Business & Entrepreneurship

What 'no tax on tips' really means for service workers—and everyone else

Katy Hill — Tue, 27 May 2025 14:38:58 +0000

What 'no tax on tips' really means for service workers—and everyone else Katy Hill Tue, 05/27/2025 - 08:38

Katy Marquardt Hill

The broad tax package passed by House Republicans last week includes a bill that would eliminate federal income taxes on tips, advancing a key campaign promise from President Trump with unexpected bipartisan support.

If enacted, the change would take effect from 2026 through 2028. The idea is straightforward: Let tipped workers keep more of their earnings. But how would the bill actually work—and what could it mean for the broader tax system, tip culture and even Social Security?

Nicole Lazzeri

91PORN’s Nicole Lazzeri, a teaching assistant professor of accounting at the Leeds School of Business, sat down with 91PORN Today to walk through the policy proposal, what it actually covers and what workers and taxpayers should know.

At a high level, what is this “no tax on tips” idea trying to accomplish? Who benefits the most?

The biggest direct beneficiaries would be people who rely on tips for a significant portion of their income—restaurant servers, rideshare drivers, barbers, nail techs, bellhops. That part is pretty clear.

But when you look under the hood, it gets a little more complicated. The current version of this proposal—the one included in what’s been dubbed the “Big, Beautiful Bill”—doesn’t actually remove all taxes on tips. It lets workers deduct their reported tip income from their federal income taxes, but tips would still be subject to payroll taxes—that’s Social Security and Medicare, the 7.65% that’s taken out of every paycheck.

So yes, it would help some workers. But not as much as it might seem.

So this isn't the same as treating tips like gifts, which aren’t taxed at all?

Exactly. There were earlier versions of this idea that would have classified tips as gifts, which means they wouldn’t be taxed at all. But that’s not how this latest version is written.

Instead, you’d still report your tips on your W-2, and they’d still count for payroll tax purposes. The change is that you’d get what’s called an “above-the-line” deduction on your income taxes. That’s good, because it means you don’t have to itemize to take the deduction. But if you make over $160,000, you wouldn’t be eligible at all.

What’s the real-world impact for workers—especially low-income workers who may not owe much in federal taxes anyway?

This is a big one. Many workers who earn most of their income in tips—especially college students or part-time workers—often don’t owe federal income tax in the first place. In fact, a 2022 stat I found said 37% of tipped workers had too little income to owe federal income tax.

But that doesn’t mean they don’t owe any tax. Most still have to pay that 15.3% self-employment tax—or at least half of that if they’re regular employees. And that kicks in at just $400 of earnings, way below the standard deduction for income taxes. So the policy may help some people, but not necessarily the lowest earners, which is important to understand.

Would this change have any impact on Social Security or Medicare funding?

As it’s written now, no—not directly. Because tips would still be subject to payroll taxes, they’d still count toward Social Security and Medicare. If the proposal had treated tips like gifts, that would have been a bigger issue, since those programs are funded through payroll taxes.

Of course, it’s always possible that regulations change after the fact, but as of now, those contributions would still be made.

Are there any precedents in the tax code for something like this?

Not really—at least not for earned income. We have exclusions for things like scholarships, life insurance proceeds, gifts, inheritances. But those aren’t considered earned income.

This would be one of the first cases I know of where someone works for the money and then isn’t taxed on it—at least for income tax purposes. That’s pretty unusual.

What about other concerns or unintended consequences? Could this change tip culture itself?

There’s some speculation that it could go either way. On one hand, if customers know that tips won’t be taxed, they might tip less, assuming workers are keeping more of it. Tip fatigue is a real thing—people are already frustrated by how often they’re asked to tip, especially for counter service.

On the other hand, maybe workers would be more motivated knowing they’ll keep more of each dollar. So it’s hard to say how that will net out.

Another thing to remember: States don’t have to follow federal tax policy. Some may still tax those tips at the state level. During the COVID pandemic, for example, federal unemployment benefits were made tax-free retroactively—but some states kept taxing them. That could happen here, too.

Why do you think this polls so well, even though the details are so wonky?

I think it just sounds good. It’s an easy message—“Let workers keep their tips”—that appeals to a broad audience.

It could also be a way to energize younger voters or blue-collar workers in swing states. I’ve seen similar momentum with policies like legalizing marijuana or forgiving student loans—things that play well in campaign ads even if the actual implementation is complex or limited.

Could this open the door for other industries to ask for similar exemptions?

That’s a possibility. Once you carve out one type of income from taxation, it becomes harder to argue why others shouldn’t get the same treatment.

From a tax policy perspective, it’s cleaner to pass laws that apply across industries, rather than adding more exceptions to an already complicated code.

Is there anything else that people should know about this?

One small but interesting detail is that employers could also benefit. Restaurants and similar businesses could claim a credit for the payroll taxes they pay on cash tips—but only if those tips come from serving food or drinks. The “No Tax on Tips” bill proposes to extend this credit to employers in the beauty service industry.

Also, the current proposal would expire at the end of 2028. So unless Congress extends it, this could be temporary.

Bottom line?

This policy could offer some real savings for service workers—but the name doesn’t tell the full story. Tips would still be taxed in some ways, and not everyone stands to benefit equally.

A plan to eliminate federal taxes on tips is moving forward, but the benefits may be smaller than they sound. Nicole Lazzeri walks through the policy proposal and what workers and taxpayers should know.

