No Tax on Tips, New Tax on Billionaires?

Welcome to the Cato podcast. My name is Ryan Bourne, Cato's R. Evan Scharf Chair for the Public Understanding of Economics. And today I'm delighted to be joined in the studio by Adam Michel, who is Cato's Director of Tax Policy Studies, and the guy we all go to at the moment for inane questions about our tax filing. You know, I always get that, Adam, every time I tell somebody I'm an economist, people ask me for financial advice. I'm guessing a similar thing happens to you with tax filing season, given you're a director of tax policy studies. Yes. I constantly get texts from friends as they're trying to figure out their taxes and have to remind them that I am not an accountant and I'm not a tax lawyer. I do know something about the tax code, but I am by no means your go-to person for how to file your personal taxes. Well, don't sell yourself short. You definitely helped me when I was looking to hire a nanny as a household employee for the first time. A process I had to go through myself, yes. So we're in tax filing season, everyone's favourite time of year. But I want to start off with a bit of counterfactual history going into counterfactual projections. So let's go back to last year. The big tax news was obviously the passing of the one big beautiful bill act. Let's suppose that it never passed. We're heading into 2026. People are starting to get their paychecks. How would people's tax outlook look different right now if that act last year had not passed? So I think this is misunderstood, or at least folks haven't never really focused on this fact that the reason that the one big beautiful bill was such an imperative for Congress is had it not passed, it would have been just shy of $5 trillion tax increase on the American economy. If the expiring 2017 Tax Cuts and Jobs Act, which was the last big tax reform, had been allowed to expire. That included tax increases on individuals. People's taxes on average would have gone up by $2,000 or $3,000. But it also included a bunch of expiration of business tax reforms that are the piece of tax reform that we think of as being pro-growth, leading to additional business investment, which leads to higher wages and a faster-growing economy. And so those two pieces together, the necessity to keep the pro-growth pieces in the tax code and keep taxes from automatically going up on Americans, was the imperative that pushed this bill over the finish line. And it created this political problem for Republicans in which the sort of people will now no longer experience that hypothetical tax increase. And so there's this – the problem they faced was they were just keeping everything the same, but they were stopping a tax cut that never would have – that people aren't experiencing. And so they had to add all this additional stuff to the tax cut, which I think we're going to get into, that snowballed into this much larger bill than simply just extending the tax cuts and calling at the end of the day. Yeah, I think that's a really important point to remember. You know, if this hadn't passed, there'd have been a huge tax increase this year. And that was the primary thing that Congress was trying to avoid. And I know much of the work that you were doing and the advocacy for the permanence of some of those pro-growth provisions was trying to avoid, too. But as you say, in politics, there's a benefit to novelty. And so as well as making many of those pro-growth aspects permanent, there were some new provisions in the code as well, which is the topic of your most recent Cato briefing paper. So the slogans, at least, that President Trump had pushed for a long time was that he wanted to introduce no tax on tips and no tax on overtime. But your paper kind of argues that those monikers are a bit misleading. So what did Congress actually do on these two fronts? Yeah, so the campaign season focused on adding all these new features of the tax code. I have a new paper on tips and overtime. there was also a increase in the state and local tax deduction. There's a larger senior deduction. There's new deductions for charitable giving and car loan interest. And so these the tips and overtime being some of the more politically salient ones, I thought it deserved a bit more investigation. And basically, the slogan is more or less correct. It is for at least tips. It's that any tip income that a sort of average American receives, we will not be paying income tax on that. There's a cap, a $25,000 cap, it phases out at higher income levels. And similarly for overtime, the additional overtime pay, so you get paid time and a half, the half time you get paid is taxed through. You get a deduction for that income. And so just these two provisions, if you are claiming them, on average, folks should expect about a $1,300 or $1,400 tax cut if you are a waiter and you get a lot of tip income or you work a lot of overtime. But presumably, in order to keep down the fiscal cost, the revenue losses from these Congress has had to circumscribe quite tightly, you know, kind of definitions of what is tip income and which professions, jobs qualify to stop, you know, Cato zeroing out my salary and paying me all in tips for each article that I write for them. This is correct. These provisions could have been written in a way that would make them much more easily accessible, allow people to easily recharacterize income into these categories. But in order to keep the fiscal costs down, Congress put all of these guardrails on it, not only the cap on how much income is eligible for the deduction, not only the income phase out, so higher income people can't have access to these benefits. But in the example of the tip income space, they have defined a list of customarily tipped industries, which is actually much broader than you would think. It is not just waiters and bartenders and car dealers, but it also includes HVAC mechanics and a whole bunch of constellation of industries that are slightly broader, but still keeping out you and I from asking Cato to pay all of us in