House Republicans have introduced a tax proposal extending the 2017 rates through 2032 while imposing a 5% tax on remittances from non-citizen workers. If implemented, this legislation could add approximately $36.2 trillion to the national debt over the next decade and disrupt the remittance process used by millions.

Highlights of the Proposal

• Tax Rate Extension: Existing individual and corporate tax rates would continue through 2032, aiming to boost consumer spending.

• Deduction Changes: Some state and local tax deductions will be phased out for wealthier individuals.

• New Remittance Tax: A 5% levy on transfers from non-U.S. citizens, requiring annual claims for reimbursement of any excess payments.

Details about the Remittance Tax

• Applicability: Only applies to senders without citizenship verification.

• Tax Calculation: Based on the total remittance value.

• Compliance Burdens: Money transfer companies will face enhanced verification demands.

Debt and Market Outlook

While there’s debate about tax cuts, this proposal could lead to significant debt growth, raising borrowing costs and increasing volatility in the financial markets.

Real-World Implications

• Western Union: May experience a net margin decline due to compliance costs.

• Remitly: Younger customers may resist the recovery process, impacting growth.

Key Legislative Timeline and Market Signals

• House Vote: Expected by May 26, 2025.

• Senate Amendments: Anticipate adjustments to revenue projections.

• Final Reconciliation: A joint committee will finalize differences before enactment.

Keeping tabs on legislative actions will be essential to understanding potential market shifts.