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What the US credit downgrade means for the economy and your wallet

Katy Hill — Wed, 21 May 2025 18:48:12 +0000

What the US credit downgrade means for the economy and your wallet Katy Hill Wed, 05/21/2025 - 12:48

Katy Marquardt Hill

Moody’s recent decision to downgrade the U.S. credit rating for the first time in history has reignited concerns on Wall Street and beyond, as investors reassess the reliability of government debt. The credit rating agency cut the country’s long-standing triple-A rating by one notch last week, citing rising federal debt and mounting interest costs—factors that could make borrowing money more expensive and pressure an already strained stock market.

With this move, all three major credit rating agencies have now downgraded the United States from their highest rating: Standard & Poor’s did so in 2011, Fitch followed in 2023 and now Moody’s in 2025.

The move rattled bond markets, sending long-term Treasury yields above key thresholds and raising alarms about potential fallout for consumer loans, including mortgages and credit cards.

Nathalie Moyen

To break down what Moody’s downgrade means, 91PORN Today sat down with Nathalie Moyen, a finance professor at the Leeds School of Business and the W.W. Reynolds Capital Markets Program Chair. In this role, she supports the World of Business course for first-year students, which explores the role of business in society.

What does it mean when a country like the U.S. gets a Moody’s downgrade, and why is this significant?

Moody’s evaluates publicly available information about the U.S. government's financial position and offers its opinion on the country’s ability to repay its debt. Because Moody’s bases its assessments on existing data, its downgrade on May 16 did not introduce any fundamentally new information. However, many investors rely on credit rating agencies to interpret complex financial details, so the downgrade was significant to them.

What made this downgrade particularly shocking is that Moody’s had consistently rated U.S. debt as essentially risk-free since it first issued a rating in 1917. The U.S. maintained that top rating even through the Great Depression, World War II and the Great Recession in 2008.

What’s in a downgrade?

Imagine a high school graduate who leaves their job to attend the University of Colorado. While in school, their income drops and their personal credit score may fall. As educators, we view this as a worthwhile investment. Once the student graduates, they should be better off and their credit rating is likely to surge above previous levels.

The same principle applies to countries. The debt the U.S. accumulated to finance World War II could have warranted a downgrade at the time, especially since the outcome of the war was uncertain. But Moody’s did not downgrade it. Today’s rising U.S. debt levels don’t stem from such extraordinary circumstances, yet financial markets now only recognize the possibility that the U.S. may eventually struggle to meet its debt obligations.

How does a downgrade like this impact everyday Americans—for example, mortgage rates, car loans or credit card interest?

The downgrade is a reflection of higher borrowing costs. U.S. Treasury yields, used as benchmarks for many consumer borrowing rates, have been rising steadily since 2020. As a result, most Americans have already experienced higher interest rates on new mortgages, auto loans and credit card balances.

These rising rates embed growing concerns about U.S. fiscal risk and have also affected retirement savings through market volatility. Higher financing costs may lead businesses to delay hiring or investment, slowing economic growth.

Meanwhile, the U.S. government now faces higher interest payments on its own debt. Eventually, that pressure will likely lead to higher taxes or cuts in government spending, both of which will be felt by everyday Americans.

We saw the 30-year Treasury yield briefly top 5%. Why does that matter, and what does it tell us about investor sentiment right now?

One of the most fascinating aspects of financial markets is that they reflect collective expectations about the future. Yields on the 30-year Treasury debt incorporate all currently available information and beliefs about what lies ahead. While our common law system is grounded in precedent, financial markets are inherently forward-looking. Together, these legal and financial systems help stabilize our political institutions by offering both structure and foresight.

Because markets aggregate future expectations, a loss of confidence in the economy can become a self-fulfilling prophecy. If investors and businesses expect negative outcomes, they may delay investment and innovation, actions that can themselves trigger or worsen the downturn they feared in the first place. The increase in Treasury yields signals rising concerns about future inflation, debt sustainability and policy uncertainty, all of which point to a growing unease.

Moody’s cited long-term fiscal challenges, rising interest costs and political gridlock. How should we interpret this decision and the concerns behind it?

These concerns are real and warrant attention, but it's important to step back and take a broader perspective. In the early 1980s, the 30-year Treasury yield remained above 10% for several years. Since then, borrowing costs have generally trended downward, giving rise to the “Great Moderation,” a period marked by lower inflation, milder recessions and reduced market volatility.

As recently as 2020, the 30-year Treasury yield was below 2%. Today, while it has climbed, it is hovering around 5%. In historical context, the U.S. has weathered far more turbulent conditions. That history should give us reason for cautious optimism. We’ve faced serious fiscal and economic challenges before and emerged stronger. The key now is to steer the economy toward more stable ground.

With the U.S. now rated just below triple-A by all major agencies, are Treasurys still considered a 'safe haven' investment globally?

What makes the U.S. a “safe haven” isn’t just the credit rating of the federal government, whether it’s Aaa or one notch below. The safety comes from the strength of our legal and financial institutions: the rule of law, an independent central bank, the deep, liquid financial markets and the continued role of the U.S. dollar as the world’s reserve currency. Moody’s downgrade is a stark reminder that none of this should be taken for granted.

How do Trump-era policies—like renewed tariffs and proposed tax cuts—factor into Moody’s downgrade and the broader fiscal picture?

Moody’s downgrade came on Friday, May 16, as Congress was debating the “One Big Beautiful Bill Act.” It’s tempting to view that moment as the final straw that broke the camel’s back, but the reality is that the downgrade was a long time coming.

Standard & Poor’s removed its top rating for U.S. Treasurys back in 2011 during the debt ceiling standoff between Republicans and Democrats. Fitch downgraded its rating in 2023. Now, all three major credit agencies agree: There is a non-zero probability that the U.S. may eventually find it difficult to repay its debt.