tipped income. I mentioned the same thing for overtime. It's not an exemption of all pay that you work over 40 hours a week. You have to be a considered overtime employee for the Fair Labor Standards Act, which excludes a bunch of types of employees. employees, it also is only on that additional half time, not the base pay. And so all of these ways are ways that the fiscal cost is ultimately constrained. So yeah, if you're earning $25 an hour and your overtime pay is $37.50, it's just on the tax-free part is on the $12.50 increment, not the full $25. So let's think about some of the economics of this, because obviously, a kind of worry or an incentive that this brings about is that encourages on the margin more economic activity that would generate tips, encourages some businesses perhaps to restructure in ways that they encourage more tip income rather than wage income, changes the way that they manage their overtime. So, you know, if you're kind of thinking this through from a business perspective for the tip, say, in a business that's eligible and the workers are eligible. On the margin, what do you think the economic impact of this will be? What sort of changes to decisions might we see as a result of this change in policy? Yeah, I certainly think that this will encourage additional tipped compensation in a couple of different ways. In some of these marginal industries that maybe tipping wasn't a big deal, the service provider will have an incentive to sort of, it will have an additional incentive to encourage some of their compensation to be in tips. You will also, there's a phenomenon called tipflation. We sort of saw this in over the last five years or so where you go to the coffee shop and they spin around the little computer screen and sort of tipping has become more prevalent everywhere. I suspect it will, this policy change will just sort of cement that trend. And then the other interesting piece is in order to be eligible for this tip exclusion, the tip has to be voluntary. So when you go to a restaurant and there's that like automatically included 20% service fee or whatever, I think you should expect some sort of additional now fine print that says this is technically not required. You can have it removed if you want to. Suggested very strongly. Yes, exactly. The default is that it's there, but there is some mechanism by which you can choose to opt out of it so that then this pay is eligible for this tax-free treatment. So let's take our economist hat off for a second and put our libertarian hats on. Milton Friedman once said, I'm in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. I think there was a broader context to what he was saying. But I get the sense that you think that overall, these two provisions and provisions like it are kind of bad policy that we should oppose So why don you make the kind of libertarian case for why you against these types of policies So there two sort of broad categories of reason The first is Friedman, what he's getting at there, is a classic sort of star of the beast argument. And that's that if we just cut tax revenue, the government will have less fuel to grow over time. And I just think empirically that has been proven false over time. I do think that you can fuel the beast. I think that new tax increases give the government sort of additional resources that then they grow beyond their means. But this idea that because the U.S. government can borrow, this isn't as true at the state level that have these harder budget constraints. But at the federal level, the ability to borrow just means that cutting taxes actually often leads to additional spending increases being paired with them. You saw this after 2017, the Congress cut taxes and then increased spending on the other side. And so I think we should be focusing on spending as that long run measure of how big the government is. And simply charging people less for the government service that we're getting and putting more of it on the credit card is just not a way to constrain the growth of government over time. The other underlying piece here is these provisions mean that you can't cut everyone else's tax rates given some level of revenue that we're bringing in. And so this is Congress picking winners and losers in the tax code. It's preferencing someone that is working for a waiter over someone who's cleaning hotel rooms that doesn't get tipped income or working on a manufacturing floor. And so it's just simply treating similar people dissimilarly is at its core unfair and inserting the government into those economic decisions. And so one of the arguments I make in my most recent paper on these provisions is if Congress gets rid of these new additions to the tax code and the three dozen other largest sort of tax expenditures, these holes in the tax code, they could cut marginal tax rates for everyone by about a quarter. and that would in and of itself bringing the same amount of revenue lead to pretty phenomenal economic benefits on its own just because taxes are incredibly distortionary and as you raise the rate, the economic damage of the tax sort of exponentially increases. Yeah, so you're not in favor of getting rid of these deductions because you want the government to have more revenue. Overall, what you're saying is that we should treat different types of activities similarly under the law. There's like an equality under the law provision. And for any given level of revenue that we're going to achieve from a kind of economic efficiency perspective, we want as non-distortionary a tax code as possible, right? So you broaden the base as much as possible, so that everybody engaging in activities, paying the same rate, and you lower the rates as much as possible. Yes, everyone should be treated similarly. And And this is, I think, a, it's not just, this is a, it's not just a libertarian principle, but it's also a core American principle. If you actually think back to like the Boston Tea Party, this was not a, they did not throw tea into the river because of a tax increase. It was a targeted