Trump's 1% Mistake: How a Remittance Tax Will Fuel the Immigration It Aims to Stop

Last month, President Trump signed the One Big Beautiful Bill Act (OBBBA), a budget reconciliation bill that had quite a bit in it considering it is over 1,100 pages long. As I mentioned shortly after the enactment, I would probably need to cover other provisions in the future and here we are. The Left-leaning outlet Vox brought one such provision to my attention: a one percent remittances tax. A remittances tax is an excise tax imposed on the non-commercial transfer of money that individuals send from one country to another. Remittances are most common for immigrants who send money to their families in their home country. 

Despite of what some might think, remitted dollars are not "lost" because the U.S.' global dominance means that the dollars return in the form of trade, investment, and dollar demand. Rather than disappear, remittances act more like temporary outflows. So why did the Republicans decide to tax remittances? In the Committee report's own words:  

The Committee believes that the ability of non-citizens and non-nationals of the United States to send payments to individuals in other countries through the system of remittance transfers may encourage illegal immigration and lead to the over reliance of some jurisdictions on the receipt of such remittance flows.

In short, the justification is curtailing illegal immigration. Some might argue that because it was initially proposed at 5 percent and eventually lowered to 1 percent, that somehow makes it better. Guess what? It really does not, and not simply because the 1 percent applies to all remittance senders, including U.S. citizens (although bank accounts and U.S.-issued credit cards and debit cards are exempt). This tax will have many ramifications both in the United States and the global economy. 

Taxes have two main functions: to generate revenue and to discourage. First, let us take a look at the revenue. In the case of the remittances tax, the Joint Committee on Taxation (JCT) estimated that it would generate $10 billion in revenue over the next decade. The Center for Global Development (CGD) puts the estimate at an even lower $4 billion in revenue over that time period. Remittances taxes imposed in other countries offer little hope. An International Monetary Fund (IMF) study found that the other two nations that notably have a remittances a tax, Gabon and Palau, did so while generating a negligible enough amount of revenue where both countries scrapped the tax.

I am not too optimistic about the revenue estimates considering that the compliance costs will diminish actual revenue, including requirements for financial institutions to distinguish between taxable and exempt payment methods, maintain detailed transaction records, and manage refundable tax credits for eligible senders. The compliance will also violate data privacy since the financial institutions will have to collect and share such sensitive personal data such as citizenship status and payment method details. While it will hit low-income and immigrant communities most heavily, U.S. citizens may face privacy risks due to increased financial surveillance, documentation requirements for refunds, and potential misclassification or data exposure. 

What behavior does a remittance tax discourage? Sending money to other countries. This might sound like a win for the anti-immigration Republicans, but it will not be. Remittances outpace foreign direct investment and overseas development aid at a rate of 3 to 4 times. Destinations include such nations as Mexico, El Salvador, Guatemala, and India, which are among the top countries of origin for the undocumented workers that Trump does not want illegally entering the country. 

A study from the Center for European, Governance, and Economic Research found that a one percent increase in the cost of sending remittances translates into a 1.6 percent decrease in remittances sent (Martínez-Zarzoso et al., 2020). This is a big deal because remittances account for at least 3 percent of GDP for 78 countries (World Bank). The Center for Global Development used the aforementioned study along with bilateral remittances data from the World Bank to find that Mexico that stands to lose, at $1.55 billion annually. 

In terms of percentage of GNI, El Salvador, Honduras, Jamaica, and Guatemala will feel it the most (see below).

A one percent tax does not sound like a lot, but it translates into money that never reaches people in developing countries. For example, remittances in Mexico have helped pay for medical bills and support pensions and public services. With underdeveloped banking systems, cash is often how many in developing countries receive money. As the Overseas Development Institute brings up, remittances are effective because have a greater impact on poverty reduction because they directly reach a greater share of the population and more poor households, not to mention that the greater purchasing power results in greater economic utility. By curtailing funds that help people in developing countries that reduce poverty, cope with financial shocks, and weather natural disasters, life will become that much more unstable for people in these countries. The increased instability created as a result will incentivize citizens in developing countries to want to emigrate to the United States, which undermines Trump's stated goal of curtailing illegal immigration.

Then there is the matter of crime. Taxing remittances incentivizes sender to bypass regulated services providers and push their transactions into informal or underground channels, which like all underground markets, are less transparent and harder to monitor.  This shift makes it more difficult to trace illicit flows, thereby undermining national security and foreign policy interests. Because this will push immigrants to underground options, they will be exposed to greater fraud, theft, and organized crime exploitation.  

On top of all of this, this remittances tax has the hallmarks of inferior tax policy. It is a form of double taxation because migrants already pay an income tax to the host country. It is a regressive tax because remittances are most commonly sent to the poor families of migrants, thereby increasing the burden of poverty. This remittances tax is also non-neutral because it discourages an arrangement where a household is split between the United States and another country. This tax is targeted, inconsistent with an overall tax design for a country without a value-added tax (VAT). The targeted nature of this tax is hypocritical considering that the GOP is purportedly the party of family values and these remittances senders are trying to help their families in poverty-stricken parts of the world.

