The Show-Me State Should Show That Zero Income Tax Can Work in Missouri

"Eliminate the state income tax" is one of those proposals that sounds like it fits libertarianism like a glove. Personally, I don't need much convincing that there are problems with taxing income. I wasn't exactly thrilled in 2013 when the federal income tax reached its 100th birthday. This brings us to current events. 

Tomorrow, the citizens of Missouri are voting on a ballot about whether to eliminate the state income tax. In concept, I like it. All things considered equal, I prefer a consumption tax over an income tax because it generally does lest discourage work, saving, investment, and entrepreneurship. The proposed amendment has stages to phase out the income tax while giving lawmakers a way to find ways to replace the lost revenue. However, my enthusiasm wanes when it collides with economic reality. 

The concern is not simply whether I think consumption taxes are better than income taxes. It is about what happens afterwards. State governments still have expenses, and the state income tax makes up about 69 percent of the state's discretionary revenue fund. Unless the state decides it is going to spend a whole lot less, it needs to make up that lost revenue somehow. The question is whether Missouri can generate enough consumption tax revenue without causing more problems. 

I asked a similar question last year when analyzing Mississippi's income tax elimination proposal, and noted that not every state is built the same. Florida can lean on tourism. Alaska has oil. Nevada has Las Vegas. Texas excels in energy production, has rapid population growth, and property taxes to help make up. 

Missouri certainly has a diverse economy, but what is its equivalent to Texas' energy sector or Florida's tourism sector? This doesn't mean that it is doomed to fail. But it also means that Missouri cannot copy other states and except the same results. I don't see an obvious revenue source replacing over $6 billion in revenue. Every dollar not collected through the income tax has to be replaced somehow, or not spent in the first place. That is the part where I think Missouri will have quite the uphill battle, and that is the part where I would like for them to show me how they would succeed. 

If that weren't enough, there is another challenge. Replacing income taxes with consumption taxes is not as simple as increasing the sales tax rate. Even organizations that generally favor shifting away from income taxes have warned about the difficult. 

The Tax Foundation recently examined this topic and found that replacing state income taxes is much more difficult than estimates suggest. The reason is that a realistic consumption tax base is narrower than advocates often assume. Taxing business inputs creates its own problems, which excluding them means that the tax rate may need to be substantially higher. 

The lesson is not that states should keep income taxes forever. The lesson is that tax reform requires careful design. A poorly structured consumption tax can create problems of its own. I hope Missouri succeeds in create a more economically efficient tax system because that is a goal worth pursuing. 

However, lowering or eliminating a tax is only one part of reform, much like I brought up with the Kansas tax cut experiment last decade. The state must ensure that the replacement system is sustainable, transparent, and does not create unintended consequences. So far, it has not done a good job to show me that.

Parsha Eikev: The Hedonic Treadmill According to Moses

Many Jews encounter this week's Torah portion every single day without even realizing it. The verse of Deuteronomy 8:10, "You shall eat, be satisfied, and bless the Lord your G-d for the good land that He has given you" should be familiar because it is in the Birkat HaMazon, the Grace After Meals. Not only is it part of Birkat HaMazon, but it is also the prooftext that we recite it after eating bread instead of before. 

At first glance, this verse teaches the lesson that we should pause to express gratitude after satisfying our physical needs. That is an important lesson, but reading the verse by itself risks missing Moses' larger argument. This is more than Moses establishing a liturgical obligation or table etiquette. This command gets at the relation between prosperity, memory, and gratitude.  

Several years ago, I wrote that a major sin of the Israelites was that they complained so much that they failed to recognize the blessings they had received, including being freed from slavery and being fed with manna and water in the wilderness. They dismissed them as if it were nothing. Yet here, what we see is Moses explain why gratitude is so difficult to sustain. 

Right after the directive to bless after eating comes the warning of "Beware lest you forget the Lord your G-d." Notice what Moses does not say. He does not say that wealth is inherently corruptive or that poverty is superior. Moses describes a progression that once one's homes, wealth, and possessions increase, they will slowly forget the One who made those blessings. It gets to the point where one says "My strength and the might of my hand have produced this wealth (Deuteronomy 8:17)." 

