This measure is part of the growing anti-immigrant stance of the current U.S. administration, which has stigmatized migrants and placed them in a situation of great uncertainty, just as has happened with other populations and, in general, with the human rights agenda in the neighboring country.

Therefore, we need to promote a public debate to assess the true role of migration and its economic contribution to both rural and working-class families and to the achievement of large profit margins for the U.S. business sector. While the ultimate goal must be to establish conditions that guarantee that no one has to leave their territory out of necessity, this requires the fundamental defense of free movement as a human right. Properly addressing the migration crisis in our region will be achieved through international cooperation and effective public policies in communities of origin, transit, and reception of migrants, not through criminalization, prohibition, and exceptional policies, such as those that have recently become disturbingly more frequent in various countries.