Ultimately, the remittances tax is not about controlling immigration. This misguided and counterproductive tax will weaken economies abroad, disrupt families, and burden law-abiding individuals with needless bureaucracy and privacy violations. It is a tax that raises little revenue, targets vulnerable communities, and increases government surveillance. This policy ends up depreciating the American values of opportunity and responsibility that made this country great. This tax will contribute to the global inequalities that fuel migration in the first place. Instead of deterring it, this tax will fuel the immigration at a considerable human and economic cost.

Nonbinary and Nonsensical?: Gender Identity Should Not Shape Public Policy or the Law

How people perceive identity has shifted in recent years. Sex, gender, and social roles used to be debated in terms of biology, behavior, or politics. These days, it has become more prevalent to define identity in terms of internal feelings, truths only known to the self, getting to the point where some demand external recognition of that identity. This shift in how identity is perceived is clearest in the concept known as "nonbinary." How I understand the concept of nonbinary is as a gender identity that is characterized by a rejection of, or identification outside of, the binary framework of man and woman, which can encompass diverse gender experiences. Nonbinary resists the classification of man and woman not through visible and external nonconformity, but rather a personal and internal sense of disconnect.

Yesterday, I was reading an article from U.K. media outlet Spiked Online titled The dark truth behind the 'nonbinary' identity. It is criticizing how an individual identifying as nonbinary is trying to get the European Court of Human Rights (ECHR) to legally recognize nonbinary as a category, even as the United Kingdom has rejected this individual's claim. It got me thinking about the whole concept of nonbinary.

 

What is logically wrong with nonbinary? I will start off by saying this is not a critique of individuals that identify as nonbinary, nor is it a dismissal of their personal experiences. As we will see later, the critique is how the concept of nonbinary identity, and the concept of gender identity more broadly, is being used to shape legal categories.

For much of history, the debate about identity essentialism was based on biological sex. Now it is based on the subjective experience of something along the lines of "I am nonbinary because I have always felt this way, and that feeling is the truth of who I am." Here is where the idea logically runs into a problem. If someone says they are not a man or a woman, but then does not define those categories or says "I reject all gender roles," what in the world does it mean to be nonbinary?  It is akin to saying something is neither red nor blue without saying what red or blue are. If you cannot describe the thing you are not, how can you meaningfully claim to not be it? 

There is no coherent way to socially define nonbinary identity because it has become more of a catch-all term rather than a clear concept.  How an individual feels discomfort with a certain set of gender stereotypes does not negate their biological sex. Nonbinary only makes sense when adhering to an overly rigid societal and stereotypical definition of what a man or a woman are supposed to be. There are very few, if any, people who perfectly embody these gender stereotypes. In this respect, nonbinary identification is less about embracing a coherent identity and more about avoiding the discomfort that comes from not fitting neatly into traditional gender expectations or roles. But this discomfort does not constitute a new identity, and should not require one. 

I can anticipate someone bringing up other identities, such as sexual orientation or religion, in which self-identification is claimed to be the basis for that identity. But that is not the case. Same-sex attraction is observable in behavior, whether sexual or romantic. While religion has a component of belief, religion can be observed through such behaviors as prayer, attending a house of worship, observing dietary laws, or celebrating holidays. While identity does not necessarily require material observability, having some definable or external features helps give it shape. Without conceptual clarity or internal coherence, an identity cannot meaningfully function as a societally recognizable or analytically useful category. It is on this front that the nonbinary identity conceptually and intellectually falls flat.

What is wrong with the concept of gender identity? This gets into where I take issue with gender identity generally. I will start with what I wrote in June about gender identity with regards to the U.S. Supreme Court case on gender-affirming "care": 

The concept of gender identity is incoherent. It is claimed to be based on objective truth, but it can be changed on one's subjective whim. Gender identity is supposed to be a societal construct, but somehow is simultaneously biological and internal. Gender identity is identified as independent of biological sex but is also identified in reference to biological sex. It is designated based on self-expression but also as a product of socialization.

This incoherence comes from the fact that if something has "X" quality, it cannot simultaneously have "non-X" quality. It is how gender identity proponents define a woman using the circular logic of "A woman is someone who identifies as a woman." Similar to nonbinary, the way it is being defined (or not defined, as the case may be) is intellectually unstable because it relies on internal contradictions, not to mention being unverifiable and unfalsifiable. As I detailed in April after the U.K. Supreme Court ruled that only biological women are actually women, I explained how simply because you feel like something or identify as something does not automatically make you that identity, as is the case with race, age, or species. In spite of how one feels about their biological sex does not change their biological sex and cannot change their biological sex. 

How Gender Identity Adversely Affects Society and Erodes Rights. Gender identity relies on an internal experience without external reference. If an identity is purely self-defined with no stable criteria, it becomes incoherent for public understanding or policy. As I brought up in June, "human rights and legal protections cannot be based on something as unintelligible, muddled, and disjointed as gender identity." It is de facto impossible to build social, legal, or medical policy based on such ambiguity, as we will see shortly. 