tax cut. It was a tax cut on tea that was this implicit subsidy to the tea company. And so there's this, I think there's this ingrained sort of American ethos of equal treatment under the law, and that should be under the tax law as well. And so that's where this sort of broad-based low rates mantra comes from. We want to reduce distortions as much as possible. Always hit the British guy with that. Of course. So we've got more of these deductions as a result of the One Big Beautiful Bill Act. But there is some kind of light at the end of the tunnel is that my understanding is that a lot of these provisions, the tips and overtime, I think in particular, actually are due to sunset in current law in 2028. So what would you suggest Congress do as we kind of approach that deadline? Is your message to them simply, look, if you eradicate these deductions, next time we come back to doing a big tax bill like this, we can lower overall headline rates and that would be a more sensible way to go? Yes, the message is that we should allow that all these temporary provisions expire and we should then we should embark on an additional true tax reform at that point where we'd not only let these expire, but clean out other junk in the tax code, other holes and deductions and special treatment and use that additional revenue you get to keep tax rates low so that you're not ending up with more resources going to the government. but you're ending up with a simpler, fairer, flatter system. I think this conversation has glossed over all of the other sort of good features of the bill. At the very beginning, we mentioned that the one big, beautiful bill extended the 2017 tax cuts. And so there was much more than just these new deductions added. It kept marginal tax rates from increasing, basically across the board. It kept a lot of simplifications from 2017 that moved people from a complicated itemizing world into the larger standard deduction, being two of the individual side changes. So there was lots of other good features of this reform. It was just unfortunate that these new provisions were sort of glommed on for political reasons. Yeah. And it does create a difficult political economy dynamics. Of course, what politicians are going to face as they go into 2028 is some beneficiaries from these targeted deductions are going to squeal very loudly if Congress tries to abolish them, which is one of the reasons if you're going to do major tax reforms, you kind of have to go after a lot of provisions at once and show you that you're doing this in a very principled way and not just targeting certain people. And that's what they did in 2017. They actually, it was a true tax reform. They got rid of a lot of special treatment and they use that to lower rates. It was sort of everyone held hands and jumped at the same time, and we ended up with a better system overall. And this time, the political economy problem was simply extending a lot of that work, didn't give you the political benefit. So now, because of this problem, they added these new provisions that they are now campaigning on. And so it's not just that letting them expire is going to create these constituencies that are attached to these provisions, but you now have a whole crop of politicians that are touting the benefits of these individual provisions. So they're sort of bought into this version of tax change as well. So a lot of the work that I'm planning on doing over the next several years is working on trying to get back to basics. How do we get the tax reform conversation back to the broad-based low rates? North Star that was the North Star for the last several decades. You seem to be implying, Adam, that ordinary households think in terms of their actual cash flows and not the CBO's budget baseline, according to current law, which brings us on nicely to the next part of the conversation, really, because the big criticism, CBO being Congressional Budget Office, the big criticism of the one big beautiful bill act was that it increased or worsened the kind of debt trajectory over the next decade. Last week, we had the latest update from the CBO on their projections for debt revenues spending over the next decade, persistent multi-trillion deficits. I believe deficit is currently just shy of two trillion, going to be rising to three trillion over the next decade. Anything else that really stood out for you in that from a kind of tax side, tax revenue perspective? So this update, they do this update every year. And what stood out to me just from the deficit perspective is the deficit isn't just growing, but now the deficit in this time around is larger than it was the last time they had this baseline. And some of that is due to the one big, beautiful bill. Some of it is due to other changing factors, immigration, et cetera, rising interest rates. And this is all despite having additional tariff revenue, which is, I think, clearly not solving any of our fiscal challenges. So that's all incorporated into this new thing, even though it's a bit uncertain. Exactly. And it's highly optimistic assumption because it assumes that the tariffs are going to stay and a future administration will repeal them and the courts won't go in the opposite direction. It also assumes that the tips and overtime and all these temporary provisions we were talking about that expire at the end of 2028 actually expire. It's from a current law. It takes Congress at their word that something is temporary in law. It is actually going to expire. And so if you extend all of the temporary tax cuts and a bunch of the temporary spending that was also included in one big, beautiful bill, things are even worse. And of course, then you've got the possibility as well that not just will you not get as much future revenue from the tariffs as you're expecting, but there's the potential that the Supreme Court might say that the government has to reimburse people who have paid certain of the emergency tariffs over the last year in which case you actively going to lose revenue So there going to be a big