Posted on 06/20/2024 4:07:34 PM PDT by karpov
Donald Trump rocked Washington last week with his proposal to fund the federal government solely from tariffs. Until roughly a century ago, tariffs composed the vast majority of national revenue, but today income and business taxes make up the lion’s share. Can Uncle Sam go back?
Taxing imports to pay Washington’s bills has a certain political appeal. Domestic taxes, often progressive in nature, are unpopular. Better to tax foreigners if we can.
The problem with this thinking, however, is that non-Americans largely don’t pay for tariffs in the end; U.S. households and businesses do, in the form of higher prices and reduced trade. The former president is relying on one of the oldest fallacies of “folk economics.” Supply and demand, not statutes or executive orders, determine who really pays a tax.
Yet, there’s an even bigger flaw in Trump’s plan. Government spending as a share of GDP is approximately 22 percent. Import spending as a share of GDP is 14 percent. To fully cover federal outlays, we would need to find a way to generate tariff revenue in excess of 150 percent of what we spend on all imports. Even if we wanted to cover current receipts only—remember, we run perpetual deficits—we would still have to squeeze an additional 100 percent of revenue out of current imports. There’s no way to make the numbers work.
The figures look even starker in dollar terms. In fiscal year 2024, the national government has taken in $3.29 trillion. Tariffs account for 1.5 percent of that, at $49 billion, meaning that we would need to scale up customs duties by a factor of nearly 70.
The commentariat has already recognized several of these difficulties. Even so, they understate the problem.
(Excerpt) Read more at city-journal.org ...
He might have said he would offset lower income taxes with tariffs.
But discussing and doing are wo different things at any rate.
I honestly believe that his main thrust will be eliminating regulations that open up job creation and bring back manufacturing to the U.S. which will in turn reduce imports, so tariffs only would not be sufficient.
Careful, JimRob-you’ll confuse the chattering class with simple, obvious facts-I like a person who does that...
Pretty funny, these guys all make the same wrong assumptions. Tariffs last Trump term didn’t raise prices. Just as wrong is thinking that decreases in Gv’t spending are not planned.
The economy needs an overhaul not a bandaid.
.
In Economist Thomas Sowell’s newest book-he absolutely ridicules bidenomics and hammers home the reality of greater income through increased tariffs and decreased taxes-AFTER first cutting govt spending-he starts with the most useless and intrusive alphabet agencies-EPA, DOE, etc. The book is “Social Justice Fallacies”-a great read so far...
Math is hard for many nowadays due to pubic skrools.
Exactly, this works if you cut government to 1/2…… guess they don’t want to take that into consideration…..
I wish he were younger so that Trump could select him as his running mate. A truly intelligent man on so many topics beyond just economics, and at 93 he's still as sharp as a tack.
Get rid of the income tax, use tariffs as much as possible, and print the rest. It’s kind of what’s happening right now anyways. /s
Yes, we can!
It takes a village!
We're in this together!
I’d love to see Prof Sowell in some economic adviser capacity to a Trump admin, if he were willing-but I’m sure he is making a nice living writing books and op-eds for financial publications right now. One of the few really sensible people in California...
Ever noticed that those who are still sharp and functioning well in their older years are people who have never stopped working, questioning, doing research, etc? Thomas Sowell and Prof Dershowitz come to mind right away. Working, questioning, being curious and involved has advantages, it seems.
Contrast that with FJB, who has probably never questioned or researched anything himself-other than how to grab off as much cash with a con as possible. We know he never really worked as a lawyer-or as anything else, for that matter, having been in politics most of his adult life-no curiosity, no desire to learn and do research-add a catastrophic brain injury in the 1980’s to that, and now, a load of psychotropic drugs, amphetamines and other drugs to make him look alive and you have a really f’ed up dude who does not need to be in charge of the nuke football...
I got interested in taking a couple of economics classes in college after reading some of Thomas Sowell’s writings on the subject. My degree is in social work, but I’m still as interested economics as I was then-it comes in handy sometimes...
"Trump’s Tariff Trap. Replacing income taxes with tariffs doesn’t pencil out."
FR: Never Accept the Premise of Your Opponent’s Argument
Consider that Thomas Jefferson had noted that the federal government was originally totally funded by tariffs that the rich paid on imported goods. (Constitutional Convention delegates that were wealthy, maybe their wealthy friends too, seem to have put their money where their mouths were.)
“The rich alone use imported articles, and on these alone the whole taxes of the General Government are levied [emphasis added]. … Our revenues liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.” —Thomas Jefferson to Thaddeus Kosciusko, 1811.
Militia readiness aside, one of the very few main peacetime expenses that the states expressly gave to the constitutionally limited power Congress was to run the US Mail Service.
In other words, most of today's federal domestic spending is based on stolen state powers and stolen state revenues uniquely associated with those powers as shown below.
"Article I, Section 8, Clause 7: To establish Post Offices and post Roads;"
"From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added]." —United States v. Butler, 1936.
Democratic and Republican patriots need to get hopeful Trump 47 and the new Constitution-respecting Congress that they support him with in November up to speed with unconstitutional federal taxing and spending, a consequence of generations of abuse of 16th Amendment powers (direct taxes) by corrupt Congress imo.
"16th Amendment : The Congress shall have power to lay and collect taxes on incomes, from whatever source derived [emphasis added], without apportionment among the several States, and without regard to any census or enumeration."
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States." —Justice John Marshall, Gibbons v. Ogden, 1824.
“If the tax be not proposed for the common defence, or general welfare, but for other objects, wholly extraneous, (as for instance, for propagating Mahometanism among the Turks, or giving aids and subsidies to a foreign nation, to build palaces for its kings, or erect monuments to its heroes,) it would be wholly indefensible upon constitutional principles [emphases added].” — Justice Joseph Story, Commentaries on the Constitution 2 (1833).
The congressional record shows that Rep. John Bingham, a constitutional lawmaker, had clarified the federal government's constitutionally limited powers as follows.
”Simply this, that the care of the property, the liberty, and the life of the citizen, under the solemn sanction of an oath imposed by your Constitution, is in the States and not in the federal government [emphases added]. I have sought to effect no change in that respect in the Constitution of the country.” —John Bingham, Congressional. Globe. 1866, page 1292 (see top half of third column)
“Cherish, therefore, the spirit of our people, and keep alive their attention. If once they become inattentive to the public affairs, you and I, and Congress and Assemblies, judges and governors, shall all become wolves [emphasis added]. It seems to be the law of our general nature.” - Thomas Jefferson (Letter to Edward Carrington January 16, 1787)
Pelosi: "We have to pass the bill so that you can find out what is in it." (non-FR; 6 sec.)
Democrats [and RINOs] Are Terrified Of An Educated And Informed Public (3.12.23)
Once unconstitutional federal taxing and spending is stopped, hopefully “permanently” with a repeal of the 16th and 17th Amendments, then Trump might have a good opportunity to run the constitutionally limited power federal government with the tariffs on imports that Jefferson had mentioned.
How quaint, thinking about pencils for $34T +. In debt
“...The economy needs an overhaul not a bandaid....”
Indeed! And tariffs replacing income taxes is a good beginning coupled with a systematic reduction in the size of government. Trump as President shouldn’t sign any Congressional bill unless it includes the elimination of some program or current expenditure.
Agreed.
Well, replacing income tax for sales tax! Tariffs are kind of VAT, but applying to foreign made products only.
I like it!
exactly
NeoCON free traitor globohomos say tariffs are bad because muh corporations can’t exploit cheap 3rd world labor - news at 11.
This is all moot as congress will never go along with it.
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