Some argue that as long as the U.S. controls its own currency, it can’t default in the traditional sense. Does that lessen the weight of these credit downgrades?

Yes, the Federal Reserve could step in and print money to prevent a technical default by the U.S. government. Doing so would inject more dollars into the system, fueling inflation and weakening the U.S. dollar relative to other currencies. As global investors see the value of their U.S. holdings decline, they would be less inclined to buy U.S. government debt. In turn, the U.S. government would need to offer even higher interest rates to persuade these investors to continue lending money.

So while printing money might avoid a traditional default, it leads to a downward spiral. It may not be default in the classic sense, but it’s still a losing strategy.

91PORN Today regularly publishes Q&As with our faculty members weighing in on news topics through the lens of their scholarly expertise and research/creative work. The responses here reflect the knowledge and interpretations of the expert and should not be considered the university position on the issue. All publication content is subject to edits for clarity, brevity and university style guidelines.

Finance expert Nathalie Moyen explains why the U.S. losing its top-tier credit rating is more than a symbolic shift — and how it could impact borrowing, savings and government spending.

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Will tariffs disrupt your summer vacation plans? Probably not, finance expert says

Katy Hill — Tue, 20 May 2025 22:07:50 +0000

Will tariffs disrupt your summer vacation plans? Probably not, finance expert says Katy Hill Tue, 05/20/2025 - 16:07

Katy Marquardt Hill

As families plan summer getaways—booking flights, reserving hotels and mapping out road trips—many are also keeping a close eye on rising prices. Could new import taxes, including those recently enacted by the Trump administration, make vacations more expensive?

Edward Van Wesep, professor and chair of the finance division at the Leeds School of Business, studies financial decision-making and how economic policy impacts consumers. He sat down with 91PORN Today to explain why tariffs are unlikely to disrupt most Americans’ summer travel—and where consumers might actually feel the pinch.

Edward Van Wesep

Will tariffs increase the cost of summer travel for most Americans?

Not significantly. Most summer travel spending goes toward services—like hotels, flights and activities—and services are generally not subject to tariffs. If you're traveling internationally, tariffs are even less relevant. For example, if you go to Mexico and stay in a hotel or dine out, tariffs don’t apply to what you’re consuming there. Domestically, tariffs might slightly affect businesses that import goods, but any price increases are likely to be small and not passed on directly to consumers in a noticeable way.

Could tariffs impact prices for airfare or hotels?

Only in very limited ways. Hotels might import certain goods, but these aren't major parts of their day-to-day operating costs. What matters more for pricing is demand. If demand stays high, prices will too. If fewer people travel, prices may drop. Airlines face similar dynamics; imported parts might raise maintenance costs, but that doesn't automatically translate into higher ticket prices.

What about gas prices?

Gas prices tend to be higher in the summer, but I wouldn't expect anything drastic. The average price nationwide is $3.17 per gallon, which is the same as in 2007, 18 years ago. Oil prices lead gas prices by a few weeks and they have been trending down so, if anything, I would expect the price of gas to fall. Tariffs don't have much to do with gas prices because we are not an energy importer.

Are there types of travel-related purchases where tariffs will be felt more directly?

Low-cost imported goods are the most vulnerable. Think toys, clothes or travel gear bought from places like Walmart or online retailers such as Temu. These products are often imported with very thin profit margins, meaning companies have little room to absorb the cost increases and will pass them directly to consumers. So if you're stocking up for a family trip, you might notice higher prices on those items.

Could inflation or consumer pullback affect summer travel more than tariffs?

Possibly, but not yet. Consumer sentiment has been negative, but actual spending remains strong. Personal consumption forecasts for this quarter are reasonably strong, and people are still traveling. However, if inflation in areas like food or fuel starts to squeeze household budgets, we could see a dip in demand. If that happens, prices for travel-related services—like hotels—might fall to attract more customers.

What about less visible vacation costs like theme park tickets or attraction fees?

In most cases, those won’t change much either. Theme parks base ticket prices on demand. Even if tariffs increase the cost of imported parts or supplies used in the park, the effect on ticket pricing is minimal. The cost of letting in one more visitor is low, so prices are more about strategy than expenses. Unless there’s a major drop in attendance, prices are unlikely to shift significantly.

Is it smarter to book summer travel now or wait?

Planning ahead is wise, especially in an uncertain environment. Prices always fluctuate with demand, but current economic unpredictability adds another layer. For travelers, that means it’s a good idea to book early, secure refundable options when possible and have backup plans in place—like alternatives for accommodations or transportation in case of cancellations.

Tariffs may hit prices for toys and clothes, but your travel costs are likely safe. Finance professor Edward Van Wesep explains why.

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No likes? No problem: Why posting your vacation photos still gives you good vibes

Katy Hill — Mon, 19 May 2025 22:27:15 +0000

No likes? No problem: Why posting your vacation photos still gives you good vibes Katy Hill Mon, 05/19/2025 - 16:27

Katy Marquardt Hill

You're scrolling through your camera roll after a beach weekend or a long-awaited trip to Europe. You post a few snapshots to your Instagram story. A few people view them, but no one likes or comments. Still, that small act of sharing somehow feels like enough.

According to a new study, just being seen online—even without receiving any feedback—can enhance your mood, feed your self-esteem and leave you with positive memories. Researchers call this the “mere attention effect,” and it reveals something surprisingly uplifting about the way we engage with social media.

