Latest news with #VeroniquedeRugy
Newsweek
16-05-2025
- Business
- Newsweek
Donald Trump's Mexico Tax Plan Could Backfire
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Experts warn that Republican plans to tax remittance payments could unintentionally increase migration to the United States. Why It Matters House Republicans have added a provision to President Donald Trump's "big beautiful bill" that would impose a 5 percent excise tax on remittance transfers. The legislation was put forward by the U.S. House Committee on Ways and Means. The measure, exempting U.S. citizens, would impact more than 40 million people, including green card holders and those on temporary work visas such as H-1B, H-2A, and H-2B. Remittances are money transfers that individuals send to family or friends in their home country, typically from a country where they are working. Millions of immigrants send money back they earn in the U.S to their home countries. What To Know Policy experts are sharply criticizing the proposal, saying it risks backfiring. Rather than deterring migration, as intended, the tax could deepen economic strain in parts of Mexico and Central America that rely on remittances, potentially increasing the pressure on individuals to migrate north in search of work. "Rather than serving as a deterrent, a remittance tax could actually incentivize more migration. If individuals believe they'll need to earn even more to meet family needs due to the remittance penalty, they may be more likely to come—and stay longer—to offset that financial loss," Veronique de Rugy, George Gibbs Chair in Political Economy and senior research fellow with the Mercatus Center, told Newsweek. "Remittances are a lifeline for millions of households in Mexico. In many rural areas, they support basic consumption, education, housing, and small-scale investment," De Rugby said. "Taxing these transfers effectively reduces household income in those communities, potentially pushing families back into poverty or forcing them to forgo essential spending. "That, in turn, reduces local demand, suppresses entrepreneurship, and weakens social cohesion in already vulnerable regions." President Donald Trump signs the guest book after touring the Abrahamic Family House in Abu Dhabi on May 16, 2025. President Donald Trump signs the guest book after touring the Abrahamic Family House in Abu Dhabi on May 16, 2025. Alex Brandon/AP In 2023 alone, Mexico received more than $66.2 billion in remittances—primarily from individuals working in the United States—accounting for roughly 4 percent of the country's GDP, according to the Migration Policy Institute. In poorer, rural areas of Mexico with few job opportunities, remittances fund essentials like food, housing, school supplies, and medications. This flow of money often makes it possible for families to remain in their communities rather than risk a dangerous journey north. "There is no question that such a policy would have an impact on certain communities. Remittances pay for everything, including food, clothes, housing, medications, and school supplies," immigration attorney Hector Quiroga told Newsweek. "A decrease of any kind will lead to belt tightening as people are forced to choose between two different necessities or do without some things altogether. The resulting economic impact would spread to local businesses, as the supply of cash would decrease overall," he said. Mexican President Claudia Sheinbaum has already rejected the proposal, calling it unjust and harmful to migrant families. She said it "would damage the economy of both nations and is also contrary to the spirit of economic freedom that the U.S. government claims to defend." Michelle Mittelstadt, director of Communications at the Migration Policy Institute, told Newsweek that it's unclear how much of the remittance flow would be impacted by the proposed tax, since U.S. citizens send some portion. Still, she warned that such a measure could drive people toward unofficial channels. Experts have argued that the policy could inadvertently increase migration to the U.S. rather than deter it. "It's a classic case of economic nationalism backfiring," said de Rugy. "Instead of reducing migration, it may increase the financial desperation that pushes more people to leave home in search of opportunity. "In addition to being economically harmful, this policy sets a troubling precedent. It penalizes lawful financial behavior, distorts labor markets, and risks damaging diplomatic relations with Mexico—all while doing nothing to meaningfully address border security or fiscal sustainability." Quiroga echoed those concerns, saying the tax would likely have unintended consequences. "Some individuals who send remittances to Mexico might conclude that it makes more economic sense to bring family members to the US and support them here rather than send remittances back, remittances that would not be worth as much if taxed at 5 percent," he said. Others warn that even a small cut to remittance income could have ripple effects in low-income communities. Mark Krikorian, executive director of the Center for Immigration Studies, takes the opposite view, arguing that the tax might discourage migration by reducing its economic benefit. Other high-ranking Trump officials have backed the measures. Vice President JD Vance, then an Ohio senator in 2023, co-sponsored the WIRED Act, which would have imposed a 10 percent fee on remittances out of the U.S. What People Are Saying Veronique de Rugy, George Gibbs Chair in Political Economy and Senior Research Fellow with the Mercatus Center, told Newsweek: "The logic of the tax assumes migration is driven purely by opportunity, but in reality, many migrants are responding to economic necessity. Making remittances more expensive only increases the pressure to work longer hours, stay for more years, or bring additional family members to the U.S." Michelle Mittelstadt, director of communications at the Migration Policy Institute, told Newsweek: "More than $66.2 billion in remittances were received by Mexico, chiefly from individuals living in the U.S., in 2023. "This represented 4 percent of Mexico's GDP that year. So U.S. taxation on this flow of money sent by individuals to their families and other loved ones in Mexico could have an effect on remittance sending, though it is not clear at this point 1) what share is sent by U.S. citizens and thus would not be subject to this proposed tax; and 2) whether this tax would prompt people to send money through unofficial channels rather than continuing to use formal money transfer routes." Immigration attorney Hector Quiroga told Newsweek: "I personally don't think that this would have any impact one way or another. While $320 million is a lot of money, the average remittance to Mexico is about $390 per month. Five percent of that is $20. That amount would likely not be enough to dissuade migrants from coming to the United States because the economic opportunity is clearly not available in Mexico, and there really is nowhere else to go." Mark Krikorian, executive director of the right-wing Center for Immigration Studies, said: "One of the main reasons people come here is to work and send money home. If that's much more difficult to do, it becomes less appealing to come here." What Happens Next Critics say the tax is unlikely to stop people from migrating since it does not address the deeper issues driving them to leave, such as poverty and limited job prospects. By cutting into the money families rely on, the policy could worsen conditions in their home countries and push more people to seek work in the U.S.
