How Immigrants Will Help Fund Trump’s Tax Cuts

1. How Immigrants Will Help Fund Trump’s Tax Cuts

WASHINGTON—To help cover the cost of their marquee tax-and-spending package, Republicans have turned to a community President Trump has often targeted: immigrants.

PREMIUM Rep. Sylvia Garcia (D., Texas) at a June Washington event marking the 13th anniversary of the Deferred Action for Childhood Arrivals program.

The package, which is heading to Trump’s desk, includes new fees on immigrants navigating the legal process, and cutting legal immigrants out of certain federal safety-net programs. The Wall Street Journal estimates that immigrants—including those who are in the U.S. legally—will be paying in some way for at least $64 billion of the package through 2034. That helps fund new tax cuts and Trump’s mass-deportation pledge.

Here are five ways the bill focuses on immigrants for savings:

The bill will make U.S. citizen children whose parents are without legal status ineligible for the child tax credit, an annual break for families to help defray the cost of raising children. Republicans argue that the exclusion is necessary to ensure government money doesn’t land in the hands of immigrants in the country illegally—even if their children were born in the U.S.

The change is estimated to make 2.6 million children ineligible for the $2,200 annual credit.

For the first time, Congress is putting a tax on remittances, the payments immigrants send to family or friends in their home countries. Those payments will be taxed at 1%—down from as high as 5% in an earlier version of the bill—and the new tax is estimated to generate more than $9 billion. (The tax applies to remittance transfers in which the sender uses cash, a money order, a cashier’s check or any “similar physical instrument.”)

The effect of the tax isn’t fully known. It could cause immigrants to use other, possibly illicit methods to transfer their money to avoid the new levy. It could also have a meaningful impact on the gross domestic products of several Central American nations such as Guatemala, El Salvador and Honduras, where remittances make up a significant portion of those countries’ annual income.

Republicans are making several classes of legal immigrants, including refugees and immigrants who won their asylum cases, ineligible for programs including Medicare, Medicaid and food stamps. Those savings tally more than $60 billion, and make up a significant chunk of the party’s cuts to those groups.

Federal agents in the hallway of an immigration court in New York City last month.

Refugees—immigrants whom the U.S. government has decided to resettle from abroad—have typically been eligible for safety-net programs because lawmakers understood they likely would be resettling in the U.S. with little to no money.

Visa holders, along with a host of other immigrants, will now be prohibited from buying insurance through the Affordable Care Act, often called Obamacare. (Young immigrants under the Deferred Action for Childhood Arrivals program, or DACA, will no longer be eligible for subsidies through the ACA.)

Under the bill, the U.S. for the first time will charge immigrants $100 to apply for asylum, making the U.S. one of the few countries to affix a price tag to asking for humanitarian protection. Asylum seekers will also be required to pay $100 for each year they wait in an asylum backlog, as well as $550 each year to renew a work permit. (Currently, asylum seekers pay a lower fee for a two-year work permit or longer.) In addition, should asylum seekers want to appeal a denial, it will cost them $900 to have an appeals body review their claims—an increase from an existing $110 fee.

Separately, anyone issued a temporary visa, such as a tourist, student or work visa, will be required to pay a new $250 “visa integrity fee” in addition to existing fees for respective visa categories. Many of these fees are written as minimums, meaning Trump or any future administration could jack them up even higher.

Fees related to asylum seekers are expected to pull in at least $1.2 billion over the next 10 years.

It is already considered a federal misdemeanor to cross the border into the U.S. illegally, but the bill will also now require immigrants caught to pay a $5,000, nonwaivable fee—money many immigrants likely won’t have. It also creates a $5,000 fee for those ordered deported at court hearings they don’t attend, who are later arrested by U.S. Immigration and Customs Enforcement.

The fees are intended to give the government new ways to bring criminal charges against immigrants, if they fail to pay these mandatory fees. Those two fees are expected to generate $146 million through roughly the next decade.

Methodology

The Wall Street Journal identified sections of the tax-and-spending measure—called the “one big, beautiful bill”—that was passed by the Senate on Tuesday. (The House passed the measure Thursday, and the president was expected to sign it into law Friday.) The Journal added up five- and 10-year estimates from those provisions two ways: first, how much the government would save by making cuts to social programs; and second, by how much the government would rake in from new fees. The numbers came from Congressional Budget Office estimates and the Joint Committee on Taxation. In most cases, the Journal examined savings in direct spending for benefit cuts and revenue figures from newly imposed fees. The Journal didn’t include fees that already exist but are being increased.

Write to Michelle Hackman at michelle.hackman@wsj.com and Jack Gillum at jack.gillum@wsj.com