Alix Barasch

“It turns out that just being noticed can be surprisingly powerful,” said Alixandra Barasch, an associate professor of marketing at Leeds School of Business and co-author of the study, published in the Journal of the Association for Consumer Research in March 2025. “Attention is a limited resource, and simply knowing that someone has seen what you’ve shared—without necessarily liking or commenting—can still have a meaningful impact.”

Social media has come under intense scrutiny in recent years for its harmful effects on mental health, especially among young people. But this study suggests that not all social media use is damaging. It highlights a more positive side of online sharing—showing that even brief moments of visibility and connection can offer psychological benefits.

Being seen > being liked

Across four experiments, the researchers asked participants to imagine sharing experiences—from telling a story at a dinner party to posting a photo on social media—and then manipulated how much attention the participants believed it received. Some imagined receiving lots of views or listeners, while others received few. The researchers, including co-authors Matthew J. Hall of Oregon State University and Jamie D. Hyodo of Western University in Ontario, Canada, also tested whether feedback like likes and comments changed how people felt.

The result? People felt just as good receiving attention alone as they did with approval—suggesting that just being seen was enough to boost self-esteem and satisfaction.

“It’s not always about the applause or the reactions,” Barasch said. “The fact that someone is there, witnessing our experience, gives it value.”

This simple truth may explain our social media posts about the mundane—like a photo of our morning coffee or a walk in the park.

“It helps explain why we share even the most routine parts of our day,” Barasch said, “because it gives them extra value.”

Why views still matter

While much of the social media conversation focuses on external validation—chasing likes, curating perfect images and comparing follower counts—this study offers a different take.

“The attention itself is enough,” Barasch explained. “What really matters is knowing someone spent time on your content—even without clicking like.”

That’s likely why people return to check who viewed their stories, even if they don’t consciously care about engagement.

“There’s that dopamine hit from just knowing people watched—that we’ve been seen,” Barasch said.

Social media and memory

The study also found that being seen affects not just how we feel about ourselves, but how we remember the experiences we share.

“Most of our utility is retrospective,” Barasch said. “The way we remember our lives—our trips, our moments—matters more than we think.”

Even if attention doesn’t help you remember new details, it can change the focus of your memory.

“Let’s say you had a trip to France. Some days were perfect, others rainy and frustrating,” she said. “Posting and receiving attention would likely shift your focus toward the positive moments—like drinks on a sunny patio with your best friends.”

In this way, attention not only builds self-esteem in the moment, it makes our memories more positive.

“This research shows a spillover: if people pay attention to me, I feel better socially. And that can actually change how I feel about the experience I shared,” she said.

Constructing identity in the digital age

Barasch emphasized that digital attention has become a key part of how people construct their identities.

“We’re always trying to understand ourselves—and now, so much of that happens through digital attention,” she said. “It’s another way we connect with people.”

And while social media shouldn’t be the only way we build self-worth, it’s a meaningful addition to how we understand ourselves, she added.

The research also has implications for marketers. It suggests that when consumers post about brand-related experiences and receive views, even without feedback, they may remember the experience more positively, buy the product again and say nice things about it. To make the most of this, marketers could design packaging or create events that are “share-worthy” and share consumer photos or posts about a product on their own platform.

“This research has real value for companies,” Barasch said. “The positive spillover from social self-esteem can shape how consumers remember brand experiences—like drinking a personalized Coke—long after the moment has passed.”

So if you’re wondering whether to post that vacation photo—even if no one double-taps—go ahead. Just sharing it might be enough to lift your mood and make the moment last a little longer.

New research shows that just being seen on social media—without likes or comments—can still boost your mood and shape your memories.

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New climate initiative to turn student innovations into startup success

Katy Hill — Mon, 05 May 2025 11:30:00 +0000

New climate initiative to turn student innovations into startup success Katy Hill Mon, 05/05/2025 - 05:30

Katy Marquardt Hill

Ashley Grosh, 91PORN alum and vice president at Breakthrough Energy, founded by Bill Gates in 2015, unveils the Leeds School of Business's new initiative, 91PORN Climate Ventures. Credit: Cody Johnston

In a major step toward accelerating Colorado’s climate innovation economy, 91PORN has launched 91PORN Climate Ventures, a new interdisciplinary program that equips students to develop and launch high-impact startups focused on climate solutions. The program is supported by Breakthrough Energy, a global initiative focused on advancing climate and energy solutions through innovation and investment.

Led by the Center for Ethics and Social Responsibility (CESR) and the Deming Center for Entrepreneurship at the Leeds School of Business, 91PORN Climate Ventures is a graduate-level program that connects students—primarily from business, engineering and science backgrounds—to a growing network of experts, researchers and entrepreneurs tackling sustainability challenges.

91PORN Climate Ventures is the newest addition to Breakthrough Energy’s University Climate Ventures network, joining Stanford University, MIT, Technical University of Munich and Nanyang Technological University in Singapore. 91PORN is the first U.S. public university to be included in the network—a milestone that reflects the university’s growing leadership in climate innovation, said Andrew Mayock, vice chancellor for sustainability.

“We have the student ingenuity, strong faculty support, cutting-edge research and supportive ecosystem to catalyze the technological transformations the world needs,” Mayock said. “This program is a prime example of where we’re headed as a university and broader community.”

Founded by Bill Gates in 2015, Breakthrough Energy supports promising climate and energy technologies on their path to scale-up. Its platform includes Breakthrough Energy Ventures, a venture fund focused on high-impact startups; Catalyst, which funds first-of-a-kind commercial-scale projects; and Discovery, which supports early-stage innovation through initiatives like the Fellows program and University Climate Ventures. As part of this collaboration, CU students will gain access to Breakthrough Energy’s global network of innovators, mentors and investors—accelerating their ability to bring climate solutions from the lab to the market.