There are certain instances where gender identity causes harm. Here are some examples, first in a medical policy context. One big one is gender-affirming care, which has been shown to cause patients harm. This is why I am against the practice for minors and only support the practice for adults if there is informed consent, even in spite of known harms. There are more general medical implications, as well. By diagnosing on gender identity instead of biological sex, patients can miss life-saving screenings or being treated with protocols misaligned with their biology. Then there is the undermining of sex-based data collection which can determine sex-based disparities in such areas as crime, health, or education, thereby eroding our ability to identify and address such problems. 

Policies that mandate pronoun usage or compel pronoun usage, a practice that  I criticized in 2022, has a chilling effect on freedom of speech in terms of forcing pronouns, as well as putting stress on parents and teachers in an education setting. It also affects speech in terms of changing such terms as "mother" and "female" to "birthing parent" and "assigned female at birth," which either depersonalize biological realities or erode the cultural and political significance of women. 

Speaking of the significance of women, feminism and women's rights are rooted in material conditions tied to female biology. Women's sex-based rights depend on a stable, material definition of what a woman is. Without that tie, protections for women are undermined, such as is the case with Title IX in the United States. It is how biological men playing in women's sports has become such a contentious topic. Similarly, biological men have been allowed into women-only shelters or prisons based on self-reported identities that cannot be tested or disproved, which can put the lives of women at risk. 

A similar argument could be made for the erosion of gay rights. As I have argued before, when discussing how refusing to date a trans person is not transphobic, "being gay has meant rejecting a strict definition of gender norms while still claiming biological distinction vis-à-vis same-sex attraction." Same-sex attraction depends on the premise that sex is real, binary, and materially grounded. A gay man is attracted to other men. A lesbian is attracted to other women. For gay people, the biological categories of "man" and "woman" are not fluid or interchangeable. They are necessary anchors for same-sex relations to work. Those anchors are based in biological sex, not gender identity. To demand that [gay] people date or have sex with those who are not of the same biological sex (including trans people) undermines the concept of sexual orientation. Since gender identity detaches "man" and "woman" from biological sex, it becomes a form of gay erasure because being gay loses meaning. 

By prioritizing logical consistency and material categories, we can preserve the credibility and coherence of legal rights. As we see, gender identity undermines the very foundations upon which women's rights and gay rights were built. Sexual orientation and sex-specific protections are based on meaningful and stable categories. Disability benefits require medical diagnosis and documentation. Even mental illness requires a DSM-based diagnosis by a professional. In contrast, gender identity is subjective and exempt from scrutiny or verification. If subjective identity is the sole criterion for legal rights or classification, where does that principle end? What about identifying as a different species, race, or age? If it is wholly subjective, then there is no limiting principle in the law. As I brought up in April, we cannot protect human rights if we cannot do so on the basic of reality or what humans are. To quote political commentator Ben Shapiro, "Facts don't care about your feelings."

Postscript. On a personal level, subjective identity is fine. I do not care on a personal level because it does not hurt anyone, which is in line with the libertarian concept of the nonaggression axiom. People should be free to live and express themselves as they choose, regardless of how much it corresponds to reality. After all, people live their lives viewing and conceptualizing things contrary to reality all the time. My concern is not with personal identification per se, but with how these identities are being formalized into legal and institutional frameworks without clear definitions or limiting principles. Legal rights, access to services, and social categories all require shared and observable standards. Other legal categories have objective criteria by which identity can be determined. Gender identity generally, and the nonbinary identity in particular, lacks that verifiable structure that makes it disastrous in philosophical, logical, legal, and practical terms. At a minimum, how are you supposed to create a legal classification for a demographic that refuses to define itself?

When all is said and done, rights that depend on shared reality cannot be sustained by individual perception alone. When legal and social frameworks abandon objectivity in favor of subjective identity, they risk becoming unworkable, incoherent, and ultimately unjust. Critiquing how an identity is defined and used in law is not the same as attacking the dignity of individuals. People deserve respect and dignity, but so do the legal and material foundations on which our rights depend. Upholding clear, observable, and materially grounded standards is not an act of exclusion. It is a foundation for fairness and justice. If we want to protect the rights that so many have worked hard for, then we need to defend those categories to ensure that those rights stay intact, which means not legally recognizing gender identity as a category.  

Trump's Mass Deportation Will Hurt At Least 63% of U.S. Workers and Cause Economic Fallout

During Trump's 2024 presidential campaign, he relentlessly emphasized border security, enforcement, and crimes committed by illegal immigrants. It does not matter that Biden was actually quite strict on immigration or that illegal immigrants are much less likely to commit crimes. Immigration ended up being one of the main issues that catapulted Trump into a second term. It even resonated enough with the Latino community that 48 percent of Latinos voted for Trump in 2024.  Not only are more Americans in support of reduced immigration to this country, but Trump's idea of mass deportation has become more popular. Last decade, 37 percent of Americans supported mass deportation. As of last year, that climbed to 47 percent, with 84 percent of Republicans being on board (Gallup). 