near deficit here as well Yes Yeah There tons of uncertainty around sort of how all of these pieces play out And just like if you, especially when you're talking about tariffs, you look at the tariff revenue line from CBO, even that number is highly overstated because it has some mechanical effects where it actually reduces corporate income taxes and payroll taxes because the businesses have to pay that tariff revenue, which reduces their taxable income in some of these other categories. And so looking at the sort of headline deficit numbers, and they just keep increasing, sort of tells you all you need to know that even raising taxes in some places isn't making up for this systemic budget problem that we have. So before we get more into that again, I'd like to ask you a question that I face a lot from people who are perhaps more supportive of the president's agenda on trade than I am Who will say look economists are always saying consumption taxes are better than income taxes Tariffs are a form of consumption tax admittedly, you know, they're not They're only applied to certain products and it's only imported goods and not domestic goods But you know the president has been trying to push for a broad tariff you know tariffs of 10 on most countries was what he was pushing ultimately through the liberation day framework so what would you say to people who say look if consumption taxes are better than income taxes in terms of being less distortionary why not raise more revenue from tariffs and use that as a quid pro quo to cut income taxes shouldn't that be something that free market economists would support. If it was a true consumption tax, maybe, but you alluded to many reasons why that analogy just isn't correct. The most fundamental one is many, a large portion of those imports that the tariff is being levied on are not end consumer goods, they're inputs into the production process. And so it actually, and then those costs sort of cascade through the production system. And it is not just a tax on end consumption, but also a tax on production, making the entire system less efficient. It's also a pretty narrow base. It's by no means a broad-based consumption tax. It's only on that narrow portion of imports. And so it has distortionary effects between categories of goods or sort of depending on what your supply change looks like you could face vastly different tax rates, which has high economic costs. And so all of these, and then there's all the political economy reasons that our colleagues talk about where it invites lobbying and whether or not you claim it as a broad-based 10% tariff, there's all sorts of exemptions and holes that are put in it for political economy reasons. And so I think for all of these reasons, we shouldn't model it as a consumption tax. and that is why when sort of economists look at how much revenue you could potentially raise from an ideal quote-unquote ideal tariff that is broad-based is by not even close to an amount of revenue we raise through the income tax the sort of top of the laugher curve the maximum you could raise from a tariff is maybe four or five hundred billion dollars a year we raise well over $2 trillion from the income tax. So this sort of swapping one for the other is just mathematically impossible. While I would love a government that could survive on $400 or $500 billion a year, that's not the world we live in, and we shouldn't be pretending it is. So of course, one consequence of this search for revenue, this recognition among some that we have a long-run debt problem is that there's going to be some demands for higher revenue. And this week, we had Alexandria Ocasio-Cortez in Munich saying that the US federal government should be taxing wealth expeditiously. And we're starting to see some experimentation for how this could happen in the States. California has a Billionaire Tax Act ballot measure for the 2026 election this november um as i understand it that's a one-time five percent wealth tax on billionaires in california so um i think overall it would be about 20 people affected with about two trillion worth of of wealth um now you know it's a bit more complicated than that there's a bit of a phase in from from one billion of wealth so the five percent tax only hits once you earn 1.1 billion. I guess my first question to you on this before we get into some of the economics is, you know, if they did this and raised a bunch of revenue, let's suppose that they raise all the revenue they're expecting, just for argument's sake. Why would anyone believe it was a one-off measure? Surely if it was successful in inverted commas in achieving its aims, then expectations would change quickly because people would think they were going to be hit by this again and again and again. Yes, I think that's exactly the case. You see there's been lots of media reports of some of the high net worth people leaving California, physically moving their residents to Texas, to Florida. And they wouldn't, this is a one-time retroactive levy, and they wouldn't be doing that if they actually believed that this was truly a one-time measure. And you can see that in some of the language that is built into the ballot initiative. They say it's a one-time levy on, quote-unquote, excessive accumulations of wealth. They go out of their way to say that this isn't going to actually put a large dent in billionaires' wealth, but instead is just a small, one-time sort of fee for people that have disproportionately extracted from California's wealth. And I think all of that language just tells you that that sort of ideology behind it is not a one-time push. Instead, this is a test measure to see if it is possible to sort of socialize the idea. And what we've seen around the world is these temporary wealth tax one-time measures, because we need to fill a budget hole, often turn into permanent measures that expand over time. And that is clearly what a lot of people think because they're actively trying to move out from under it. Yeah, it's like the camel's nose under the tent, right? You do it