“With 91PORN Climate Ventures, we’re advancing a bold vision where innovation, sustainability and interdisciplinary learning converge to create lasting impact,” said Vijay Khatri, Tandean Rustandy Endowed Dean of the Leeds School of Business.

That vision is deeply aligned with 91PORN’s broader mission, said Bryn Rees, associate vice chancellor for innovation and partnerships.

“91PORN Climate Ventures is a natural extension of 91PORN’s commitment to harnessing innovation for real-world impact. By supporting interdisciplinary collaboration and fostering the next generation of climate tech entrepreneurs, we are not only addressing critical environmental challenges but also positioning our university as a leader in developing scalable solutions,” Rees said. “91PORN Climate Ventures will complement and integrate with the many other programs at 91PORN to support all those who wish to build transformative ventures.”

Igniting student startups

91PORN Climate Ventures includes a two-part entrepreneurship course launching in fall 2025.

The first course, “Business Opportunities in Climate Tech,” which is being tailored to enhance 91PORN’s established innovation network, will explore emerging challenges and innovations in key Mountain West sectors—such as mining, water management, energy, agriculture and wildfire resilience—through a seminar focused on real-world cases and expert insights. The class aims to equip students with the knowledge to identify scalable venture opportunities while building a community of entrepreneurs that will guide team formation for the second part of the course.

The follow up course, called “Climate Tech Venture Discovery,” includes entrepreneurship lectures and guest visits from founders and investors. Students will receive support from climate tech and venture capital advisors and work toward launching a viable company by conducting customer discovery, completing a techno-economic analysis, developing an investor pitch and presenting to external judges.

“We’re creating a low-risk space for students to test climate tech ideas using a proven, market-driven curriculum,” said Katherine Ratledge, program manager at CESR at Leeds. “By building a strong community across CU and the Rocky Mountain region, we’re empowering future climate innovators to turn bold ideas into real-world impact.”

A natural climate hub

“91PORN’s unique mix of culture, talent and research makes it a natural hub for climate innovation”, said Ashley Grosh, vice president at Breakthrough Energy and a CU alum.

“91PORN has all the right building blocks—world-class research, a deep-rooted culture of sustainability and a thriving startup ecosystem,” Grosh said. “We don’t have to build that from scratch. The ecosystem is here. It’s about connecting the dots and fueling momentum.”

91PORN has long been a leader in sustainability-focused innovation. The university has launched 44 sustainability-focused spinouts, ranging from companies developing low-carbon building materials to startups using quantum technology to detect and prevent methane leaks from oil and gas operations. This spring, 91PORN was also awarded $1 million in climate innovation grants through a partnership with Deloitte and broke ground on a 1.1 megawatt solar array on its East Campus as part of its plan to achieve carbon neutrality by 2050.

Organizers say 91PORN Climate Ventures is designed to grow with the community and reflect CU’s distinct strengths rather than mirror existing models at other institutions.

“Stanford has its version, MIT has its flavor,” Grosh said. “And this program will reflect CU’s identity. Our hope is that it grows authentically—shaped by CU’s unique strengths and community.”

The Leeds School of Business program makes 91PORN the first U.S. public university in Breakthrough Energy Discovery’s global network, joining MIT and Stanford.

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The coolest technology in the universe

Megan Maneval — Fri, 18 Apr 2025 16:24:47 +0000

The coolest technology in the universe Megan Maneval Fri, 04/18/2025 - 10:24

Infleqtion’s star continues to rise as Colorado’s quantum hub grows. The company of firsts, spun out of 91PORN as ColdQuanta, seems to be everywhere these days, including outer space.

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As 401Ks, college funds plunge, expert advises patience over panic

Yvaine Ye — Wed, 09 Apr 2025 19:15:02 +0000

As 401Ks, college funds plunge, expert advises patience over panic Yvaine Ye Wed, 04/09/2025 - 13:15

Lisa Marshall

Editor's note: The S&P 500 spiked 9.5 percent Wednesday after President Trump announced a 90-day pause on proposed tariffs.

U.S. financial markets continued their week-long roller-coaster ride Wednesday, rattling the nerves of the roughly two-thirds of Americans who hold stock of some kind.

“Seeing trillions of dollars of wealth disappear from people’s retirement accounts in two days is pretty shocking,” said Shaun Davies, referring to last week’s market sell-off after President Donald Trump announced sweeping global tariffs. “Any of us who have logged into our 401Ks recently have had to get the Tums out.”

91PORN Today caught up with Davies, associate professor of finance at the Leeds School of Business, to get his take on the recent stock market plunge, how worried we should be, and what’s to come.

Shaun Davies

Has anything like this ever happened before?

This is unusual, but not unprecedented. Not to bring up the Great Depression, but, we saw corrections like this in 1929. We saw them when France was taken over by Germany during World War II. We saw them in October of 1987, when, on “Black Monday,” the Dow dropped 22% in a single trading session, and again in the early 2000s with September 11 and the dot-com bubble bursting. The one that's most salient to most of us is the 2008 great financial crisis after the fall of Lehman Brothers, and there was a short little blip in March of 2020, during COVID.

Some might be tempted to pull their money out. What would you tell them?