While mass deportation is becoming increasingly popular, there are real-world implications that are not neatly captured in campaign slogans. Before embracing or rejecting mass deportation, we should look to what the data have to say about economic and fiscal implications. The Wharton School of Business, which is the premier business school, did exactly that in a policy brief it released late last month.

This report presents two possible scenarios. The first is a four-year policy in which unauthorized immigration returns to baseline levels in 2029, after Trump's current presidential term. The second scenario assumes that all unauthorized immigrants will be removed from the United States by 2034. This paper gets into a few of the fiscal and economic implications that go beyond the generic "GDP will decline." Unsurprisingly, the second scenario has larger outcomes because it costs more to implement a policy that removes all unauthorized workers. 

One of the more interesting implications is that of wages of those in the U.S. labor market. The report distinguishes between high-skilled labor (which accounts for 63% of the working force) and low-skilled labor. In both scenarios, high-skilled labor experiences a decline in wages. That decrease would be an average decrease of $494 per year in the first scenario and $2,764 in the second scenario. 

It ends up a bit different for low-skilled workers. In the first scenario, low-skilled wages increase by 1.1 percent in 2034 and fall by 0.6 percent in 2054. It is in the second scenario where low-skilled labor experiences true increases. This means that low-skilled workers can experience a decrease in lifetime earnings of $8,600 (four-year policy) or a gain of $63,600 (10-year policy), depending on which policy takes in effect.

Then there are the other effects of the deportation. The four-year scenario is expected to increase the budget deficit by $350 billion and reduce the GDP by 1.0 percent by 2034. In contrast, the ten-year scenario is expected to increase the budget deficit by $987 billion and reduce the GDP by 3.3 percent by 2034.

While the 10-year plan makes for flashier headlines, it is also the less likely of the two. Being able to remove all unauthorized workers is unfeasible, and I do not simply say that because it has not been done in the past. Think about all the enforcement, detention, legal proceedings, and transportation that it would take to remove 11 million people from the United States. The legal, economic, and social blowback would be tremendous. While more difficult, the four-year plan is more feasible than the ten-year plan. 

Regardless of which scenario plays out, this study concludes that mass deportation policies harm the greater U.S. economy, reduce overall average wages, and increase federal deficits. The only way that low-skilled workers benefit from mass deportation is if the U.S. government manages to remove all unauthorized workers, which is unlikely. These findings largely consistent with what I wrote in October 2024 when I scrutinized Trump's mass immigration idea on economic, social, legal, and political terms. 

What this Wharton School study adds to the deportation debate is a clearer sense of the tradeoffs of deportation, not simply in dollars and cents, but also in the economic futures of most American workers. For those who care about the national interest of the United States, what should matter is a policy grounded in economic reality, not empty slogans. All Trump's mass deportation does is throw American workers under the bus.

Social Security at 90: An Outdated, Broken System Failing Retirees and Betraying Future Generations

On August 14, 1935, President Franklin Delano Roosevelt signed the Social Security Act. With the stroke of his pen, FDR established the Social Security program that we know today. Social Security was initially created as a safety net for the elderly during the Great Depression, many of whom lost their savings, jobs, and family support. Over time, Social Security became a source of supplementary retirement income. It has also faced increasing criticism, including here at Libertarian Jew. It drew enough of my ire that I listed it as one of the twelve reasons we should all dislike FDR. What makes Social Security so terrible? 

Why Social Security Is Fiscally Unsustainable 

Social Security is insolvent and fundamentally unstable. Why fundamentally unstable? In part, it has to do with its pay-as-you-go mechanism. In spite of what most Americans believe, recipients do not have their personal account with their own funds. Current workers pay the benefits of current retirees through the pay-as-you-go mechanism. Social Security's pay-as-you-go mechanism shares structural similarities with Ponzi schemes in that current contributors fund current recipients. Although Social Security is legally sanctioned (unlike a Ponzi scheme), this structure of transferring income instead of saving it raises sustainability concerns. No one has money saved in a personal Social Security retirement account because money is transferred from current taxpayer dollars to current beneficiaries. The only difference between a Ponzi scheme and a Social Security is that when the payout pyramid collapses, no one goes to jail. Taxpayers simply pay more. 

Because Social Security relies on current workers' contributions to pay current retirees, its stability is directly tied to the number of workers supporting each beneficiary. When the ratio is high, the system can function smoothly, like it did when the worker-to-beneficiary ratio was 159.4 to 1 in 1940 (SSA). With the Baby Boomer generation retiring, that ratio has decreased to 2.7 in 2023 and is expected to decrease to 2.1 workers by the end of the century (Pew Research). This decreasing worker-to-benefit ratio means that there are fewer workers shoulder the burden of a growing system, thereby putting greater financial strain on Social Security. 

When the demographic shifts are combined with the pay-as-you-go mechanism, the payroll tax becomes a more unsound funding source of the Social Security program. Over time, the deficits add up and will deplete the Social Security Trust Fund. The most recent SSA annual report predicts depletion in 2034, although it is likely that one of the negative effects of the "Big, Beautiful Bill" is accelerating that date to 2032. Once that Fund is depleted, statute dictates that Social Security payments are limited to incoming revenue. According to the bipartisan Committee for a Responsible Federal Budget's (CRFB) estimates, that will translate into a 24 percent cut in Social Security benefits (see below). 

