The Trump administration has heavily promoted the larger tax refunds expected this year as a selling point for Republicans in the midterm elections, but two conservative economists refuted that narrative on Tuesday, arguing that, in aggregate, the Trump administration’s policies were, in effect, a tax increase.
Signed into law by President Donald Trump last year, the One Big Beautiful Bill Act extended a number of tax cuts implemented during his first term – tax cuts that largely benefit the wealthiest Americans, and at the expense of social safety net programs like Medicaid and food assistance. The savings for “the average American,” however, were more than offset by the price hikes caused by Trump’s tariff policy, conservative economists Phil Gramm and Michael Solon argued Tuesday in an op-ed published in The Wall Street Journal.
“Although the government is putting money back into taxpayers’ pockets on the one hand via tax refunds, it is taking more money out via tariff-driven price increases, leaving Americans worse off financially,” the op-ed reads.
“The Trump administration insists that other countries are eating the cost of tariffs. That is a myth. If foreigners were absorbing the costs, import prices would drop: To keep their products at the same prices in U.S. stores, foreigners would have to lower their products’ prices to make room for the tariff. Instead, a Bureau of Labor Statistics analysis found that ‘U.S. import prices were unchanged (0.0 percent) in 2025.'"
According to estimates from the Joint Committee on Taxation cited by Gramm and Solon, taxpayers are projected to receive around $188 billion in reduced tax liability for 2025 directly attributable to Trump’s OBBBA. On the other hand, the president’s tariffs are expected to have collected $195 billion in 2025 in new tariff revenue, an increase that studies have found has been passed on to American consumers “almost entirely.”
“Things will get worse in 2026,” the op-ed reads. “The Congressional Budget Office projects that Mr. Trump’s tariffs will generate $331 billion this year, while the CBO estimates the new tax cuts will save taxpayers $230 billion. Families and businesses will be worse off on net. This will matter in the election."
"If Mr. Trump had implemented his tax cuts, deregulation and welfare reforms and left tariffs alone, the economy would be booming. His obsession with tariffs has denied us the 'golden age' he promised."