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To: businessprofessor

Tariffs are a tax, and their effect on an economy has to be seen in light of total taxation. There is a tax rate at which income of government is optimized (Laffer curve peak). Assuming the tax rate to be optimal now (which it may not be, but for sake of argument suppose it is) then one could push tariffs up if in compensation one pushed other taxes down, and end up with no net impact on the economy.

There is something to be said for national self sufficiency helping national security.


40 posted on 09/05/2011 10:59:08 PM PDT by HiTech RedNeck (There's gonna be a Redneck Revolution! (See my freep page) [rednecks come in many colors])
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To: HiTech RedNeck
Tariffs are a tax, and their effect on an economy has to be seen in light of total taxation. There is a tax rate at which income of government is optimized (Laffer curve peak). Assuming the tax rate to be optimal now (which it may not be, but for sake of argument suppose it is) then one could push tariffs up if in compensation one pushed other taxes down, and end up with no net impact on the economy.

One of the succesful arguments for the 16th Amendment was that tariffs gave American business an unfair advantage. They got a protected market, but didn't have to pay any tax for the privilege. The income tax was sold as a way to level the playing field - as a way of making businesses pay for the privilege.

66 posted on 09/06/2011 4:17:46 AM PDT by danielmryan
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