The issue is not ambition or success. It is normalizing one's blessings until they do not feel like blessings at all. Ironically enough, the greatest threat to gratitude is not hardship. It is success. 

We experience this phenomenon more often than we realize. The first home that we were once excited to buy eventually becomes just our mortgage payment. The car we couldn't wait to drive is reduced to our daily commute. The newest iPhone we wanted so badly becomes just another tool in our lives. Good health goes unnoticed until illness reminds us how precious it is. Even the people we love can become so familiar that we forget what a blessing they are before it's too late. 

This tendency is neither unique to the ancient Israelites nor is it a sin. It is part of being human. None of this is to diminish personal responsibility or achievement. If anything, it helps place them in their proper context. The challenge is making sure that good circumstances do not lead to entitlement, but to appreciation. 

This is why Judaism does not leave gratitude to chance. Jewish tradition recognizes the human tendency to forget, which is perhaps why Judaism so heavily emphasizes remembrance. Instead of hoping people will remember, Judaism builds it in the rhythm of our daily lives so we see things we might otherwise overlook. And it has to be built into daily rhythm because as Moses realized, humans forget quickly. It would explain why Jews say the Shema twice a day and Jewish men put on tefillin as often as they do. 

Jews traditionally begin the day by saying the blessing Modeh Ani in order to acknowledge the gift of another day. Throughout the day, blessings are said, so much so that the ancient rabbis said that we should aim for 100 blessing a day. It shows up when we eat food. It is a theme in Jewish holidays, such as Sukkot and Chanukah. It's even in our namesake. The word "יהודי" has the same root as "להודות", meaning to thank or to acknowledge. 

When we thank, we do not simply utter words. We realize how good reality can be. Yes, we work hard, we achieve, and we build. But we also have numerous blessings that did not come from us. Judaism reminds us that both of those truths must be held in order to understand reality. But at the same time, gratitude helps us making the same mistake that Moses warned against: believing that all our blessings come from us, and that they're to be expected rather than be gifts.   

Moses understood that prosperity not only changes what we possess, but what we notice. Yet perhaps the deeper lesson is that gratitude, when done right, should change how we experience what we possess. A person who believes that everything is owed to them will never feel satiated. There will always be another achievement to accomplish, another possession to acquire, or another reason to feel that we have fallen short in life. 

Gratitude does not mean we stop striving. It does not mean we do not acknowledge our own achievements. It means that we see the complete picture. And that is the challenge that Moses proposed: seeing the extraordinary in the ordinary. A meal with family. Going on a date. Walking and talking with a friend. Waking up out of bed for another day. The irony is that they are significant precisely because they do happen regularly. Perhaps the lesson here is not to find more reasons to be happy, but to transform in the kind of person who can find the blessings that already exist. 

The Steep Costs of Trump Expanding Tariff Power Under Section 301

Section 301 wasn't supposed to be a presidential blank check. Yet that's increasingly how it has been used. The latest lawsuit challenging the Trump administration's latest tariffs argues that the statute doesn't authorize this latest round of import taxes. The courts will sort out that legal question in due course.

But the lawsuit highlights a broader problem: Section 301 has steadily evolved from a targeted enforcement tool into an increasingly elastic source of presidential tariff authority in which the president can impose tariffs because "the president said so." If every trade dispute can justify sweeping tariffs, then the statute's limiting principle has largely disappeared.

Congress enacted Section 301 as part of the Trade Act of 1974 to combat unfair foreign trade practices. It authorized the president to respond when another country maintained discriminatory policies that burdened U.S. commerce, using targeted retaliation to encourage reform and open foreign markets. In other words, Congress designed Section 301 to function like a scalpel, not a sledgehammer.

Section 301 was built around leverage. The idea was to impose costs on foreign governments until they removed unfair trade barriers. That logic begins to break down when tariffs become untethered from the specific conduct they're supposed to address.

The Competitive Enterprise Institute has observed that recent Section 301 actions often feature expansive investigations, weak causal links, and tariffs extending far beyond the industries connected to the alleged misconduct. The result is an increasingly flexible statute capable of supporting almost any desired tariff outcome.

