“Trump fans applauded when he said he’ll eliminate taxes on tips. Then Harris proposed that, too. Her audience applauded. Trump then proposed not taxing overtime. More applause.<\/p>\n\n\n\n
But narrow tax exemptions are bad policy.<\/p>\n\n\n\n
In my new video<\/a>, economist Allison Schrager explains how they create nasty, unintended consequences.<\/p>\n\n\n\n “No one likes tipping,” says Schrager, “but all of a sudden, you’ll have to pay tips for everything.\u2026More people will be paid in tips.””<\/p>\n\n\n\n …<\/p>\n\n\n\n “Trump’s proposal to eliminate tax on overtime would reduce hiring.<\/p>\n\n\n\n “Employers may hire fewer people so they can give more overtime to employees they have already,” says Schrager.”<\/p>\n\n\n\n …<\/p>\n\n\n\n “rent control is destructive. “Sounds really good,” says Schrager. “But all it means is that people are less inclined to rent to you.”<\/p>\n\n\n\n “Why would you enter a market where it seems like the government is actively trying to hurt you?” Adds Mercatus Center economist Salim Furth. “You’re providing an essential service, something human beings need to live, and the government views you as a hostile outsider. I wouldn’t want to bring any service into a market like that.”<\/p>\n\n\n\n Argentina’s new libertarian president just scrapped rent controls. The supply of rental apartments doubled, and prices declined by 40 percent<\/a>! That’s good policy.<\/p>\n\n\n\n But Harris proposes the opposite!”<\/p>\n\n\n\n …<\/p>\n\n\n\n “Trump’s (and Joe Biden’s) tariffs don’t just punish China, they reduce choice and raise prices in America.<\/p>\n\n\n\n “Free trade is good!” says Schrager. “It brings lower prices, making our own industries more dynamic, raising our income.”<\/p>\n\n\n\n “But trade does take away some Americans’ jobs,” I point out.<\/p>\n\n\n\n “But it creates a lot of other new<\/em> jobs,” she replies.<\/p>\n\n\n\n It sure does. More<\/em> and better<\/em> jobs than those lost through trade.”<\/p>\n\n\n\n …<\/p>\n\n\n\n “She proposes giving “first-time homebuyers” $25,000. Again, her fans applaud.<\/p>\n\n\n\n Schrager explains, “free” money from government doesn’t increase the supply of homes. When every buyer has $25,000 more, “they just bid up prices even higher!””<\/p>\n\n\n\n