To maintain this behemoth that is 21 percent of the federal budget and the single largest item in the budget, the government needs to find a way to fund $25 trillion in unfunded Social Security obligations. Right now, the current Social Security tax rate is 12.4 percent: 6.2 percent paid by the employer and the other 6.2 percent by the employee. If you are self-employed, you pay the 12.4 percent. Historically, Social Security taxes have increased, not decreased (Tax Policy Center). Given that the worker-to-beneficiary ratio is expected to decline, do not be surprised to see the payroll tax increase as a response from Congress to try to "fix" Social Security.

The Burden on Younger Generations

Younger people especially get harmed if politicians decide to fund Social Security program in perpetuity. How much will it cost the median worker entering the workforce to keep Social Security going indefinitely? According to a Cato Institute analysis, it would cost $157,000, which is the equivalent of giving up 29 months of pay over a lifetime, which is more than two years' worth of salary. Despite paying more, these workers are expected to receive reduced benefits compared to current retirees, or even have reduced or means-tested benefits. In short, younger generations are being asked to pay more for less.

What is the Return on Investment?

And what does a taxpayer, regardless of age, get for paying all that money? A low return on investment, or ROI for short. The SSA publishes internal real rates of return (IRR), which act as a measure of ROI. Using a simple midpoint estimate of the IRR from its most recent IRR report, the ROI for Social Security is 2.7 percent, while the Treasury bond real rate of return is about 2-3 percent (nominal is closer to 4-5 percent). In contrast, the average stock market return in the last five years was 8.9 percent when adjusted for inflation; 8 percent in the last decade; and 6.3 percent in the last 30 years. 

Why the low ROI? The reality is that Social Security reserves are mandated to be invested in U.S. government securities only. Treasury bonds are essentially IOUs from the federal government to itself, which means that Social Security will never be high-yielding in its current form. A Tax Foundation study confirms that it is the combination of these investment choices, a lower birth rate, and a lower worker-to-beneficiary ratio that contribute to this low ROI (Entin, 2016).

For Social Security proponents, they see Social Security as a safety net that provides baseline financial protection. But what good is that safety net if it fails to meet the financial needs of retirees, especially those who depend on it as their primary or sole income source? With rising costs and increased lifespans, seniors need an investment tool that allows them to maintain a dignified standard of living. Social Security fails spectacularly on that front, especially when compared to the average ROI of the stock market. That safety net mentality of prioritizing insurance-like protection over investment-like returns is what has gotten the American people into hot water, much like it has with Medicaid. If retirees had the ability to invest their Social Security taxes elsewhere, 27 percent of Americans would not have to rely solely on Social Security for income (Pew Research). 

Structural Flaws and Moral Hazards

In case fiscal insolvency, a low return on investment, or disproportionately harming young workers was not enough, here are more reasons to take issue with Social Security:

• There is no ownership or inheritance of Social Security. If someone dies, they cannot pass on their hard-earned savings to heirs as they can with a 401K. Even the Supreme Court has recognized that individuals are not guaranteed Social Security contributions (Flemming v. Nestor).
• Despite its progressive formula, Social Security is not means-tested. High-income retirees can still collect full benefits, regardless of need. This feeds into the program's entrenched safety net mentality, which prioritize broad, guaranteed payouts over investment-like returns or personalized savings. This undermines both its financial sustainability and its ability to efficiently target those truly in need. The fact that it fails on both counts undermines its rationale for existing as a government program.  
• Social Security hits the poor harder with its flat tax, i.e., everyone pays the same rate. However, the tax cap at $176,100 effectively makes it regressive. The reason why it hits hard is that the 6.2 percent cuts into one's expenses when struggling to make ends meet. This tax takes a significant share of income that would otherwise go to basic needs or personal savings. 
• Social Security is designed as a lifetime, inflation-adjusted annuity. The longer one lives, the more one can collect through Social Security. Although lower earners receive a higher benefit as a percentage of their earnings, it is not so helpful because the structure disadvantages demographics with shorter average lifespans (e.g., Bostworth et al., 2016), such as low-income workers and certain racial minorities (e.g., African-Americans, Native Americans). 

Alternatives and a Case for Privatization

Reform is always kicked down the road because the myopia of the election cycle disincentivizes long-term thinking. As this report from the Cato Institute shows, reform is possible. Other countries have implemented social security reforms, whether it is transitioning to a basic benefit structure (New Zealand), reducing excessive benefits for higher earners, implementing automatic stabilizers (e.g., Sweden's age-indexed eligibility), or voluntary Universal Savings Accounts (e.g., Canada). Countries like Sweden and New Zealand have adopted innovated reforms that improve solvency and fairness, offering models that the U.S. could adapt. 

Changing demographics and increasing obligations make the current system outdated in terms of serving the needs of the retirees of today and in the future. Since Social Security is the "third rail" in U.S. politics, U.S. politicians lack the willpower to do anything aside from kicking this volatile can down the road. Rather than more incremental reforms, I would prefer privatization, in no small part because the Organisation for Economic Co-operation and Development (OECD) found that private accounts lead to broader economic growth. 