Yahoo
14-05-2025
- Business
- Yahoo
Opinion: America needs real fiscal reform
A thin majority (52%) of Americans believe it is possible to both balance the federal budget and cut taxes at the same time, while slightly less (48%) believe the budget could be fixed simply by reducing the growth of spending in Washington. An optimist would take comfort that at least a good portion of the public believes fiscal sanity is within reach. Without at least a belief, the nation doesn't stand a chance. But others may say those figures, part of a poll conducted by RMG Research for Napolitan News, demonstrate how few people grasp the challenge of closing an annual deficit that hovers around $2 trillion, let alone what it would take to chip away at a national debt that is nearing $37 trillion. I will always lean toward the optimists, especially when I consider how dire the opposite — total fiscal collapse — would be. But I'm also a realist. Donald Trump's proposed budget doesn't get us there. Oh, it would do a lot of things you might like. You could deduct the interest you pay on car loans. Every baby your family brings into the world would receive a $1,000 savings account as a start on life, with parents or others allowed to add up to $5,000 per year to the account, tax free, until the child is 31. Taxes on tips and overtime earnings would disappear, within limits, and people 65 or older would see an extra $4,000 added to their standard deduction, meaning they would pay less in taxes. Lower taxes will spur economic growth. It would make some deep cuts, including to bureaucracies and redundant programs. But it also chips away at Medicaid, an entitlement program for which states pay about 30%, by pushing more costs onto states, much of which they can't afford. Many poor people would lose services, as was made clear in an analysis sent to two members of Congress earlier this month by the non-partisan Congressional Budget Office. It may be easier to pick on low-income, needy people than the more well-heeled recipients of Social Security and Medicare. It may be tough to say no to the military. But you can't fix the budget without fixing them first. The proposed budget is 'more rhetorical than revolutionary,' wrote Veronique de Rugy, the George Gibbs Chair in Political Economy and Senior Research Fellow at the Mercatus Center. In a piece published both by Reason magazine and the Cato Institute, she said the cuts may look impressive, but they 'lose luster' when compared to the added spending for the military and border security and the continuation of the 2017 tax cuts. 'And for all its fiery declarations, the budget fails to truly confront the drivers of our fiscal crisis,' she said. Any genuine discussion about fiscal sanity should begin with the University of Pennsylvania's Penn Wharton Budget Model brief that was released nearly two years ago. It estimated that disaster will come when the nation's total debt equals about 200% of its economic output, or GDP. And, at the time, the scholars there estimated the nation had 20 years, probably less, until that point. Disaster will be triggered when investors believe the U.S. is no longer capable of paying its debts. When that happens, according to the brief authored by Jagadeesh Gokhale and Kent Smetters, 'no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly.' The U.S. would have little choice but to inflate the dollar in an attempt to pay off the debt at interest rates that would have to rise in order to attract skittish investors. That would lead to the destruction of wealth and increased unemployment. Viewed against those predictions, both the Trump administration and those who decry his proposed cuts miss the point. Yes, politicians should be more surgical and smart than they are now in cutting. But no one should turn a blind eye to what's at stake. Fifteen years ago, former Wyoming Sen. Alan Simpson, a Republican, and Bill Clinton's former chief of staff, Democrat Erskine Bowles, got together and devised a credible plan to save the nation fiscally through strategic tax hikes and budget cuts. No one in Washington wanted to touch it. That was when the national debt totaled only $12 trillion. As de Rugy put it: 'We don't need more of the same; we need evidence of a serious turnaround. Until that happens, we have little choice but to assume that Trump's budget is another big-government blueprint in small-government clothing.' Instead of just believing, maybe Americans should start demanding action while there is still time.
