Report on the U.S. “One Big Beautiful Bill” and its Implications for Sustainable Development Goals

Executive Summary

A proposed United States legislative act, titled the “One Big Beautiful Bill,” presents significant implications for Non-Resident Indians (NRIs) and the advancement of several United Nations Sustainable Development Goals (SDGs). While the bill aims to strengthen institutional integrity through stricter tax enforcement, its proposed remittance tax directly conflicts with global efforts to reduce poverty and inequality. This report analyzes the bill’s key provisions through the lens of the SDGs, focusing on the potential impacts on financial flows, economic development, and institutional governance.

Analysis of Proposed Remittance Tax and its Impact on SDGs

The bill’s proposal for a 1% excise tax on cash-based money transfers from the U.S. poses a direct challenge to the principles underpinning multiple SDGs. Remittances are a critical financial lifeline for millions in developing nations, including India.

Conflict with SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities)

• Remittances serve as a primary mechanism for poverty alleviation, directly supporting household income and consumption in recipient countries.
• The proposed tax would increase the cost of sending funds, thereby reducing the net amount received by families and potentially undermining progress on SDG 1.
• By imposing an additional financial burden on migrant workers supporting their families, the measure could exacerbate economic disparities, running counter to the objective of SDG 10 to reduce inequality within and among countries.

Ramifications for SDG 8 (Decent Work and Economic Growth) and SDG 11 (Sustainable Cities and Communities)

• The increased cost of remittances may compel NRIs to alter their financial strategies, potentially reducing the volume and frequency of funds transferred for family support and investment.
• As noted by financial experts, this could lead to delays or restructuring of major investments, such as property purchases and local development projects, which are vital for stimulating local economic growth (SDG 8).
• A decline in these investment flows could negatively affect the development of sustainable and resilient communities in India, impacting progress toward SDG 11.

Implications for Institutional Integrity and Financial Compliance

While certain provisions of the bill challenge development goals, others align with the objective of building strong and transparent institutions.

Alignment with SDG 16 (Peace, Justice and Strong Institutions)

• The bill emphasizes stricter enforcement of existing financial regulations, including the Foreign Account Tax Compliance Act (FATCA) and Foreign Bank Account Report (FBAR).
• By allocating more resources to the IRS and increasing penalties for non-compliance, the legislation aims to enhance tax transparency and accountability.
• These measures support the targets of SDG 16, particularly the goal of reducing illicit financial flows and building effective, accountable institutions at all levels.
• It is important to note that the bill does not change the fundamental reporting requirements for foreign income or assets but rather strengthens the enforcement environment.

Summary of Provisions and Strategic Recommendations

Key Unchanged Provisions

1. Global Income Taxation: The U.S. policy of taxing citizens and residents on their worldwide income, including rental income from Indian properties, remains unchanged.
2. Capital Gains: The tax treatment of capital gains from the sale of overseas property is not modified by the bill.
3. Double Taxation: The ability to claim foreign tax credits to prevent double taxation on income earned in India is preserved.

Recommendations for Stakeholders

1. Monitor the legislative progress of the bill to anticipate final implementation details.
2. Evaluate remittance methods, as bank or card-funded transfers may be exempt from the proposed tax, offering a more cost-effective channel that aligns with development-friendly financial practices.
3. Ensure meticulous compliance with all FATCA and FBAR reporting obligations to mitigate risks associated with the heightened enforcement environment.
4. Seek professional guidance to navigate the evolving cross-border financial regulations in a manner that protects personal assets while remaining conscious of broader sustainable development impacts.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 10: Reduced Inequalities

  The article’s central theme is the proposed U.S. tax on remittances, which directly impacts financial flows between a developed country (U.S.) and a developing country (India). This policy affects migrant workers (NRIs) and their ability to send money home, which is a key issue in reducing global inequalities.

• SDG 17: Partnerships for the Goals

  This goal is relevant as the article discusses international financial systems and cooperation. It touches upon mobilizing financial resources for developing countries (through remittances), international tax compliance (FATCA, FBAR), and policies that can either facilitate or hinder cross-border financial flows.

• SDG 1: No Poverty

  Remittances are a critical lifeline for many families in developing countries, contributing to poverty alleviation. The article notes that funds are sent for “family support.” An increase in the cost of sending these funds could negatively impact household incomes in India, connecting the issue to the broader goal of ending poverty.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 10.c: By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent.

  The article directly addresses this target by discussing the “proposed 1% remittance excise tax on cash-based money transfers.” This tax would increase, not reduce, the transaction costs of remittances, running counter to the objective of Target 10.c. The text explicitly states this “could increase the cost of sending funds home.”

• Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection.

  This target is connected to the article’s discussion on the “stricter enforcement” of tax laws. The mention of the “Foreign Account Tax Compliance Act (FATCA),” “Foreign Bank Account Report (FBAR),” “higher penalties for non-compliance,” and “stronger international data-sharing mechanisms” all point to efforts to strengthen tax compliance and revenue collection through international cooperation, which is a core component of this target.

• Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.

  Remittances are a significant source of private financial flows to developing countries. The article highlights that the proposed tax could impact these flows, as NRIs “may be compelled to reassess their remittance strategies — both in terms of amount and frequency — whether for family support or investments in India.” This directly relates to the mobilization of financial resources for India from its diaspora in the U.S.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 10.c.1: Remittance costs as a proportion of the amount remitted.

  The article provides a specific data point for this indicator by mentioning the “proposed 1% remittance excise tax.” This figure is a direct measure of an added cost to remittances, which can be used to track changes in the overall cost as a proportion of the amount sent.

• Implied Indicator for Target 17.1: Effectiveness of tax compliance mechanisms.

  While a specific indicator number is not mentioned, the article implies its measurement. The discussion of “stricter enforcement,” “higher penalties for non-compliance,” and “stronger international data-sharing mechanisms” suggests that progress is measured by the effectiveness and stringency of the compliance environment for reporting foreign income and assets under regulations like FATCA and FBAR.

• Implied Indicator for Target 17.3: Volume of remittances.

  The article implies that the volume of financial flows is a key metric. It states that the proposed tax could force NRIs to “reassess their remittance strategies — both in terms of amount and frequency.” This suggests that the total amount and number of remittance transactions are key indicators for measuring the mobilization of financial resources from the diaspora.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators’ to present the findings from analyzing the article.

Source: legal.economictimes.indiatimes.com