Each year, an estimated $300 billion leaves the U.S. economy in the form of remittances—money earned in the United States and sent abroad, often tax-free and untracked. According to newly uncovered IRS figures, this outflow is double the amount previously acknowledged by federal agencies and nearly five times the size of the country’s annual foreign aid budget.
“This is a silent financial hemorrhage that most Americans know nothing about,” reported Troy Smith of Slingshot News during an interview on the Stone Zone podcast. “We’ve discovered that only about $150 billion is tracked by the IRS, and even then, the oversight is minimal. The other $150 billion is essentially off the books. That’s a crisis hiding in plain sight.”
Remittances—often small amounts sent by immigrants to family members overseas—may seem harmless. But collectively, they’ve become a massive transfer of wealth that evades taxation entirely, despite being earned on American soil.
“This isn’t just someone sending $100 to an uncle in Guatemala,” Smith said. “We’re talking about an entire underground foreign aid program, created not by Congress, but by the U.S. economy—and it’s being siphoned out without a dime in taxes.”
By comparison, the United States officially allocates about $65 billion in foreign aid each year. But Mexico alone received nearly $67 billion in remittances in 2023, largely from the U.S., which now accounts for 4–5% of Mexico’s entire GDP.
“It’s stunning. These countries are building parts of their economy off American labor—and American silence,” Smith said.
At the heart of the problem is the 0% tax rate on remittances. Unlike domestic income, which is taxed at rates that often exceed 30% for the average American, money wired abroad slips through the system untouched. Smith and his team say the situation has gone unchecked for too long.
“We’re not talking about a gray area here. This is black and white,” Smith said. “The IRS barely audits these transfers. There’s no consistent tracking. The money disappears into the global ether.”
Worse still, an estimated $10 billion to $20 billion of these transfers end up in offshore tax havens such as Switzerland and the Cayman Islands, indicating that wealthy individuals are also leveraging the loophole to skirt U.S. tax laws.
“This isn’t just an immigration issue. It’s a corruption issue. It’s an elite issue,” Smith said. “It’s a system that punishes working Americans while giving a free pass to those with access and influence.”
Beyond economics, Smith warned that unchecked remittances can also become a vehicle for financing criminal or terrorist activity. “There’s no paper trail for half this money. If you wanted to move funds for cartel operations, terrorism, or hostile foreign entities, this is how you’d do it,” he said. “You’d use a broken system that nobody in Washington has the courage to fix.”
Smith pointed to past efforts by President Trump’s administration to implement a 5% tax on remittances, which was later watered down by Senate Republicans to 3.5% in the pending “Big, Beautiful Bill.”
“Even that modest proposal is now on life support,” Smith said. “There’s serious speculation that establishment Republicans, many of them multi-millionaires, will strike the tax entirely. These are the same people who balk at raising taxes on corporations but have no problem taxing working Americans.”
Smith suggested that remittance taxation could become a critical component of immigration policy, arguing that reducing the financial incentive would reduce the flow of illegal migration.
“You wouldn’t need mass deportations,” he said. “You’d just need to remove the prize at the end of the tunnel—tax the remittances. The magnet disappears.”
While the average American pays more than 33% of their income in taxes, those sending billions abroad are paying nothing, and foreign economies are booming off U.S. labor. With an estimated $150 billion vanishing from IRS oversight annually, calls for reform are growing louder.
“If we don’t act,” Smith warned, “we’re choosing to bankrupt our own economy, fund foreign governments, and shift the tax burden to the very people trying to build a life here—the American taxpayer.”