Yahoo
03-05-2025
- Business
- Yahoo
Opinion - The evidence is in: Forcing workers to join unions destroys good-paying jobs
Contrary to what you hear from most D.C. Beltway politicians and national media pundits, we do still make things in America. Veronique de Rugy, an economist and a senior research fellow at George Mason University's Mercatus Center, pointed out in a recent commentary that the inflation-adjusted value of U.S. industrial production — that is, manufacturing, mining and utilities combined — 'is higher than ever.' Real domestic manufacturing alone is up 177 percent — nearly triple — from 1975. And since 1994, the U.S. output of 'computer and electronic products' specifically has grown by 1,200 percent. Motor vehicle output is up 'well over 60 percent.' U.S. Labor Department data show nationwide payroll manufacturing employment was roughly 12.8 million in 2024. That's substantially higher than in 2009 or 2014, and slightly higher than in 2019, the last year before COVID-19 hit. U.S. Commerce and Labor Department data combined show the average annual compensation (including the value of noncash benefits) for an American factory employee is more than $100,000 a year. So there clearly is a future for good-paying factory jobs in our country. But the data also show state labor policy matters a lot in determining where net new job creation happens. From 2014 to 2024, manufacturing payroll employment grew by roughly 530,000, or 10.4 percent, in the 23 states that had right-to-work laws prohibiting the termination of employees who refuse to join or bankroll a union for that entire decade. Meanwhile, in the 23 states that lacked right-to-work protections for the whole period in question, aggregate manufacturing jobs fell by 0.2 percent, or roughly 12,000. (The four states that changed their policies during that period are excluded from this analysis.) The correlation between right-to-work status and superior growth in manufacturing jobs is robust. The seven states with the greatest percentage gains in manufacturing payrolls over the past decade (Nevada, Florida, Utah, Arizona, Idaho, Georgia and South Carolina) are all right-to-work states. Site selection experts whose career success depends on giving corporations good advice about where to make job-creating investments have confirmed again and again that right-to-work states are superior locations for new factories and expansions alike. In a 2023 interview, for example, Boyd Co. owner John Boyd observed that right-to-work laws have always been 'a recruiting tool for companies.' It's no mystery why, without right-to-work protections, employees are more likely to be forced into one-size-fits-all union contracts that foster work stoppages, wasteful work rules, job featherbedding and a union-label 'hate the boss' mentality. Just a few years ago, when they were still Harvard graduate students, economists Matthew Lilley and Benjamin Austin collaborated on research aimed at determining to what extent the diverse economic benefits associated with right-to-work laws are actually caused by Right to Work itself. Lilley and Austin, who today are professors of economics at Duke and Harvard, respectively, focused their attention on 'adjacent pairs of counties' in different states where one county had right-to-work protections for employees and the other did not. The Lilley-Austin analysis showed that right-to-work laws boost overall employment substantially, and that their impact is particularly strong in the manufacturing sector, which has a long history of heavy unionization. As Lilley reported in a 2023 follow-up paper for the Manhattan Institute, among the 373 neighboring counties he and his partner had analyzed, there was an average '3.23 percentage-point increase in the manufacturing share of employment' on the right-to-work side of the border. He then noted: 'This difference is substantial, equivalent to a 28 percent increase in manufacturing employment' in right-to-work counties relative to their forced-unionism neighbors. Practically all elected officials in the U.S. claim to support the creation of new manufacturing jobs and the retention of current ones. But the many Big Labor politicians in Washington, D.C., who support the elimination of state right-to-work laws and the expansion of union bosses' forced-unionism privileges to all 50 states are objectively in favor of the destruction of good-paying manufacturing jobs. Stan Greer is senior research associate for the National Institute for Labor Relations Research. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
03-05-2025
- Business
- The Hill
The evidence is in: Forcing workers to join unions destroys good-paying jobs
Contrary to what you hear from most D.C. Beltway politicians and national media pundits, we do still make things in America. Veronique de Rugy, an economist and a senior research fellow at George Mason University's Mercatus Center, pointed out in a recent commentary that the inflation-adjusted value of U.S. industrial production — that is, manufacturing, mining and utilities combined — 'is higher than ever.' Real domestic manufacturing alone is up 177 percent — nearly triple — from 1975. And since 1994, the U.S. output of 'computer and electronic products' specifically has grown by 1,200 percent. Motor vehicle output is up 'well over 60 percent.' U.S. Labor Department data show nationwide payroll manufacturing employment was roughly 12.8 million in 2024. That's substantially higher than in 2009 or 2014, and slightly higher than in 2019, the last year before COVID-19 hit. U.S. Commerce and Labor Department data combined show the average annual compensation (including the value of noncash benefits) for an American factory employee is more than $100,000 a