Every month, Martha, a young mother of three from Omoa in Northern Honduras, struggles to make ends meet as job opportunities in her region are sparse. With opportunities running out, her husband Jery migrated to the United States for work, so that he could send money to his family back home. These payments, known as remittances, aren’t luxury—they are food, clothing, and health care.
To the average American, this story is reduced to one statistic among millions, a simple figure on a screen. The media dehumanizes and glosses over the struggles immigrants face every single day. However, to immigrants, even the most basic ‘everyday’ policies can be the difference between life and death.
Senate Bill 3516 is a clear example of this statement. It threatens the lifeline that Martha and millions of others require.
** S.3516 imposes a 10% tax on money sent abroad, reimburses U.S. citizens for that tax through the IRS, and imposes massive fines, prison sentences, and even diplomatic penalties on anyone who tries to avoid paying it.
This article focuses on three main clauses of S.3516.
(1) If the designated recipient of a remittance transfer is located outside of the United States, a remittance transfer provider shall collect from the sender of such remittance transfer a remittance transfer fee equal to 10 percent of the United States dollar amount to be transferred.
(2) In the case of any individual who is a citizen of the United States, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the aggregate amount of remittance transfer fees paid by such individual under section 920(g) of the Electronic Fund Transfer Act (15 U.S.C. 1693o–1(g)) during such taxable years.
(3) Whoever, with the intent to evade a remittance transfer fee to be collected in accordance with this subsection…(i) shall be subject to a penalty of not more than the greater of— (I) $500,000; or (II) twice the value of the funds involved in such remittance transfer; (ii) imprisonment for not more than 20 years; or (iii) both penalties set forth in clauses (i) and (ii). Any foreign country that, in the joint determination of the Secretary of Homeland Security, the Secretary of the Treasury, and the Secretary of State, aids or harbors an individual conspiring to avoid the fee collected in accordance with this subsection shall be ineligible, in the discretion of the Secretaries described in this subparagraph—(i) to receive United States foreign assistance; or (ii) to participate in the visa waiver program under section 217 of the Immigration and Nationality Act (8 U.S.C. 1187) or any other immigration program; and (3) in subsection (h)(2), as redesignated—(A) in subparagraph (A), by striking “and” at the end; (B) in subparagraph (B), by adding “and” at the end; and (C) by adding at the end the following: (C) for purposes of applying the fee required under subsection (g)(1), does not include payments for valuable consideration.
The 10% Remittance Tax
The U.S. is one of the world’s largest sources of remittance outflows, sending an estimated $100 billion to low- and middle-income countries. In countries such as El Salvador, Honduras, and Guatemala, remittances account for 20-30% of GDP.
For context, the World Bank reports that the average remittance from the U.S. to Latin America is around $300-400 per month and often represents 60% of these families’ incomes. The 10% tax proposed would take almost 30-40 dollars out of the monthly payments that immigrants need.
Even if we consider a smaller tax of one percent on remittances, as proposed in Congressional bills H.R. 1813 (2017) or H.R. 8566 (2022), the economic effects were detrimental. Nearly one-quarter of senders would abandon regulated transfer systems, resulting in annual remittance flows of almost $1.5 billion in lost revenue.
Unlike income taxes, this fee is imposed regardless of ability to pay, making it inherently regressive. This is especially true given the share of immigrants in lower tax brackets, with roughly 35 percent making under two-thirds of the median wage. This disproportionately burdens low-income immigrants while remaining negligible to wealthier senders.
In fact, contrary to the purpose of border security policies, taxes increase the use of non-transparent, informal monetary flows. As one development research lab warns:
When flows go underground, oversight disappears. Anti-money laundering and counter terrorism efforts weaken. Illicit actors blend in more easily. The result: a less transparent, less secure financial system, all for marginal revenue gains.
Two-Sided Tax Credits
The tax credit in S.3516 creates a two-tier system in which U.S. citizens can recover remittance fees through a tax code, while non-U.S. citizens cannot. Since recovering remittance fees requires both citizenship and sufficient tax liability, the people who are likely to get reimbursed are high-income Americans.
The immigrants who sent remittances, roughly ~54%, were not naturalized citizens. Most were poorly educated and low-income. This creates a paradox: the burden falls almost entirely on those least able to afford it, while those with the most resources face no net cost at all.
The credit mechanism reveals the bill’s true purpose. If border security were the genuine concern, there would not be any tax credit at all. Selective reimbursement exists as a way to penalize immigrants, not to achieve legitimate policy goals.
The Draconian Punishments
The third clause of the bill is very clear in delineating the consequences of failing to pay the remittance fee: an exorbitantly expensive fine, potentially coupled with a decades-long prison sentence. These provisions place extraordinary amounts of risk on immigrants attempting to support their families abroad, framing remittances as potential high-stakes crimes.
Relative to other financial infractions, the penalties surrounding S.3516 are extreme. Ordinary violations are often handled through far more modest civil penalties, putting fee evasion on par with, if not higher than, offenses like large-scale fraud.
The forcing of disproportionate punishments on those who can least afford to bear them reveals an enforcement regime both vindictive and unfair. This regime, when almost exclusively applied to the most impoverished of immigrants, becomes a weapon of oppression against vulnerable communities.
Even then, the second part of S.3516’s third clause adds a layer of international ramifications, threatening to withhold American assistance and visa privileges to countries suspected of aiding individuals evading the fee. Turning domestic fee enforcement into a method of leverage is a tactic not without precedent—prior application, however, ended with a litany of diplomatic consequences.
S.3516, while popularly advertised as a tool to fund border security, ultimately imposes disproportionate burdens on the most vulnerable of populations. Its 10% tax on remittances gives rise to a unique two-tiered structure that favors high-income citizens, while low-income immigrants are forced to bear the brunt of the burden. The bill’s draconian enforcement strategies, administering disproportional punishments to those who fail to pay the tax while threatening foreign countries to “play along,” create a regime of fear and control.
Rather than achieving any meaningful security or policy goals, the bill exemplifies a pattern of prioritizing public spectacle over practicality or humanitarianism, featuring dramatic changes and enforcement measures with minimal evidence that it will accomplish its promised objectives.
Behind the bill of S.3516, migration is not managed; it is monetized.