Individuals need greater control over their retirement savings, potential for higher returns, and flexibility in retirement goals to help avoid poverty in their old age. In short, they need autonomy over their future quality of life. If U.S. politicians stay mired in the inertia that is the myopia of election cycles and buying votes, future retirees remain vulnerable to government stupidity. It is time for politicians to embrace privatization instead of keeping retirees trapped in a subpar retirement system. 

Liberation Day Tariffs? More Like Economic Captivity Threatening the U.S.' Economic Future

Since the beginning of his second term, President Trump has aggressively pursued tariffs. He implemented tariffs on Canada, China, and Mexico under the guise of the War on Drugs. There were the 25 percent tariffs on steel and aluminum, as well as the tariffs on automobiles and auto parts. Trump created more tariff turbulence with the so-called "reciprocal" tariffs. Announced on April 2 during what Trump labeled as "Liberation Day," these new tariffs entail a basic universal tariff of 10 percent along with additional tariffs ranging from 10 to 50 percent, depending on the country. Shortly after that announcement, I detailed how a) these tariffs are not truly reciprocal, but based on shoddy math; and b) Trump's rationale for these tariffs, the trade deficit, is baseless. 

Then in May, the U.S. Court of International Trade unanimously ruled that Trump's "Liberation" Day tariffs, along with tariffs adopted under the International Emergency Economic Powers Act of 1977 (e.g., the fentanyl-related tariffs), are unconstitutional. Unfortunately, the Supreme Court decided to not rule on the constitutionality of these tariffs before its last session was over. As such, a number of the country-specific "Liberation" Day tariffs (e.g., Brazil, Canada, India) went into effect last Thursday. The baseline 10 percent tariff from the "Liberation Day" announcement has been in effect since April 5. In 2023, I wrote a piece on what a universal 10 percent tariff would look like. Basically, it it is a regressive tax on U.S. consumers that will raise prices, strain supply chains, and particularly punish small businesses and ordinary households. But more on that in a moment. 

I already wrote about the fentanyl-related tariffs and the "Liberation" Day tariffs would have had a much greater impact on the economy, which is why I am focusing on those tariffs instead. The "Liberation" Day tariffs will constitute the largest tax increase as a percent of GDP since 1982 (Tax Foundation). The economic effects of these "Liberation Day" "reciprocal" tariffs had they been implemented cannot be overstated. Here are some estimates of economic impact from what these "Liberation Day" "reciprocal" tariffs would have cost (unless otherwise specified):

• American Action Forum: In April, the estimated cost to U.S. consumers and businesses was up to $371 billion a year. However, in August, AAF amended that estimate to over $400 billion, which is mainly due to the larger 30-percent tariff imposed on the European Union since the initial "Liberation Day" announcement. 
• JPMorgan: Last month, JPMorgan estimated that the effect of Trump's tariffs would increase the Personal Consumption Expenditures (PCE) index by 0.2-0.3 percentage points. This is to say that these tariffs will have inflationary effects, which will probably give the Federal Reserve pause in lowering interest rates. 
• Tax Foundation: An estimated $3.1 trillion over ten years ($310 per year), with the average household cost amounting to a $2,100 for the average household in 2025 alone.
• Wharton School of Business: Reduce GDP by 8 percent and wages by 7 percent. A middle-income household faces a $58,000 lifetime loss in earnings. These tariffs would be twice as distorting as increasing the corporate tax from 21 percent to 36 percent, which is impressive given how distorting corporate taxes are. 
• Yale University: In April, Yale's Budget Lab estimated the following effects of the "Liberation" Day tariffs: consumer prices to increase by 1.3 percent in the short-run; the average household would lose $2,100 in purchasing power; and a reduction U.S. GDP growth by 0.5 percentage points. 
• In its August update, the Budget Lab did not separate the "Liberation" Day tariffs. However, it confirms that with all the tariffs, the effective tariff rate will be 17.5 percent, which is the highest since 1935. This aggregate effect is estimated to translate into an average per household loss of $2,400 in purchasing power for the year 2025; a US GDP decline of 0.5 pp; and unemployment rising 0.3 percent (or a loss of 497,000 jobs). 

Keep in mind that these estimates are generally for the "reciprocal" tariffs alone.  When you compound these tariffs with the other tariffs, the overall effects of Trump's trade war are all the more glaring. As of August 1, the Tax Foundation's model puts its estimates of Trump's tariffs at a GDP reduction of 0.8 percent, a job reduction of 788,000 full-time equivalent (FTE), and capital stock decreasing by 0.7 percent. 

I want to point out something else that the American Enterprise Institute brought to my attention. A 0.8 percent GDP reduction might not sound like a lot at first. However, when you compare it to what the Congressional Budget Office projected long-term GDP to be before the "reciprocal" tariffs were in play (see below), it's a sizable reduction in GDP. 

