A new tax buried in President Donald Trump’s budget bill has financial privacy experts worried that the administration is trying to use financial regulations to collect people’s private information.
On the surface, it looks like a simple 3.5% tax on remittances — which is money that people send to friends or family abroad. But there’s a catch.
“They created an exemption saying that if you’re an American you don’t have to pay the tax — just prove that you’re an American,” said Nick Anthony, a policy analyst with the Libertarian-leaning Cato Institute.
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That exemption is only available to U.S. citizens — not permanent residents or immigrants with valid visas.
“You’re fundamentally seeing a divide where these two groups are treated differently,” Anthony said. “Your options are basically comply or get charged. And that creates a really concerning system moving forward.”
Anthony believes revenue collection is a secondary reason for the tax — that the higher priority for the administration might be to build a database of information about citizens who have friends or relatives outside of the country.
This isn’t the first time the Cato Institute has criticized the Trump administration for using financial regulations to increase surveillance of immigrants.
Earlier this year, Anthony wrote a report on a Trump plan to run security checks on anybody who transferred more than $200 abroad in certain zip codes near the border — including several in San Diego.
In 2024, Mexico received more than $60 billion in remittances from the United States, according to a report from the bank BBVA.
That regulation would have required people to submit their name, address, financial information and other data every time they send more than $200 to people abroad.
However, a federal judge in Texas temporarily blocked that policy after the Texas Association of Money Services Business and other groups sued the Trump administration.
Anthony called that judge’s decision a big win for financial privacy.
“This is something that was really nice to see,” he said. “The judge specifically said that [the policy] ‘overreaches’ and that it is ‘unreasonable.’ Even going so far as to say that it likely violates the Fourth Amendment.”
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