Federal legislation that would boost taxes on money Mexican migrants working in the U.S. send home to families could have a major impact on New Mexico and other states.
The budget bill that recently passed the U.S. house would impose a 3.5% tax on such remittances.
The Mexico ambassador to the U.S., Esteban Moctezuma Barragán, was in Santa Fe last week for a series of meetings.
Last month he sent a letter to U.S. lawmakers asking them to reconsider the proposal.
While in town, Barragán told KSFR’s Jim Falk that the levy would unfairly impact nearly 400,000 temporary workers in the U.S.
Those are people with a legal visa that are mainly employed in the agriculture and construction industries.
"They pay their taxes here in the U.S. and if they ask for another tax when they send the money home, that's a double taxation, which is something that we believe is not fair," said Barragán.
"The other issue is that banks are going to spend a lot of money creating new administrative procedures and systems to deal with this new tax because people will have to prove citizenship."
In addition to those issues, Barragán said, is the fact that more than 80 percent of migrant income is spent in the United States.
Less than 17 percent was sent home as remittances, he wrote in the letter.
That amounted to more than $60 million moving from the U.S. in 2023 to its neighbor to the south, according to the Bank of Mexico.
Barragán said that Mexican migrants contributed more than $121 billion to the U.S. economy in 2021.
He said that additional taxes would compel migrants to use unregulated channels and would ultimately have the opposite of the bill’s intended impact.
"If you want to increase migration, cut money that is sent to those places where there is a migrant pattern. People will find new ways to send money, not to pay such a high tax," Barragán said.
The status of the budget legislation remains up in the air as GOP senators consider amending portions of the bill that would sharply reduce Medicaid and food assistance funding.
You can hear Jim Falk’s full interview with the Mexico ambassador on our website.
