This week, the House Ways and Means Committee released the text of its proposed tax plan. If you go to page 327 of the document that dubs itself “the one, big, beautiful bill,” you’ll see that it imposes a 5% tax on remittance transfers.

These are electronic transfers of money sent by people in the U.S. — often immigrants — to others abroad. There are some exceptions to the tax, including most transfers made by U.S. citizens.

In 2023, people in the U.S. sent a total of $93 billion in remittances to people in countries around the world, according to the World Bank.

That money goes to help friends and family pay for basic needs like food and clothing, per Paul M. Vaaler, a professor of law and business at the University of Minnesota. It also funds entrepreneurial ventures.

“They may use it to buy a pickup truck, and that pickup truck helps run the farm during the day, but then it becomes a taxi at night,” Vaaler said.

If a federal tax on remittances takes effect, it could drive those transactions underground, said Rice University research scholar José Iván Rodríguez-Sánchez.

“There's going to be a black market,” he said. “We know that if you have to send money for your relatives and they need that money, you will try to find ways to send $100 and not $95.”

A remittance tax is also not likely to get an enthusiastic response from institutions that are part of the legitimate market, Vaaler added.

If the tax goes through, banks and money transfer companies could see fewer transfers — and fewer transaction fees.