The Cato Institute adds that these measures appear less focused on correcting unfair trade practices than on preserving a preferred tariff policy. In that sense, trade enforcement risks becoming a rationale rather than the objective. Once almost any international grievance can justify sweeping import taxes, Section 301 stops functioning as a narrowly tailored trade law and starts looking like an open-ended delegation of Congress's tariff power.

The mismatch between the alleged harm and the proposed remedy is another sign of how elastic Section 301 has become. Even accepting the administration's claims about forced labor, the Cato Institute analysis also finds that the amount of trade plausibly affected is a tiny share of overall commerce (see below). Yet the response is not a narrowly tailored correction of a specific distortion; it is a sweeping tariff regime affecting trillions of dollars in imports. When the remedy is significantly larger than the underlying problem, it starts looking less like trade enforcement and more like economic punishment.

Perhaps the courts will conclude that the statute permits this approach. But if Section 301 can be stretched to accommodate virtually any broad tariff program, its limits become difficult to identify. And when the limits of a delegated power become impossible to identify, the delegation itself deserves a closer look.

The concerns surrounding Section 301 are not limited to statutory interpretation or presidential power. They also involve the very real economic costs created by expanding tariff authority. According to the Penn Wharton Budget Model, Section 301 tariffs alone are projected to cost Americans approximately $1.05 trillion over the next decade. Those costs do not vanish at the border. They are absorbed by businesses and consumers through higher prices, increased input costs, and disrupted supply chains.

The National Taxpayers Union notes that adding the costs of Section 232 national security tariffs brings the total burden of these tariff policies to roughly $2.2 trillion over ten years. That is a significant economic consequence flowing from executive decisions that increasingly rely on broad interpretations of existing authority. Tariffs may be imposed by presidents, but their costs are paid throughout the economy.

Section 301 was never meant to be a blank check for presidential tariff authority. It was designed to address specific unfair trade practices, not serve as a legal scavenger hunt for whatever tariff justification an administration can find. The courts may decide whether this latest theory passes muster, but Congress should make clear that Section 301 is not an all-purpose authorization for presidents to impose taxes whenever they want. 

If Congress does not reclaim its tariff authority, the executive branch will have expanded power to tax the American people into higher prices, distorted markets, and fewer protections. I thought that this country was founded on a war in which Americans fought against unfair taxation. History does not repeat itself, but it's amazing how it rhymes. 

The Sanctioning Russia Act Won't Stop Putin, But the Tariffs Will Expand Presidential Power

When Russia invaded Ukraine in 2022, Western governments responded with one of the most sweeping sanctions regimes in modern history. At the time, I questioned whether economic sanctions would compel Vladimir Putin to change course, noting that they often impose heavy economic costs while producing mixed political results. 

Four years later, Russia remains at war, and Congress is now debating legislation that would expand presidential tariff authority in an effort to increase pressure on Moscow. Instead of rushing forward, lawmakers should consider what the past four years have actually taught us about sanctions, tariffs, and constitutional government.

Ryan Young, a senior economist at the Competitive Enterprise Institute, scrutinizes the argument that the Sanctioning Russia Act would have any meaningful impact on the war in Ukraine. Since direct trade between the United States and Russia is already minimal, new tariffs would do little to reduce Russian export revenue. The bill's broader use of secondary tariffs against countries buying Russian energy also raises concerns. Young argues that these tariffs are unlikely to change the policies of major trading partners while potentially creating diplomatic conflicts and disrupting broader U.S. trade relationships.

The National Taxpayers Union's chief concern is not simply the size of the proposed tariffs, but the uncertainty surrounding them. The legislation gives the president broad discretion to determine which countries are targeted and what tariff rates they receive, while requiring the list of affected countries to be recalculated every 180 days. 

As global energy markets change, countries could move on or off the list with little warning. Businesses can adapt to almost any rule, but they struggle when the rules themselves are constantly changing. This is why Congress should write clear, predictable laws rather than leave fundamental trade decisions to executive discretion.

If that were not enough, there are issues with constitutional governance. Rather than asking whether additional sanctions on Russia are warranted, the Cato Institute asks whether Congress should grant the president another broad source of unilateral tariff authority. 