The damage to the United States exceeds what think-tanks estimate or mainstream economic theory predict. We have seen this tariff terror before. During his first term, Trump's tariffs resulted in 166,000 fewer jobs, wages reduced by 0.14 percent, a GDP reduced by 0.21 percent, and an annual price tag of $51 billion. Even President Bush Jr.'s tariffs translated into 200,000 jobs lost and $4 billion in lost wages. 

Adding to this, the International Monetary Fund (IMF) analyzed tariffs across 151 countries from 1963 to 2014 (Furceri et al., 2019). Guess what the IMF found? "Tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance." That last bit about the trade balance is more important in these latest round of tariffs because trying to fix the trade balance is Trump's supposed justification for these farkakte "reciprocal" tariffs in the first place.

It would not have been surprising to see that these tariffs would have harmed investor and consumer confidence. History does not bode well for these sorts of tariffs. Back in 1930, President Herbert Hoover signed off on the Smoot-Hawley Tariff Act. Smoot-Hawley did not cause the Great Depression because the United States was already in an economic downturn at that point. But it sure made matters worse by turning a nascent recession into a full-blown depression (e.g., Mitchener et al., 2021).

Trump seems hellbent on playing Russian Roulette with repeating a history that no one ought to repeat. What Trump would have been "liberating" Americans from with his "Liberation" Day "reciprocal" tariffs is higher wages, cheaper goods, and a better quality of life.  These tariffs will make it more difficult for the everyday American to afford food, clothing, transportation, and household goods. American manufacturers will be walloped as well because they rely and parts and inputs from other countries. Those parts and inputs are about to get a whole lot more expensive with these tariffs. 

As I pointed out last October, Trump's tariffs do not help the working class or the struggling small business. It will benefit politically connected corporations and unions. Trump's "reciprocal" tariffs are so bad that economists, think tanks, and advocacy groups that have historically been in favor of tariffs think Trump is taking it too far. The United States should not have idiotic tariff policies because other countries do. No one can tax their way to prosperity, whether it is a wealth tax or a tariff. Maybe this time, the American people will learn this lesson the hard way.

From Job Loss to Automation: There Is a Real Price of Minimum Wage Laws

I have found fewer economic topics that have been more divisive for economists than the minimum wage debate. For advocates, it is a moral and economic imperative to help provide a living wage so no one ends up in poverty. For critics, minimum wage has unintended consequences that make matters worse, especially for the low-skilled workers minimum wage was meant to help. As minimum wages increase higher and higher, a new wave of research gives us a sense of what is to come with higher minimum wages. Today, I will cover some of the most recent research conducted on the topic of minimum wage.

The first is a working paper from the National Bureau of Economic Research on the increased minimum wage for fast food workers in California that was released last month (Clemens et al., 2025). This research found that increasing minimum wage to $20 decreased employment by 2.7 percent, or a reduction of 18,000 people. This is even more jarring given that this minimum wage increase only applied to fast-food restaurants with over 60 locations. 

Why does this happen? This is not mere theoretical. It is Supply and Demand 101 in action. Two phenomena take place when the minimum wage becomes higher than what businesses are paying. One is an increase in people who want to work for the higher wage. The second phenomenon is that fewer businesses want to pay, since workers are now more expensive. As a result of these two phenomena, the result is a labor surplus in the market, which is another way of saying that minimum wage causes greater unemployment. 

This NBER research makes a new contribution to the debate. Minimum wage proponents often argue that the benefits of higher pay outweigh the job losses, as this 2024 research paper does. However, the new NBER paper estimates that 29 to 49 percent of the wage gains were offset by job losses. This does not even get into the social or psychological costs of unemployment, not to mention how unemployment has the potential to slow one's career development and worsen the trajectory for lifetime earnings. 

This segues us into an interrelated phenomenon: automation. Automation is the use of machines, technology, and software to perform tasks that were previously performed by humans. I call automation interrelated because not all job losses are due to automation and not all automation results in job losses. 

All the same, automation is a response to higher minimum wage laws. Last week, the think tank Cato Institute released a policy brief entitled The Minimum Wage and Automation (Nain and Wang, 2025). This brief explores how minimum wage hikes led to greater automation-related patent applications. The researchers found that when there is a 10 percent increase in these patent applications, there is a 1.6 percent decline in employment share for workers in routine jobs without an education, as well as a 1.2 percent drop in their wages. How does this happen? 

By definition, minimum wage is an increase in labor costs. Minimum wage laws disproportionately impact industries that rely on low-wage, routine-task workers. In response, firms eyeing automation either decide to adopt existing automation technology or invest in new automation technology. This demand drives innovation from manufacturing and tech industries, which increases the opportunities to supply automation services to other end-users. This means that as automation increases, jobs entailing repetitive routine tasks are more susceptible to being permanently replaced. 

Minimum wage increasing automation is a finding that is confirmed by a study from Nature released this past June finding that an increase in minimum wage in Europe resulted in an increase in robot installations (Sharfaei and Thavorn, 2025). This Nature study shows that the deleterious effects of minimum wage are not confined to a certain industry or a specific country. 

