The Hidden Tax

Why Conscription Is a Tax on My Lifetime — and Why It Has to Be Hidden

June 2026

This is a translation — the original is in German.

I belong to the cohort being negotiated over in this debate, without anyone negotiating with it. That sharpens the eye for certain details — and perhaps dulls it for others. I write this as one of the affected, not as a bystander. The figures hold regardless.

In April 2026, Defense Minister Pistorius called a travel restriction in the new Military Service Act a “drafting error.” A provision that appears in the statute, that passed through the ministry, the cabinet, and the Bundestag, and that draws on an explicitly worded paragraph of the old Conscription Act — that is no typo. And had it truly been unintended, it would have been struck. Instead it was merely put to sleep by decree. It remains in the law.

That is where I start looking more closely. Because the question this provision raises is not legal but economic: What logic drives a state to restrict the mobility of young men before conscription is even active? The answer was given in 1967, and it is the core of what I want to set down here: Conscription is not a security necessity. It is a hidden tax — and the way it is handled follows, whether deliberately planned or not, exactly the logic a hidden tax demands.

Friedman’s Insight

Milton Friedman was no pacifist, but on one point he was unambiguous: Conscription is a hidden tax. At first glance it looks cheap — the conscript receives a fraction of what a professional soldier earns, and the state budget looks lean. But these zero costs are an illusion. The real costs have not vanished; they have merely been shifted, from the state onto the conscript. What he could have earned, learned, built is genuinely lost — only not on the Defense Ministry’s balance sheet.

Friedman made the point in a famous hearing. When a general objected to an “army of mercenaries,” Friedman shot back: Would you rather command an army of slaves? Whoever does not receive the market price for his labor but is forced to serve performs no paid work; he bears a levy on his own lifetime.

Two things follow. First: a professional army is economically cheaper despite higher salaries, because it makes the true costs visible. Second, and this is decisive here: Hidden taxes get evaded. People respond to incentives. Whoever recognizes himself as a hidden taxpayer looks for ways to shift the burden: university, emigration, conscientious objection, every legal lever. And this is exactly where the travel restriction becomes intelligible: it is not the instrument of an active conscription, it is its preparation. Whoever wants to levy a hidden tax had better prevent tax flight.

This is no libertarian idea. Walter Oi quantified the opportunity costs at the same time (1967); Joshua Angrist later identified them causally via the Vietnam lottery. He received the 2021 Nobel Prize in Economics. In the Handbook of Defense Economics the thesis stands as textbook knowledge. On this point, Friedman is anything but an outsider.

What It Costs

This is long past a thought experiment. In 2024 the ifo Institute calculated it for Germany (Research Report 144, commissioned by the Federal Ministry of Finance). Three scenarios:

5% of a cohort (as in Sweden): roughly 3 billion euros lost per year
25% of a cohort (the scope of the old conscription): roughly 17 billion euros, about 0.4% of GDP
100%, a mandatory year for everyone: roughly 70 billion euros annually

The 70 billion haunting the debate is thus the extreme case. Realistic for a Pistorius model is the middle one: 17 billion, year after year. More telling is another figure from the study: the ifo also calculated what the market solution costs — simply higher salaries until enough people volunteer. At equal military target size, the damage to gross national income falls from 17.1 to 9.4 billion — a good 45% less — while the visible state expenditure rises in turn.

This is Friedman’s argument, empirically confirmed. The market solution burdens the budget more but destroys less value, because the costs fall where they are lower. Conscription is not cheaper. It is merely distributed differently — onto the shoulders of those at the start of their working lives, with the least room to maneuver.

Who Pays

And here it becomes unjust. The individual burden equals the difference between the civilian expected wage and military pay, times the length of service. Whoever would have earned more in the private sector loses more in absolute terms — measured per conscripted person, the tax is thus progressive in education. Concretely: a conscript receives an effective net equivalent of about 1,000 euros, roughly 42% of his civilian market wage. The remaining 58% are a hidden compulsory levy borne by a single generation. Over a working life: on average around 5% lower lifetime income, around 12% less wealth.

But that is only half the truth, because the burden does not fall at random. Whoever can evade, evades — through university, through emigration, through objection. What remains, on average, is the one whose market wage is lower and who has the fewest escape options. His hidden tax is smaller in absolute terms but larger as a share of lifetime income. The two stand side by side because they are two different levels: per person actually conscripted, the high earner loses the most in absolute terms — progressive. But measure the probability of having to serve at all, and the share of lifetime income, and the burden shifts downward — regressive. The hidden tax is thus not only quiet. In its distributional effect it hits hardest those who have the least.

One could measure all this. The Mikrozensus contains education and wage data by cohort; the 2011 suspension of conscription is a natural experiment that allows a clean comparison of the last conscripted cohorts against the first free ones. The data exist, the methods exist. What is missing is not the tool. It is the will to look.

The Long Shadows

Because the damage stays. A year of delayed education and employment acts not linearly but multiplicatively — returns compound over decades. A year of service at 19 is a year of missing compound interest, projected over forty working years. Angrist’s estimates for the Vietnam era found, even fifteen years after service, incomes 15% lower. Add distorted educational choices: some enroll in university only to escape service; others break off training because continuity is severed.