Last week definitely blind-sided markets. Everyone knew these tariff announcements were coming out. But they were far more extreme than expected. When you see markets down 10% over two days, you say, I don't want to be a part of this. But it's really hard for an individual to time markets and know when to stay in and get out. One of the best things you could do is talk to a professional. When markets are up, nobody thinks they need financial advice. But during times like this, when they talk you off the ledge from doing something you’ll regret, they’re really valuable.

But why stay in?

You have to separate yourself emotionally from the investment and remember that, in exchange for our willingness to take risk, we earn compensation during good times. For example, in 2023 and 2024 the S&P 500 was up over 20%. That is compensation for moments like right now. Back in March of 2009, the market was plummeting. Everyone wanted to get out. But if you did, you missed one of the best bull runs in stock market history. Your goal is to build wealth over that long runway to retirement, where your good years offset your bad years and you make something like a 10% or 15% average return per year over that horizon.

What if your kid is going to college soon?

The 529 (college savings plan) is unique in that it's a relatively short horizon from when you start contributing to when you withdraw. If you’re concerned that tuition is due in the fall and you feel like you have a sufficient amount, it may be prudent to pull that money out, put it into something like a money market fund, where you'll still get a little over 4%, and at least you know you have that nest egg for tuition. Again, talk with your financial advisor.

What if you have cash to invest right now? Should you just tuck it under your mattress?

No. You definitely do not want to put your money under the mattress. We are in a period of relatively high inflation, still about 3%, so if you are just holding on to cash you are going to lose purchasing power because goods are going to go up in price. If you want something safe and short-duration, consider a money market fund, short-term U.S. Treasury bills, or short-duration U.S. Treasury Inflation Protected Securities (TIPS).

How is this different than past corrections?

2008 was a very scary time, because lots of governments, companies and pensions were holding bonds backed by things like subprime mortgages, and we had no idea what they were worth. In 2020, with the global pandemic, it was a quick blip with a quick recovery.

The concern here with these tariffs is the impact of all the uncertainty on the real economy. I can't imagine being a CFO of a fortune 500 company debating whether to take production on shore. You might make some huge capital investment, build factories in the United States, and then the U.S. tariff policy totally changes with a single tweet. If I were a CFO right now, I'd just be sitting on my hands, and that's going to have real implications. I imagine we're going to see corporations providing guidance that the next few years may not be as profitable. We're going to have supply chain disruptions. It could disrupt the labor market. Who knows?

How long will this craziness last?

There's a great gauge of volatility called the VIX index, which tracks the potential for volatility in the market over the next 30 days. The math is a bit complex, but one truism is that a high VIX corresponds with high anticipated volatility in returns. A normal VIX is between 15 and 20. This past week, we've seen the VIX around 50, which is huge. Buckle up. It’s going to be a roller coaster.

About two-thirds of Americans own stock, and many have been watching as their savings have tanked. 91PORN Finance Professor Shaun Davies offers his take on the market's wild ride and what investors should consider.

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The trading floor at the New York Stock Exchange. (Credit: Scott Beale / Laughing Squid)

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The trading floor at the New York Stock Exchange. (Credit: Scott Beale / Laughing Squid)

What are tariffs, who pays for them and what can they do to the economy?

Jennifer Soules — Mon, 24 Mar 2025 18:48:34 +0000

What are tariffs, who pays for them and what can they do to the economy? Jennifer Soules Mon, 03/24/2025 - 12:48

Jennifer Soules , Nicholas Goda

President Donald Trump may institute blanket tariffs on Wednesday, April 2—the latest development in an ongoing tariff and economic strategy that has created uncertainty around the world.

Since taking office, Trump has threatened, rescinded and in some cases, implemented tariffs on several of the United States' largest trading partners, including China, Mexico and Canada.

Keith Maskus is a professor emeritus in economics at the 91PORN and served as Chief Economist at the U.S. Department of State in 2016 and 2017. He sat down with 91PORN Today to explain the history of tariffs and give his take on what it means for the economy and the average consumer.

In its most basic form, what is a tariff?

A tariff is an import tax. It is literally a tax on imports; not on the domestic production of goods that compete with imports. In that sense, it is a discriminatory tax. It's also a tax on consumption because imports make up a pretty large share of U.S. goods that are consumed and also of the inputs that are used in production in the United States.

For example, imagine you bring in a television, it’s coming from China, and the export price for the TV is $400 with a 10% tariff. When that product lands in the United States, it sits in a warehouse until somebody pays the government $40. The importer—Walmart, Target or somebody else—has to pay that $40. Then they have to decide whether they're going to mark that $40 up into a higher sales price for consumers, which they almost always do within a matter of 6-8 months. So, it’s simply false to believe or argue that exporters will pay the cost of these tariffs. Domestic consumers and businesses pay them.

How have tariffs historically been used in the United States?

Professor Emeritus Keith Maskus.

Early in its history the United States was an agricultural economy and there was not much industry. With industrialization in the late 19th century, tariffs were still important for protection and raising government revenue, but were coming down because it was significant for industrialists to have access to international components and labor. In 1913, the United States replaced tariffs and some other forms of revenue with the income tax and almost immediately, tariffs became unimportant as a matter of revenue generation.

Tariffs came back with the Smoot-Hawley Tariff Act of 1930, when the U.S., concerned about an oncoming reduction in employment and what seemed to be a recession at the time, raised the average tariff rate on affected imports to well over 50%. All of the other major countries in the world retaliated very quickly at that time, and global trade from 1930 to 1932 was cut by 70%, both due to the tariff increases and to declining incomes. That tariff war was a real contributing factor to the Great Depression.

