Replace The Income Tax With Tariffs? How High Would Tariffs Need to be to Make Up the Difference?

Epoch Times ^ | 01/31/2025 | Jeffrey Tucker

[ProgressingAmerica]

One of the worst things President Roosevelt did was re-invigorating the popularity of progressive taxation using his Bully Pulpit during his time as President from 1900-1908

Then he sent his henchman veep Taft out there to get it done. We didn’t stand a chance.

[DIRTYSECRET]

It would be lower if spending were cut wouldn’t you say?

[SeekAndFind]

RE: It would be lower if spending were cut wouldn’t you say?

That’s in the article.

[arthurus]

It is NOT a one-for one economic trade-off. Any calculations from this this point are vaporous. Trump, himself likely has a better idea of where things will go than any of us. One consideration is that sharp and , it is hoped-short, recession is already baked into the economic cake whatever measures are taken. Given that, it is the best move to make whatever drastic measures are deemed appropriate for future boom and prosperity right now.

[sauropod]

.

[Dr. Franklin]

Initially, the federal government only taxed income from investments, not wages. That changed in WWII when wages were taxed to pay for the war. So, if a person wasn’t paying wage tax, he was unpatriotic. Once the government starts taxing something, it doesn’t stop.

[arthurus]

All projections that posit a cutting the deficit over a period of years will, at best only increase the debt a little bit in the first year or two because no Congress can bind a future congress or president. The only really successful move would require a dictator to simply fire 2 million federal workers and dismantle the agencies and bureaus in which they work and nullify all their regulations that were not explicitly passed by Congress while repealing the income tax and reverting to a gold standard. That could well occasion a hard recession or short depression but it would release business from the shackles that have driven so much of our production overseas and in perhaps 4 to 6 quarters the boom would lift the economy like a rocket.

[orionrising]

problem is medicare medicade consumes trillions.

[Jim Robinson]

tariffs and excise taxes. much better than an income tax.

And cut, baby, cut!

[null and void]

"there is no tariff high enough to make up the difference. There is no choice but to cut spending dramatically."

Cut spending dramatically?

I'm in!

[sauropod]

Yep.

[bigbob]

[sphinx]

It would be impossible to fund the fedgov as it exists today through tariffs.

Impossible.

The reason is that tariffs are self-limiting. It would be a bumpy transition, but tariffs would almost immediately be driven so high that people would do without imported discretionary purchases and substitute domestic products — even extremely expensive ones — for the imported product.

Imports would collapse, and revenues would collapse with them.

So sure: we can mine our own rare earth minerals, go back to manufacturing all our cars, computers and sneakers in the U.S., and do without fresh fruits and vegetables out of season. (I remember canned asparagus — so I would do without asparagus.) Eventually we would approach autarky. We would be poorer but self-sufficient.

But we couldn’t fund Social Security, Medicare and Medicaid, food stamps, the National Park Service, air traffic control, and 1001 other things with tariffs.

[unclebankster]

Good graph.

Tariffs are about getting more producers and their production back in the US, than replacing other federal tax revenues.

We’ve become reliant on foreigners in every aspect of national life & commerce.

This has to change, or we won’t maintain our status as a Great Power Nation.

[AZJeep]

Tariffs are sort of sales tax.

The problem, now, in rising enough money through tariffs, would be that if tariffs are too big, they would not rise enough - people would just stop buying any imports.

But, I believe, tariffs with some kind of national sales tax would be enough. I remember Sen Lugar running on national sales tax in 2000. I guess, they made the calculations.

But, in any way the government gets our money, they spend too much of it!

[logitech]

Income tax is immoral.

The government has no right to tax anybody’s income.

[conserv8]

“people would just stop buying any imports.”

They will most likely discontinue the purchasing of American merchandise on Amazon and Ebay as well

[Dr. Sivana]

But we couldn’t fund Social Security, Medicare and Medicaid, food stamps, the National Park Service, air traffic control, and 1001 other things with tariffs.

This is a complicated equation, for as you point out, purchase of imported goods is largely discretionary.

I would also suggest that some government expenditures, particularly Medicaid and Welfare could decrease if more low-skill manufacturing jobs were available.

[Freee-dame]

In modern factories, there are not that many low skill manufacturing jobs. There are robots and automation to do much of what low skill workers used to do.

There might be a lot of low skill, landscaping jobs available soon, however