And demographics make everything worse. The cohort of 18-year-olds has shrunk from around 920,000 (1990) to about 810,000 (2025) — and against the baby-boom cohorts of the 1960s, from which the old conscription drew (a good 1.4 million per cohort), it has nearly halved. The same personnel requirement means a markedly larger relative intervention today. In an aging society with a shrinking working-age population, every single conscript is more expensive than ever.

The Number No One Is Allowed to See Anymore

If it is true that hidden taxes get evaded, then there is a metric for it: the number of conscientious objectors. It is the speedometer of tax flight. And the federal government taped over precisely this speedometer in 2026.

Since the Military Service Modernization Act, in force on 1 January 2026, the Defense Ministry classifies the number of conscientious objectors as Verschlusssache — Nur für den Dienstgebrauch (restricted — for official use only). The justification given in answer to a parliamentary question: the “welfare of the state” (Staatswohl). Publication, it claims, could let unauthorized parties draw “conclusions about the Bundeswehr’s capacity to grow and its personnel planning.”

Let that sink in. A few months earlier the same government still released these figures routinely and in detail in response to parliamentary questions. Throughout the entire Cold War — when application numbers at times ran into six figures — they appeared in every statistic. Precisely now, as conscription returns, the number is declared a secret.

Why? Because the trend is inconvenient. In 2024, 2,998 conscientious-objection applications were filed, in 2025 more than twice as many, and in the first quarter of 2026 alone there were 3,494 — 3,193 of them from people who had never served, more than in all of 2024. This rise cannot be read solely as economic evasion: facing a real war in Europe, people also object out of conscience, not only out of calculation. But that explains the numbers — not their concealment. And the justification for secrecy does not go far. An adversary with intelligence capabilities already has a solid picture of German military readiness and does not depend on the federal government’s public figures. What the classification actually achieves is not protection from the enemy but the obstruction of public oversight of a growing evasion dynamic. First the travel restriction, holding the mobile in place. Then the secrecy, removing the scale of objection from public view. This need not be a deliberate strategy. It is enough that both rules institutionally perform exactly the function Friedman described for hidden taxes: make evasion harder, lower visibility.

The Equity Problem

This regressivity has a trigger: selectivity. As soon as only part of a cohort is conscripted — and anything else is unrealistic given demographics and capacity — a lottery arises whose losers are not determined at random but, as shown, are those with the fewest escape options. This is exactly where the circle closes with the travel restriction and the secrecy: both are attempts to keep the mobile and educated from evading and to make the scale of their evasion invisible.

Against this it is argued that the professional army, too, recruits disproportionately from poorer social strata — the “army of the poor.” True, but it is not the same injustice. Whoever signs up for pay receives the market price and can say no; whoever is drafted bears a compulsory levy with no way out. Unequal self-selection is not the same as unequal coercion — and only the latter does the state here levy covertly.

Counterarguments That Don’t Hold

The debate knows a handful of objections. Most explain where the personnel need comes from without justifying conscription as the instrument to meet it; one goes further — but it too not all the way.

Ukraine and the emergency. Wartime mobilization, it is said, presupposes peacetime conscription. But Ukraine rather complicates the argument: it introduced conscription in 2014 and mobilized under martial law in 2022. Ukraine does indeed have a persistent, acute personnel problem — but it also shows that mobilization alone is worth little without equipment, training, rotation, logistics, and command capacity. The example establishes a need; it does not establish universal peacetime conscription as its inevitable solution. And the actual emergency is long since regulated in the Basic Law: mobilization in the defense case is available anyway (Articles 80a, 87a, 115a). If the situation truly becomes existential, the state drafts — and for that it does not need the permanent operation in peacetime.

Capacity. The Bundeswehr has missed its former target of 203,000 for over a decade (as of May 2026, around 185,600), with barracks infrastructure in documented decay — and the political target is now far higher, at around 260,000 active soldiers by 2035. It cannot fill its current target, let alone absorb tens of thousands of recruits. A mass build-up would even have a paradoxical effect: readiness would fall in the short term, because experienced personnel would have to carry basic training, at questionable training quality.

Strategy. Modern defense needs specialists whose training takes years. Sweden and Norway show that selective, incentive-based models create reserve capacity without the welfare losses of universal conscription. In an army shaped by drones, sensors, and cyber capabilities, the short-term conscripted layman is no self-evident gain. In the age of the 100-euro FPV drone, sheer personnel mass is no substitute for training, integration, and technical competence.

Affordability. The market solution, it is said, is unaffordable — you cannot raise salaries far enough to fill 260,000 active troops plus reserve. That turns the matter on its head. A state with its own monetary sovereignty has no fundamental financing problem; if national defense is truly existential, the price is not a counterargument but the condition. And the punchline: according to the ifo, the market solution at equal capability is actually cheaper overall. It merely burdens the budget visibly instead of the conscripts invisibly. “Too expensive” here only means: too expensive to admit the costs.