Laws of economics do not get suspended simply because proponents want their favored policy to work. There are real-life consequences and tradeoffs to minimum wage laws. Job loss and automation are two outcomes. There are also the effects of reduced work hours, increased consumer prices, prolonged recessions, and an increased federal budget deficit. It is no wonder that minimum wage does nothing to reduce poverty. In the end, policies driven by good intentions that ignore economic realities only serve to hurt the people they were meant to help. Workers deserve better than having to navigate a labor market distorted by wage mandates that make it more difficult to find and keep a job. 

Pulling the Plug: Why NPR and PBS (Or Any Public Media) Should Not Be Taxpayer-Funded

For over half a century, the Corporation for Public Broadcasting (CPB) has supported public radio and television, including National Public Radio (NPR) and the Public Broadcasting Service (PBS). Last week, CPB announced that it will be shutting down next month. This announcement came in response to President Trump rescinding $1.1 billion in funding for the nonprofit over the next couple of years. While Trump can hardly be considered a libertarian, he has at least downsized multiple government agencies, including the Department of Education, the U.S. Agency for International Development (USAID), and now CPB. I would prefer he tackle such major budgetary drivers as Social Security, Medicare, and Medicaid. At least on this topic, Trump and I are on the same wavelength: the government has no business funding public media. 

Let us start with the fact that PBS' and NPR's funding primarily comes from private sources. About 15 percent of PBS' funding comes from the federal government, whereas it is under 2 percent of annual revenue for NPR. To be fair, there are additional federal funds that flow into the affiliate stations and the affiliate stations in turn pay NPR or PBS. Government revenue represents about 10 percent of local affiliate revenue on average, although that could be upwards of 25 percent for rural stations. When factoring in that indirect support, that means that PBS gets about a quarter of its revenue from the federal government, whereas it is a bit over 10 percent for NPR. Since most of their revenue does not come from the government, the argument that PBS or NPR would automatically disappear is unconvincing.

I grew up watching Sesame Street. I have fond memories of Big Bird and learning to count from Count von Count. It was enjoyable and educational television. PBS and NPR have produced award-winning programming, so they have the potential to survive without the federal funding. This potential is greater given the median NPR-watching household makes $100,000, which is over $30,000 more than the median U.S. household. PBS and NPR already have the fundraising mechanisms in place to raise more funds, the brand loyalty and trust, and an affluent viewership. Their programming should be able to stand on their own if it really is that top-notch. Similar to the argument against student loan "forgiveness," is it really fair if the average worker is funding programming for people with six-figure incomes? Is this really the most efficient or even most equitable use of taxpayer money? 

This brings me to my next point and stating the obvious: the year is 2025 and the media landscape is different than what it once was. Unlike in the 1960s, there are thousands of media outlets worldwide that the American people can access, including cable television, podcasts, streaming platforms (e.g., Netflix, Hulu, YouTube), newspapers, and magazines. Public media no longer fills the unique gap it once did. NPR and PBS are but two media providers in a diverse and competitive marketplace. If people want to consume programming from PBS and NPR that they consider high-quality, that is fine. I am not calling for PBS and NPR to be shut down. What I am asking is that NPR and PBS programming no loner be taxpayer-funded, but rather competes with the other media providers in the market. 

This brings me to the theme of political bias. There is bound to be at least some bias in reporting the news. Editors make multiple choices, including what stories to cover or not cover, what perspective to take, and what language to use. There can be an argument made that there is a Left-leaning bias at NPR. This is not only because NPR is about 7 times more likely to be consumed for news by Democrats than Republicans. An insider of NPR, Uri Berliner, documented how ideological conformity and groupthink have eroded NPR's editorial balance.  

Although Berliner's account corroborates bias, it would not matter if it had not. The deeper problem inherently remains that any news outlet funded by the government risks politicization, either because of perception of state endorsement or actual influence. Public trust erodes when journalism and government are financially entangled. 

And once that bias creeps in, government funding is not merely questionable, but dangerous. At that point, you are not subsidizing the news, but a narrative. Media outlets have a right to air their perspective, but none are entitled to public funding because the government should remain neutral regarding public discourse. Would the NPR-listening crowd be okay with the government funding Fox News, Breitbart, or the Washington Examiner? I very much doubt it! Discontinuing funding for CPB does not violate the First Amendment. Rather, it reinforces it because free speech best thrives when it is free of state sponsorship. 

During the Reagan years, former NPR chair Frank Mankiewicz tried to have NPR become independent of federal funding, and I think he was right to do so. Ultimately, this is not about silencing NPR or PBS. This is about having these media providers succeed on their own merits in an open, diverse, competitive market. NPR and PBS have the infrastructure, audience, and financial base to do so. Other media outlets did not require government subsidies and neither should NPR or PBS.

Much like I argued in 2017, taxpayers should not be on the hook for $535 million a year for programming that caters disproportionately to wealthier Americans or that carries a partisan tilt. In a country that is at least in theory supposed to support freedom of speech and limited government, it follows that public discourse should be shaped by the people, not underwritten by politicians in Washington, DC. If PBS and NPR are truly indispensable, they will survive without the largesse of the federal government.