The bill allows the executive branch to determine which countries are targeted, what data are used to identify them, what tariff rates apply, and which nations qualify for exemptions. Such discretion extends far beyond Russia policy and could easily be used as leverage in unrelated trade negotiations. Congress should be reclaiming its constitutional authority over tariffs, not delegating even more of it to the executive branch.

Russia's aggression deserves a firm response, but good intentions are no substitute for sound public policy. If additional tariffs are create uncertainty for businesses, further erode Congress's constitutional authority, and are unlikely to change Putin's behavior, lawmakers should think twice before rushing this bill into law. 

Effective foreign policy requires realism, constitutional restraint, and a willingness to question politically popular ideas. Otherwise, Washington risks punishing everyone except the people it intends to punish. Hope is not a strategy, and tariffs are not a substitute for one.

Why Eliminating the Social Security Payroll Tax Cap Is Not an Easy Fix

Every few years, politicians think they have found the silver bullet for solving Social Security's financial woes. This time, it is Senators Elizabeth Warren (D-MA) and Bernie Moreno (R-OH) proposing to eliminate the Social Security payroll tax cap of $184,000. The argument is simple enough: tax earnings above the current cap, collect more revenue, and the program can keep going. If only it were that simple.

As I detailed last year, Social Security's challenges are rooted in demographics and the structure of the program itself. Eliminating the payroll cap sounds like a sound solution, but it is an expensive workaround that does not deal with the declining worker-to-beneficiary ratios, longer life expectancy, or the pay-as-you-go financing structure.  

If eliminating the payroll tax cap were an obvious solution its supporters claim, you would at least expect broad agreement among tax policy experts. But even the Left-leaning Tax Policy Center (TPC) argues that the Warren-Moreno proposal is flawed.

The TPC calculated that this proposal would bring in $2.5 trillion in revenue over the next decade. That sounds like a lot of cash, but here's the catch. It does not actually save Social Security. It only closes about half of the long-term financing gap, and annual deficits return in about 4 years. By the way, this is the best-case scenario. 

TPC points out another issue: severing the link between contributions and benefits. Social Security was created as a a safety net during the Great Depression, but policymakers also deliberately structured it as social insurance, with benefits tied to workers' earning histories and payroll contributions. Workers have generally viewed their benefits as something they earned through payroll contributions. 

Eliminating the cap while leaving benefits largely unchanged weakens that relationship. For many higher-income workers, additional contributions would no longer purchase additional benefits. Once the program is perceived more as income redistribution, it risks undermining the broad political support. 

Higher marginal tax rates can create economic distortions by educing the incentives to earn additional income, invest, or expand business. When taxpayers keep less of each additional dollar earned, some may alter their work decisions, compensation arrangements, or investment strategies to minimize tax exposure. While these effects may be modest for some, policymakers should consider the broader consequences of increasing taxes on productivity, economic growth, and future revenue generation. A policy intended to strengthen Social Security should not undermine the economy that funds it. 

The debate over eliminating the payroll tax cap shows that policymakers are more focused on finding more money over reforming a structurally flawed program. Higher taxes can postpone difficult decisions, but they cannot fix demographic realities, a low return on investment, or the lack of personal ownership over retirement savings. The people of America need more than paying more to Social Security. It needs reform that can provide the working American with the ability to comfortably retire instead of struggling in their later years.

What Does Nonbinary People's Day Celebrate If Anyone Can Be Nonbinary?

July 14 is not only Bastille Day in France, but it is also International Nonbinary People's Day, which takes place tomorrow. It was chosen as July 14 because it's the exact midpoint between International Women's Day and International Men's Day. It was created to raise global awareness about nonbinary people, but it begs an essential question: what in the world is nonbinary?

Every commemorative day celebrates an identifiable group of people. Veterans Day celebrates veterans. International Women's Day celebrates women. Before celebrating a category, it is reasonable to ask what distinguishes its members from everyone else. That is a surprisingly difficult question to answer when it comes to nonbinary people. 