The citizen army. Conscription, it is said, binds the military to society and prevents a detached caste. In a parliamentary army under strict civilian command this fear is anachronistic — it stems from the world before consolidated democracy. And insofar as the argument aims at shared burdens, it works only under universality, that is, precisely not under a selective, demand-based conscription.

The honest objection. One goes further than the others, because it comes from economics itself: the forgone wage is no pure loss, since service builds human capital — leadership, technical skill, discipline. True in principle, and the ifo says so itself. But the question is not thereby settled, only displaced: that forced labor below the market wage is an implicit tax remains an identity; what is contested is only the size of the net loss. And that is empirically decidable — if service built net human capital, those who served would later earn more. They earn less — as seen, still years after service around 15%. The learning gain dampens the loss; it does not reverse it. And a telltale signal: if service had a private return above the civilian path, no coercion would be needed — skills the market rewards attract volunteers. That one must compel the mass is itself the proof that its return lies below the alternative. There remains the honest caveat: for some the year is formative and net positive — but precisely that person would have volunteered, and the gain of the few does not justify the hidden, regressive levy on the rest.

Why, Then, at All?

Economically, conscription is more expensive than the market solution. Socially, it is more unjust than any uniform distribution of burdens. Operationally, the Bundeswehr cannot implement it. Militarily, it is an anachronism. Logically, it is superfluous even in an emergency. If not a single one of these fields yields an argument, why does the debate persist?

The honest answer lies beyond the logic of the matter. I call it mentality politics (Mentalitätspolitik): decisions carried by their symbolic, not their instrumental value. Conscription is a symbol — of the gravity of the situation, of civic duty, of a particular idea of how a society should order itself under threat. It is a political gesture, sold as an economic measure. And that would be legitimate — if it were said openly.

Instead one gets “drafting error.” A travel restriction that is deactivated but not struck. A conscription introduced as “voluntary military service” with a demand clause as a back door. A billion-euro study circumvented in press releases. And an objection figure declared classified. It was no oversight. It was the institutional logic Friedman described in 1967 — observable today in German legislative practice.

What Is at Stake

I belong to the cohort that pays for this. If Germany moves, under the current law, to a demand-based conscription, an entire generation falls under a system whose costs are invisible by design, whose burdens disproportionately hit those with the fewest resources, and whose justification rests on a threat frame that the economic evidence does not support.

Whoever takes national resilience seriously must make the soldier’s profession competitive — not compulsory. Anything else is not security policy. It is a hidden tax on the future of a generation, levied by a majority that will never pay it itself. And the fact that we now even conceal how many resist it says more about the honesty of this policy than any press release.

Sources

Friedman, M. (1967): Why Not a Volunteer Army? In: Tax, S. (ed.): The Draft: A Handbook of Facts and Alternatives, University of Chicago Press, pp. 200–207.
Oi, W. Y. (1967): The Economic Cost of the Draft. American Economic Review 57(2), pp. 39–62.
Angrist, J. D. (1990): Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records. American Economic Review 80(3), pp. 313–336.
Adema / Poutvaara / Schlepper / Taghiyev / Wochner (2024): Volkswirtschaftliche Kosten einer Wiedereinführung der Wehrpflicht oder eines sozialen Pflichtjahres, ifo Forschungsbericht 144 (commissioned by the Federal Ministry of Finance).
Poutvaara, P. / Wagener, A. (2007): To draft or not to draft? Inefficiency, generational incidence, and political economy of military conscription. European Journal of Political Economy 23(4), pp. 975–987.
Strand, S. (2024): The Reactivation and Reimagination of Military Conscription in Sweden. Armed Forces & Society 50(4), pp. 1175–1195.
Warner, J. T. / Asch, B. J. (1995): The Economics of Military Manpower. In: Hartley, K. / Sandler, T. (eds.): Handbook of Defense Economics, Vol. 1, Ch. 13, pp. 347–398.
Heinemann, P. (2026): Pistorius zur Genehmigungspflicht im Wehrdienstgesetz. Legal Tribune Online, 08.04.2026.
Högl, E. (2025): Jahresbericht 2024 der Wehrbeauftragten des Deutschen Bundestages.
Cohort sizes (18-year-olds, 1990/2025): Federal Statistical Office (Destatis), GENESIS table 12411-0006, Fortschreibung des Bevölkerungsstandes (reference dates 31.12.1990 and 31.12.2025).
Bundeswehr personnel strength (185,608 in uniform, as of 31 May 2026): Bundeswehr, “Aktuelle Personalzahlen der Bundeswehr”, bundeswehr.de.
CO application figures 2024/2025: German Bundestag, Printed Paper 21/898 (14 July 2025), Federal Government reply “Kriegsdienstverweigerung in Deutschland in den Jahren 2024 und 2025”; figures for 2025/Q1 2026 per nd-aktuell (2026, BAFzA data).
On the classification of the CO figures since 2026: DFG-VK, “Bundesregierung erklärt Zahlen zur Kriegsdienstverweigerung zur Staatsgeheimsache”; nd-aktuell, 27.04.2026; Euronews, 27.04.2026 (BAFzA application figures).