year. So there clearly is a future for good-paying factory jobs in our country. But the data also show state labor policy matters a lot in determining where net new job creation happens. From 2014 to 2024, manufacturing payroll employment grew by roughly 530,000, or 10.4 percent, in the 23 states that had right-to-work laws prohibiting the termination of employees who refuse to join or bankroll a union for that entire decade. Meanwhile, in the 23 states that lacked right-to-work protections for the whole period in question, aggregate manufacturing jobs fell by 0.2 percent, or roughly 12,000. (The four states that changed their policies during that period are excluded from this analysis.) The correlation between right-to-work status and superior growth in manufacturing jobs is robust. The seven states with the greatest percentage gains in manufacturing payrolls over the past decade (Nevada, Florida, Utah, Arizona, Idaho, Georgia and South Carolina) are all right-to-work states. Site selection experts whose career success depends on giving corporations good advice about where to make job-creating investments have confirmed again and again that right-to-work states are superior locations for new factories and expansions alike. In a 2023 interview, for example, Boyd Co. owner John Boyd observed that right-to-work laws have always been 'a recruiting tool for companies.' It's no mystery why, without right-to-work protections, employees are more likely to be forced into one-size-fits-all union contracts that foster work stoppages, wasteful work rules, job featherbedding and a union-label 'hate the boss' mentality. Just a few years ago, when they were still Harvard graduate students, economists Matthew Lilley and Benjamin Austin collaborated on research aimed at determining to what extent the diverse economic benefits associated with right-to-work laws are actually caused by Right to Work itself. Lilley and Austin, who today are professors of economics at Duke and Harvard, respectively, focused their attention on 'adjacent pairs of counties' in different states where one county had right-to-work protections for employees and the other did not. The Lilley-Austin analysis showed that right-to-work laws boost overall employment substantially, and that their impact is particularly strong in the manufacturing sector, which has a long history of heavy unionization. As Lilley reported in a 2023 follow-up pape r for the Manhattan Institute, among the 373 neighboring counties he and his partner had analyzed, there was an average '3.23 percentage-point increase in the manufacturing share of employment' on the right-to-work side of the border. He then noted: 'This difference is substantial, equivalent to a 28 percent increase in manufacturing employment' in right-to-work counties relative to their forced-unionism neighbors. Practically all elected officials in the U.S. claim to support the creation of new manufacturing jobs and the retention of current ones. But the many Big Labor politicians in Washington, D.C., who support the elimination of state right-to-work laws and the expansion of union bosses' forced-unionism privileges to all 50 states are objectively in favor of the destruction of good-paying manufacturing jobs.
Yahoo
02-05-2025
- Business
- Yahoo
Letters to the Editor: 'Abundance agenda' might not be the answer to America's economic woes
To the editor: Guest contributors Veronique de Rugy and Adam Michel argue that lowering tax rates on capital gains, dividends, interest and business income would reward investment and grow the economy ('The 'abundance agenda' will fail without tax reform,' April 30). They say we should aim for 'more neutral, more consumption-based taxation.' That might look like increasing sales taxes — which take up a bigger percentage of the average household budget than of the wealthy household budget — and decreasing taxes on investments, which are important to the wealthy but have little place in the average family's finances. This prioritization of capital over labor is the favorite policy of those who have money to invest, but the pretense that it will 'trickle down' throughout the economy has been proven hollow time and again. In 2024, the bottom 50% of U.S. households owned 2.4% of total household wealth, while the top 10% of households held 67.3%, according to the Federal Reserve. Which of these groups needs a tax cut? Which would benefit from more public spending on housing, education and healthcare? Grace Bertalot, Anaheim .. To the editor: This op-ed sounds encouraging by suggesting the 'abundance agenda' policy framework as something both the left and right can embrace. Their argument is that if business is freed of burdensome taxes, abundance would rebound. I believe the underlying economic conundrum in the country is economic inequality, not a lack of abundance. The article asserts, without evidence, that, 'An abundant economy will do more for lower-income Americans than redistribution ever could.' This sounds like trickle-down economics all over again. Todd Collart, Ventura .. To the editor: De Rugy and Michel might have noted that the U.S. national debt is currently $36 trillion and has been rising at the rate of $1 trillion to $3 trillion a year. For decades, GOP leadership has maintained that tax cuts at the top will spur growth and increase revenue. We know now that this is a fantasy. The authors could have actually provided a public service by listing specific measures to compensate for the revenue lost by their proposals. Simply proposing new revenue reductions, given our disastrous fiscal status, just perpetuates the folly of and damage caused by supply-side economics. Eric Carey, Arlington, Va. This story originally appeared in Los Angeles Times.