once and then you think, well, we could do it again. But this time, why does it have to be a one billion threshold? Why not 800 million or 750 million? You asked me to suspend belief and say they raised all the revenue that they're planning on getting. The history of wealth taxes around the world is that they raise nowhere near the amount of revenue that they're projected to raise. and uh and and that is if you are in a true budget deficit and the goal is to raise some revenue uh if they miss their target the impetus is very clearly then going to be well we we it needs to be 500 million dollars threshold so we so we capture more more wealth so that we can actually raise the revenue we need and that's how these taxes expand over time and bring more and more people um under under their thresholds. So before we get to the revenue and the experience with other countries that have tried wealth taxes in the past, I think it's fair to say that economists, most economists, with the exception of those that are really kind of obsessed with inequality issues, think that wealth taxes are really destructive in terms of economic performance, economic activity. Just talk us through the basics of why a wealth tax is regarded as so much more damaging, so much more distortionary than, say, an income tax, a consumption tax, or another broad-based tax? So a wealth tax is a tax on a stock of wealth. So that first, it's not a tax on your flow of annual income. It's a tax on accumulated assets. And those assets aren't for, especially the the wealthiest people in the world are not just bars of gold under their mattress. They're ongoing concerns. Most of that wealth is tied up in Amazon, in SpaceX, in ongoing businesses. And so levying a tax on all of those business assets on real estate is a tax on the productive assets that are currently employing millions and millions of Americans. And so if you tax, even a 5% wealth tax sounds like a small number, but if you assume that tax has to be paid out of the annual return on that underlying asset, that asset has to, if it has a 5% return and it's taxed at a 5% rate, that is an income tax equivalent of a 100% tax rate. And that is in addition to all the other taxes that the owner of that asset's paying, which is 50%, 60% at the higher end. And so it's both the fact that the tax cascades into these incredibly high effective tax rates and the fact that you're taxing the underlying productive assets that are the lifeblood of economic activity. And so as a result of that, you encourage much more consumption relative to investment. And if this is in a limited geographic area like California, you encourage people to leave, as you said. And Mark Zuckerberg recently left California in previous years. We've had Peter Thiel, Elon Musk, Larry Page. Some of them say that the threat of these types of tax policies was a contributing factor to them leaving Others left generally just because of a business and tax environment that they didn feel was conducive to the health and prosperity of their business But these high high individuals are incredibly mobile They tend to find it very easy to leave. And it's not just their physical presence that changes. Often they're moving their business locations and activities as well. Yeah, it has all of these spillover effects. If you're moving your business headquarters with you often, all of that activity goes with you. And especially like a place like California, the top couple percent of income earners already fund like half of their income tax revenue. And so if a couple of the highest income people in California move out, it's not just that they're not going to get the wealth tax revenue, but they're actively eroding their income tax base too that they would have otherwise gotten from sort of ordinary income taxes or capital gains taxes. All of that is leaving with them as well. So it's not just the investment that would have happened in the state or what their next business venture would have been or the expansion of it. But it's also making it harder for California to raise revenue from other sources. So it has this sort of cascading negative impact. Yeah, I think this is something that people often forget when they're urging for more and more progressive tax systems. And the more you put a bigger chunk of the overall burden on high income or very wealthy individuals, the more sensitive the tax base becomes to keeping them there. And if you do offer things that deter them from being in your jurisdiction, you can lose a big chunk of your revenues very, very quickly. So wealth taxes, they've got a bit of a potted history in Europe. My overall kind of understanding is that they either these days tend to be very narrow and raise very, very small amounts of revenue, not just include property and certain other types of asset. But the countries that have tried really broad ranging ones, the behavioral effects, these economic distortions were so huge and it was so difficult to administer and value all of the assets that actually they ended up abolishing them because it was just not worth the hassle of doing so. Is that right? Is my kind of broad understanding of the history of these world taxes right on that? Yes, that's right. Across sort of the OECD countries, our largest trading partner is mostly across Europe. There's about a dozen countries that had wealth taxes sort of through the 90s. And these were all experimental measures, and they have since been repealing them. I think there's like three or four countries now that still have, you're right, sort of low rates or more narrowly tailored versions of these taxes. And the taxes today currently raise very little revenue, the ones that still exist. And when they were tried in the past, they also raised very little revenue with huge administrative burdens. I think one way to put it in an American context is we have a form of a wealth tax. It's the estate tax still in our tax code. So when you die and pass your assets onto your heir, we levy a 40% tax rate on assets over a certain threshold. And in the