WHY TRUMP IS WEAPONISING REMITTANCES

Donald Trump’s One Big Beautiful Bill’ has a not-so-beautiful clause for Indians in the US, proposing a 3.5% tax on remittances sent abroad, which could add to the financial burden of millions of Indian diaspora members supporting families back home

- DIPAK MONDAL

DONALD Trump has shaken many a boat with his quirky policy making in a short span of his second term as US president. He plays to the gallery and targets everyone he and his voters think comes in the way of the Make America Great Again (MAGA) dream.

His primary nemesis to his MAGA dream is the 'illegal' immigrants, who he famously said are 'poisoning the blood of our country'.

No wonder, the redrafting of the 2017 legacy Tax and Jobs Cut Act (TJCA) - curiously named One Big Beautiful Bill - had a whole chapter on 'Removing Taxpayer Benefits for Illegal Immigrants'.

The bill seeks to, among other things, levy an excise tax of 3.5% on remittance transfers. Originally, the bill had envisaged a 5% tax on outward remittances, but later reduced to 3.5% through an amendment at the time of its passage in parliament. The new tax, which comes into effect from 1 January 2026, applies to green card holders or other individuals, who are on other nonimmigrant visas in the US.

"By exempting only US citizens and nationals making remittance through qualified remittance transfer provider, the proposal disproportionately affects millions of lawful immigrants including green card holders, work visa holders, and non-resident aliens, many of whom maintain ongoing financial obligations in their home countries," says Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP.

Immigration: The US story

The new levy is part of the Trump administration's larger goal of cracking down on immigrants illegal or otherwise. Trump has data 'in his favour' to back his anti-immigrant stance. Pew Research puts the US foreign-born population at 47.8 million in 2023, which is an increase of 1.6 million from the previous year.

According to it, immigrants account for 14.3% of the US population, a roughly threefold increase from 4.7% in 1970.