Nonbinary: The Identity That Means Everything and Nothing

Most organizations and nonbinary individuals define nonbinary in roughly the same way: someone whose gender identity is not exclusively male or exclusively female. At first glance, that sounds straightforward enough. But after further examination, it doesn't answer the question because then there is the follow-up question of "What does that look like?"

Depending on who you ask, being nonbinary can be a range of things, whether that is identifying as both male and female, neither male nor female, something in between, outside the gender binary altogether, gender-fluid, or possessing multiple genders. These descriptions point in dramatically different directions. Instead of identifying a single, distinguishable category, "nonbinary" appears to function as an umbrella term for a wide variety of subjective experiences. 

That in itself presents a conceptual problem. Categories exist to distinguish one thing from another. The category of "veteran" distinguishes those who have served in the military from those who have not. The category of "citizen" distinguishes between those who possess a particular legal status from those who do not. 

But what distinguishes a nonbinary person from a man or woman who simply rejects traditional gender stereotypes? If the answer comes down to subjective self-identification, then the category has no ascertainable membership criteria. It tells us only what someone calls themselves, not what distinguishes them from everyone else. That "definition" offers no independent criteria by which anyone can distinguish between a nonbinary person from an ordinary variation between men and women. As such, the category of "nonbinary" has no meaningful limiting principle. 

The "Because I Say So" Problem: A Definition That Defines Itself

The problem becomes even more obvious when one asks a self-identifying nonbinary individual how they know they are nonbinary. The answer is usually with some form of "Because that's how I identify." But identify with what? Again, the most common definition is someone whose gender identity is neither exclusively male nor female. It is not descriptive because it does not answer the question of what gender is in this framework. 

If a man is defined as someone who identifies as a man, if a woman is someone who identifies as a woman, and a nonbinary person is defined as someone who identifies as nonbinary, the explanation becomes circular. If gender is not biological sex, personality, clothing, interests, or gender stereotypes, then what positive characteristics remain? The definition tells us who identifies, but it provides zero insight into what they are identifying with. Instead of pointing to an independently recognizable characteristic, the label appears to refer only to itself. 

At this point, I can see someone objecting to this description of nonbinary by saying that many identities involve self-identification. After all, no one can peer into another person's mind to determine whether they are truly a Christian, a Democrat, or homosexual. But those identities refer to something beyond the declaration itself. 

Biological sex refers to observable biological characteristics. Sexual orientation describes enduring patters of romantic or sexual attraction. Religion encompasses identifiable belief and practices that exist independently of merely claiming the label. While each of these identities contains subjective elements, they also refer to concepts that can be understood apart from self-identification. 

Nonbinary is different. Since the only criterion for membership is declaring oneself to be nonbinary, then the declaration is not merely evidence of the identity; it is the identity. The category then becomes self-referential, which makes it impossible to distinguish between the label and the thing the label is supposed to describe. That may suffice for personal self-expression, but it does not provide a foundation for a category, certainly one that is supposed to have an international day of recognition and observance. 

Everyone Is Different, and....?

Even if we wanted to set aside the definitional problems with nonbinary, there is another problem: the characteristics often associated with nonbinary identity are not unique to nonbinary people. Human beings have always varied in personality, interests, appearance, and behavior. Some men are more traditionally masculine, while others are more traditionally feminine. 

This is especially true when looking at gay men and lesbians. For gay men, there is everything from the muscle gays and jocks to the fem boy, and everything in between. Lesbians range on the femininity spectrum from lipstick lesbian to being butch. One of the contributions of the gay rights movement was challenging the idea that a man must conform to a narrow definition of masculinity or that  a woman must conform to a narrow definition of femininity. 

Men who are less masculine are still men, and women who are less feminine are still women. That does not mean that they are this third category. If nonbinary identity is based on not fitting neatly into traditional gender norms, then it risks treating ordinary human diversity as evidence of a separate identity category. A category that encompasses anyone who does perfectly conform to gender stereotypes, which is basically everybody, ultimately ceases to distinguish between anything meaningful. 

The vast majority of people experience themselves differently from some idealized form of gender norms and expectations. Since there are no criteria that separate nonbinary people from men and women who share those same traits, the category has no clear boundary. Without clear boundaries, the category of nonbinary is meaningless because virtually anyone can qualify simply by interpreting their own relationship with gender in a particular way. A description that includes just about everyone who feels different in some way ceases to be a category at all. 