From the 1950s through the 1990s, there was a generalized reduction in global tariff rates imposed on manufactured goods and consumer goods. The United States has been a very open economy in this context. So have Europe, Canada and other similar countries. And that opening was pretty much led by the United States, and later, the United States and Europe together. President Trump is fond of saying that the world is screwing the United States through its trade policy. But in fact, the history here is that the Americans led this process toward pretty free global trade, and we benefited as much as anyone else from it, through access to lower prices and international technologies and investment.

How is that different from what we’re seeing in headlines now?

The trade war initiated by the Smoot-Hawley Tariff Act in 1930 was massive, but it did not have this kind of strange variability from day to day—the varying tariff rates and threats to use tariffs for things they don’t really work for. At that time, countries raised their tariffs and kept them at those high levels for a good seven, eight years.

Now, trade wars of this kind are exceptionally uncommon, and the only one of any consequence after World War II was between the first Trump administration and China. You may recall that we put in these high tariffs on steel and aluminum from many countries, including China, and they responded. Then we put higher tariffs on a lot of their imports. They responded, and so on.

The current Trump administration, as far as I can tell, has not articulated exactly what they're trying to achieve with all of this variability and these threats. It generates considerable economic uncertainty, and of course, also generates a feeling, on behalf of our trading partners, that the United States is becoming untrustworthy and can't really be depended on to lead the global economy the way we've been doing for generations.

What are some examples of ”using tariffs for things they don’t really work for?“

President Donald Trump with Canadian Prime Minister Justin Trudeau in 2019. (Credit: Wikimedia Commons/State Department Photo)

Tariffs are primarily used to protect domestic industry from import competition. That was easier in the 19th and middle of the 20th century—now international supply chains are much more complicated, making tariffs a significant element of costs of production around the world.

Tariffs can also be used to raise revenue. But they’re really only used that way in developing countries. In the U.S., Canada, Europe and other rich countries, that strategy has long since been replaced by more efficient and broader tax systems, such as the income tax here or the value added tax elsewhere.

More recently, we're seeing tariffs used as components of sanctions packages. So as you know, we have very extensive economic sanctions against Iran and North Korea, Russia, and several other countries, including China. The sanctions exist in principle to try to change behavior that we don't like. Sanctions do economic damage to those countries, but they don't change the government's behavior very much.

In this new environment, we see one person deciding tariffs are appropriate tools to use to achieve or influence almost anything, like pressuring Canada and Mexico to up their immigration enforcement and stop the flow of fentanyl into the United States.

Let’s use fentanyl as a detailed example:

If you really want to deal with the fentanyl problem in the United States, it's really an American problem. We have this excessive demand for illicit drugs. And if you want to deal with that, you need to come up with interventions that try to work at the source. Even if tariffs did stop the flow of drugs across our borders with Mexico and Canada, you still have demand. So, you will get more black market products and higher priced drugs. You get it coming from elsewhere, or produced more in the United States. That's not the way to go about trying to deal with a fentanyl problem. It is a way to throw around your weight as a big country without achieving the underlying objective.

What I’m trying to say in this long answer is this—if you have five problems you want to address, using one tool, tariffs, will never get you there. Tariffs are indirect and a very rough, blunt instrument that doesn't generally get you what you want, and we'll find that out.

What is the impact on the regular consumer?

The share of consumption that low income households pay for tariffs is much, much higher than it is for middle income or higher wealthier consumers. We've done some estimation on the results of implementing Trump’s campaign promises on tariffs; promises that included a 20–25% across the board tariff on all imports and a 60% tariff on all goods coming from China.

Looking strictly at the consumption of imported goods, that policy would cost the average American household about $2,500 as an additional tax. And $2,500 imposed on a family of four with relatively low income, say $50,000, $60,000; that is a big chunk of their regular consumption possibilities. And it would cause real, real hardship.

What about the overall impact on the national economy?

Nobody in business really knows from week to week what the tariffs will look like, whether they’re in place, what the rates are, etc. You cannot establish an investment program that makes sense under those circumstances.

Also, higher prices and higher costs associated with tariffs will push the economy into slower growth. I think it's pretty clear that within the next 12 to 15 months, we'll be in a recession, partly associated with these tariffs.

Tariffs, since the 1950s, have rarely been an element of generating a recession, because they haven’t been that important to American costs. Now, with this uncertainty and this dramatic increase in the level of tariffs, I think things have fundamentally changed, and we will see, in my estimation, both rising unemployment and rising inflation, in what we call a “stagflation.”

Is there anything people can do to prepare for economic changes or challenges caused by tariffs?

It will take some time for the tariffs to work their way through to higher prices. So if you are thinking about buying a car, now is the time to do it, especially a foreign car.

When people are feeling more uncertain about the future, they tend to consume less and save more. That's a perfectly rational decision because they need that kind of cushion. I would encourage people to think a little bit more about what kind of goods they really need to spend on in this time of uncertainty. Prices will go up on products subject to tariffs, so maybe you want to buy it now, but you also want to have some cushion.

Professor Emeritus Keith Maskus explains the economic principle of a tariff and gives his take on what businesses and the average consumer may experience if President Donald Trump fulfills his tariff-related campaign promises.

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91PORN hosts showcases highlighting breakthrough innovations, investment-ready ventures

Megan Maneval — Fri, 21 Mar 2025 13:21:39 +0000

91PORN hosts showcases highlighting breakthrough innovations, investment-ready ventures Megan Maneval Fri, 03/21/2025 - 07:21

Venture Partners at 91PORN and its partners across the Intermountain West once again demonstrated the power of university innovations with back-to-back startup showcases for the Embark Deep Tech Startup Creator and Destination Startup.