case of the Michael Jackson estate, it took 12 years for the IRS and the estate to come to a court-mediated, agreed value of all those assets. And if you think of, basically, that's what a wealth tax has to do every year. It's easy to say your stock value in company X is valued at X dollars because that's traded on exchanges and there's a sort of agreed upon price. But if you have a unique catalog of music or a lot of your wealth is in art or wholeness, or a privately closely held business that isn't traded. All of these things just actually coming to an agreed upon value is incredibly difficult, creates all sorts of gaming opportunities that just make these types of taxes administratively burdensome. So I'm getting a lot of targeted ads on social media at the moment for Trump savings accounts. I don't know why I'm getting targeted because as far as I know, my child would not be eligible for these Trump savings accounts. But they're really being pushed by the administration as something transformative. So why don't you just tell us what a Trump savings account is? And then I know that you're skeptical of both the need for these accounts and how much more beneficial they'll be for people as and above other kind of savings vehicles. So why don't you just kind of tell us your big picture take on Trump savings accounts? Yeah, so I think your Your daughter is eligible for a Trump account, although she's not eligible for the seed money that the government is putting into it. So a Trump account is a savings account, a new type of savings account. And for children that are born between 2025 and 2028, they get a thousand dollar deposit in the account from the government, just a transfer payment. And the accounts can receive contributions from employers, from other third parties, from parents. And the Trump account structure is actually making the existing sort of constellation of savings accounts we have and the complexity that comes with them worse, not better. And so my diagnosis of the problem has always been that we have 401ks and 529s for education and HSAs for health savings and Coverdales. And there's about a dozen of these special accounts we have that basically remove capital gains taxes from savings. And the problem is the complexity. All of these have income thresholds and rules for what you can spend the money on, some for retirement, some for education, some for health. And ultimately, all of those rules scare people away. Like many lower income people, young people don't want to lock their money up for a specific purpose or until retirement. And so the solution is to wipe all those rules away and say, hey, here's a general purpose savings account that you can save for whatever your life's priorities are. we've we've called these a universal savings account you and chris edwards have both written written about this as well a trump account takes some of that but then turns it on its head and and says every child gets this account but it still has to can only be used for retirement for a down payment on a house for starting a business a couple other very limited limited uses. It is also less tax advantaged than the existing Roth IRA structure. The money that government puts in is treated differently. But if I put money in my child's account, the gains are actually taxed at ordinary income tax rates rather than capital gains rates. So it's unclear to me that this is a true savings incentive beyond the subsidies that are being put in there by government and maybe employers. And so I think the motivation was in the right place, but because they wanted to turn it into this transfer program where the government is putting money into the accounts, it had to come with all these strings attached, which then undermines this sort of general purpose savings vehicle. Yeah. One thing that I joked before when similar baby bonuses and things were being proposed and trust funds or whatever is that so much of this ends up just being further subsidies to housing demand at a time when in many areas of the country we have a very restricted supply so a lot of it ends up getting capitalized into high house prices we're coming up on time so i just wondered if you want to give listeners any one thing to watch on tax policy for 2026 i guess this california billionaire tax if that passes, that's going to be a pretty big deal in November. But is there anything else that should be on our radars as we go through this new tax year? Well, we are in the middle of filing season, right? So April 15th, everyone has to get their returns in. And the actual return folks will be getting will be a little bit larger. Tax filing will be more complicated as folks work through all these new deductions and exemptions. There's certainly a lot of movement at the state level, as you mentioned. Whether or not states conform to a lot of these federal changes is interesting. So some states will also give you the tip deduction and overtimes, others won't. Wealth taxes in California, Illinois sort of flirted with a similar idea. So keep your eye on that. And then I think it will sort of the popularity of these new changes will also be important to inform sort of what happens when they all expire in a couple of years. The other thing that I'm following is Congress will probably work on crypto tax reform. Cryptocurrencies are currently treated as assets, which makes it more complicated, which is an unnecessary complication to how the capital gains in that system should be treated. So that's probably the next sort of congressional tax reform conversation that will be going on legislatively here in Washington. Well, I'm afraid that's all we've got time for. Adam, thanks so much for joining us today. You can read Adam's new paper, New Income Tax Deductions for Tax-Free Tips and Overtime, on the Cato Institute website. you can go into Adam's profile and read all of his latest commentary on tax policy issues so thanks for joining us thanks listeners and you tune in every Tuesday and Thursday for new editions of the Cato podcast thanks for having me on