So What Is Being Celebrated?

A meaningful category should tell us who belongs, what members have in common, and how they differ from everyone else. Yet nonbinary lacks a clear definition, objective membership criteria, and distinguishing characteristics beyond self-identification. If a category can include almost anyone who feels different from traditional gender expectations, then it is not a distinct group of people. Since there is no clear defined group of people to celebrate, what does Nonbinary Day celebrate exactly? 

It seems like it is one of the first awareness days in human history for a group of people who cannot explain who is in the group. In short, it is the culmination of coddling every subjective experience simply because someone says "it's my lived experience" and of the Participation Trophy mindset. When words no longer describe anything beyond what someone says they describe, categories themselves lose their purpose. It is a death knell of words having any meaning. 

Why Restricting International Students Is Trump's $481 Billion Mistake

There are a number of features that make the United States a unique and exceptional country. One of those drivers of American innovation has been that it has attracted ambitious people around the world, which means having an immigration policy open enough to allow them to work and live in the United States. America has historically understood that importing talent is one of the best investments it can make, but the current administration has lost sight of that concept. 

As I pointed out earlier this year, the Trump administration has attacked legal immigration to the United States. One of those foci of attack has been restricting international students to study in U.S. universities. The Trump administration asserted that foreign adversaries have exploited American universities to steal sensitive research and technology and that stricter visa screening was needed to safeguard U.S. interests.

Whether these restrictions ultimately improve national security remains difficult to measure. What is much easier to estimate, however, is their economic cost. A recent study from the Peterson Institute for International Economics estimates that restricting international STEM students could reduce U.S. GDP by as much as $481 billion over the next decade.

The reason for this decline in GDP is intuitive. The mechanism is fairly intuitive. International STEM students don't simply earn degrees. They become part of America's innovation ecosystem. Many stay to work in research labs, high-tech firms, and startups, where they help develop new products, improve existing technologies, and increase productivity throughout the economy. 

By reducing the number of these future innovators, restrictions shrink the pool of human capital that drives long-term economic growth. The projected GDP loss is therefore not an accidental correlation, but the estimated value of the discoveries, companies, and productivity gains that never materialize.

This immigration restriction especially hits hard for the science, technology, engineering, and mathematics (STEM) industry because as the PIIE study points out, 35 percent of all STEM workers with a PhD are foreign-born and U.S.-trained.

Scientists and engineers develop new products, improve manufacturing processes, write software, discover medical treatments, and launch companies that employ thousands of people. These innovations make workers across the economy more productive, which is ultimately what drives rising incomes and long-term economic growth. International STEM graduates have played an outsized role in America's innovation economy for decades. Restricting their numbers reduces the number of future breakthroughs that make the entire U.S. economy more prosperous.

Ironically enough, these restrictions can actually undermine the President's rationale for the restrictions. Economic strength is one of the foundations of national security. A larger, more productive economy generates greater capacity in research, development new technologies, and gives the United States the resources needed to maintain a technological edge over its rivals. 

Policies that reduce innovation therefore carry national security costs of their own. Restricting international STEM students may prevent some security risks, but it also reduces the supply of scientists and engineers who drive economic growth. If America becomes less innovative, it also becomes less capable of sustaining the military and technological superiority that has underpinned its security for decades.

The irony is that policies intended to protect American workers and strengthen American security can end up undermining both. In an effort to protect America, policymakers risk reducing the very economic dynamism that has made America powerful. STEM students do not simply compete for jobs. They create knowledge, launch companies, and develop technologies that make the entire economy more productive. Restricting their ability to study in the United States means fewer innovations, fewer businesses, and less economic growth.

Restricting international STEM students risks sacrificing one of America's greatest strategic assets: its ability to attract talented people who create new ideas and technologies. In addition to economic implications, it harms national security because it risks reducing the innovation and technological leadership that make the United States secure in the first place. This is yet another reminder that protectionist policies have this uncanny ability to limit economic freedom and American prosperity at the same time.