Justin Answers Your Questions on Trump Accounts | The Professor Is In
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What is the main topic discussed in this episode?
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I'm not very good at taxes. I know that I'm an economist, and I know I'm standing up here as if I'm an expert, but actually my household Betsy does our taxes. I find the whole thing overwhelming. Some bloke was talking to me about his 501c3 the other day. What language is this?
I'm Megan Connors.
And I'm Justin Wolfers, and this is The Professor Is In. Think of this as office hours, and Megan's here to bring me your questions.
Your recent diving in debunked some of the hype around Trump accounts. This episode inspired a lot of debates and follow-up questions, and I'd like to dig into some of that with you. Okay, so first up, you described these accounts as a temporary populist giveaway that stitched onto a permanent tax break for the already wealthy. This seems to be kind of a go-to strategy for the second Trump term, and I was wondering if you could speak to some of the other ways we've seen this fake populism.
I described it that way because that's what it is. And you're absolutely right, Megan, to see that this is a theme. It's really a theme mostly for the stuff coming out of the one big, beautiful bill, otherwise known as the Trump budget, otherwise known as the one major piece of fiscal policy, the administration got. Look, we saw this in a whole bunch of other ways. The president went on the campaign trail and promised no tax on tips. It turns out you do tax tips. If you're in certain tip-prevalent occupations, though, there'll be no tax on tips until the end of 2028. He talked about no tax on overtime. It turns out he does tax overtime. So if you work an extra five hours... And you get time and a half, you'd be due to get seven and a half times your hourly wage.
So it's only the extra half that's not taxable, only up to a limit, only for certain occupations. And guess what? That also runs out at the end of 2028. He talked about no tax on social security. In fact, they still tax social security. They did something else in the tax code to help older people, but social security is still taxed. Hey, guess what? It runs out at the end of 2028. You know, there's one thing that didn't run out at the end of 2028. The other major part of the Trump budget was these populist parts. Then there was tax cuts for the rich. The tax cuts for the rich are permanent. So as it stands, if the next president in Congress don't renew any of the gimmick populist giveaways, I think each of these are actually, by the way, bad policy for a whole range of reasons, discussion for another day.
then they are literally just going to disappear. That's probably a good thing in terms of like economic policy. It's probably a bad thing in terms of the president being relentlessly dishonest, which is I'm going to pass something briefly, let it go away once I'm gone and have more permanent tax cuts that help me and my mates.
You said that for many families, Trump accounts simply add further complexity to an already complex savings system. And I was wondering if you could kind of explain what are the economic costs of complexity when it comes to personal finances? Or you could also extend this to taxes or tax system as well.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–4:34
2
What is the episode’s purpose and how does Justin introduce listener Q&A about Trump accounts?
4:34–7:45
3
How has 'temporary populism' been used in other Trump tax promises and when do those provisions expire?
7:45–13:51
4
What are the economic costs of complexity in tax-advantaged accounts and who is most harmed?
13:51–14:38
5
How does Justin define the two parts of Trump accounts—what’s the temporary giveaway vs the permanent tax change?
14:38–29:41
Speakers
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