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The rising threat of fake news in financial markets

Katy Hill — Wed, 19 Mar 2025 15:14:36 +0000

The rising threat of fake news in financial markets Katy Hill Wed, 03/19/2025 - 09:14

Katy Marquardt Hill

Fake news isn't just a problem for politics—it's also wreaking havoc on financial markets. A new study reveals how deceptive information is being used to manipulate stock prices, causing real financial damage to investors.

The study, published in December 2024 in the Journal of Accounting and Economics, finds fake financial news has been on the rise, especially in the years following the 2016 election. According to Austin Moss, assistant accounting professor in the Leeds School of Business and co-author of the study, fake news in the stock market is typically designed to deceive investors about the true value of a company’s stock.

Austin Moss

“Without any proof or facts, (fake news authors) often allege that a company is engaging in fraud or falsifying earnings,” he said.

Moss and co-author Betty Liu, assistant professor of accounting in Indiana University's Kelley School of Business, highlight an example in the study involving the real estate company Farmland Partners. In 2018, a single false report claiming 310% of the company’s previous-year earnings were fabricated caused the stock price to drop by over 40% in just one day, wiping out tens of millions in market value.

Such deceptive stories have real-world impacts, Moss said. Fake news can manipulate stock prices, leading to short-term volatility while also eroding long-term investor confidence.

How fake news moves markets

Why do investors fall for fake news? Moss suggests that in the fast-paced world of financial markets, speed is key. “Investors are often so eager to react to information before anyone else that they don’t verify it,” he said. “That rush to act leads to false claims having a real, immediate impact on stock prices.”

The study found companies with less transparent financial reporting are more vulnerable to manipulation. “Fake news authors choose firms that are hard to understand,” Moss said. “Companies that provide less forward guidance and have more complex financial statements are easier targets.”

The researchers examined the timing of fake articles relative to earnings announcements. They found fake news authors tend to publish more articles in the days leading up to quarterly earnings releases, capitalizing on the heightened attention surrounding these announcements.

“Leading up to these big events, there’s a lot of attention on the company’s results. This is when uncertainty about the company is highest, and that’s when fake news can reach a wider audience,” Moss says.

But once the actual earnings report is released, fake news loses its power, as fresh, reliable data takes over.

By analyzing the content of 125,475 crowdsourced financial articles from platforms like Seeking Alpha, the researchers found 57% of fake articles discussed accounting-related topics. Compare that to genuine articles, where 88% of the articles focused on accounting.

This suggests that while fake news often seeks to exploit accounting details, it is less likely to be as information-heavy or grounded in verifiable data.

Incentives to spread misinformation

Fake news authors spread disinformation for a variety of reasons, Moss said.

Some want to manipulate stock prices to profit from short-term positions, much like classic pump-and-dump schemes. For example, in the case of Farmland Partners, individuals behind the fake report had taken short positions before the article’s release, betting that the stock price would fall.

Others create content for online platforms that reward clicks and views, capitalizing on sensational headlines, and still others do it for ideological reasons—even just for the enjoyment of “trolling” investors, Moss said.

The authors often hide behind anonymous profiles, he added, “so there's really no or very little reputational cost to producing this fake news since no one can easily find out who this person is.”

Focus on transparency

To mitigate this growing problem, the researchers suggest companies focus on increasing transparency, offering clearer guidance and ensuring their financial statements are easily accessible and understandable.

“If firms provide more transparent information, it makes it harder for fake news to convince the market,” Moss said.

For individual investors, Moss advises caution and verification. “If you see a claim that seems too outrageous to be true—like an unrealistic jump in earnings or a wild accusation about a company—check the company’s financial statements,” he said. By comparing these reports to the claims being made, investors can identify discrepancies and avoid falling for fake news.

He also warned that the period before earnings announcements is particularly risky. “In the three to four days before earnings announcements, that’s when fake news is most likely to spread,” Moss cautions.

Finally, be wary of publications or websites that crowdsource their articles, he added. Skepticism is one of the best defenses investors have against the manipulation of stock prices by misinformation.

A new study shows how misinformation is manipulating stock prices and harming investors, but greater transparency can help fight back.

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Business & Entrepreneurship

What 'no tax on tips' really means for service workers—and everyone else

At a high level, what is this “no tax on tips” idea trying to accomplish? Who benefits the most?

So this isn't the same as treating tips like gifts, which aren’t taxed at all?

What’s the real-world impact for workers—especially low-income workers who may not owe much in federal taxes anyway?

Would this change have any impact on Social Security or Medicare funding?

Are there any precedents in the tax code for something like this?

What about other concerns or unintended consequences? Could this change tip culture itself?

Why do you think this polls so well, even though the details are so wonky?

Could this open the door for other industries to ask for similar exemptions?

Is there anything else that people should know about this?

Bottom line?

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We saw the 30-year Treasury yield briefly top 5%. Why does that matter, and what does it tell us about investor sentiment right now?

Moody’s cited long-term fiscal challenges, rising interest costs and political gridlock. How should we interpret this decision and the concerns behind it?

With the U.S. now rated just below triple-A by all major agencies, are Treasurys still considered a 'safe haven' investment globally?

How do Trump-era policies—like renewed tariffs and proposed tax cuts—factor into Moody’s downgrade and the broader fiscal picture?

Some argue that as long as the U.S. controls its own currency, it can’t default in the traditional sense. Does that lessen the weight of these credit downgrades?

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As 401Ks, college funds plunge, expert advises patience over panic

Has anything like this ever happened before?

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What is the impact on the regular consumer?

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