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Tariffs Are Awful, but the Income Tax May Be Worse
Foundation for Economic Education ^ | March 21, 2025 | Walter Block

Posted on 04/03/2025 11:38:40 AM PDT by E. Pluribus Unum

Every fiber of my economic being cries out against tariffs. If they are so good, why doesn’t each state in the US have one against the products of all of the other 49? That is, Ohio could “protect” its industries against the incursions from Arizona. This is obviously silly. One of the important reasons America is so prosperous is that we have a gigantic, internal, free trade area.

Donald Trump supports them on the ground that the McKinley administration was prosperous, and relied upon tariffs. But this is to commit the post hoc ergo propter hoc logical fallacy: that since A precedes B, A must be the cause of B. No, America did indeed become rich during this epoch, but that was in spite of tariffs, not due to their benign influence. If you are looking for a historical episode to shed light on this matter, the Smoot-Hawley Tariff of 1930 will do far better: it greatly worsened an already bad recession, plunging our economy into a deep depression.

Our President also claims that the US is victimized by a negative balance of trade: we buy more from Canada and other countries than they purchase from us. However, I have a horrid balance of trade with McDonald’s and Wal-Mart. I acquire several hundreds of dollars’ worth of their products every year, and neither has yet seen fit to reciprocate with any of my economic services (hint, hint!). On the other hand, I have a very strong positive balance of trade with my employer, Loyola University New Orleans. They pay me a decent salary; apart from a few lunches in their cafeteria, my expenditures to them fill their coffers to a zero degree. Should anyone worry about this sort of thing? Of course not. Ditto for international trade. If Country A...

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TOPICS: Business/Economy; Government; Politics/Elections
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1 posted on 04/03/2025 11:38:40 AM PDT by E. Pluribus Unum
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To: E. Pluribus Unum

If the tariffs are so awful, why the hell are the DemonRATS screaming for the Euro Peons and other third world crappers being allowed to use them against America?


2 posted on 04/03/2025 11:42:11 AM PDT by FlingWingFlyer (If you're an average "middle American", white supremacist Sen. Chrissy Coons called you stupid.)
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To: E. Pluribus Unum

He speaks as if the world is a nice place, people are wonderful and everybody is fair.

They aren’t.

The other countries are not concerned with the welfare of Americans.

They are barely concerned with the welfare of their own people.

They are out for blood and treasure.

Ours..................


3 posted on 04/03/2025 11:46:27 AM PDT by Red Badger (Homeless veterans camp in the streets while illegals are put up in 5 Star hotels....................)
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To: E. Pluribus Unum

Tariffs aren’t awful because all the other countries are obviously using them - so why not us?

And the author is an idiot: “why doesn’t each state in the US have one against the products of all of the other 49? “

The answer to that is that it’s constitutionally prohibited for the states to regulate interstate commerce - it belongs to the federal govt. Idiot.

I don’t disagree that income tax is worse.


4 posted on 04/03/2025 11:48:09 AM PDT by reed13k
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To: FlingWingFlyer

Because the United States is evil, that’s why.

Teh United States is just filled with White Christian Nationalist.

We know that because they elected Trump!

Silly!


5 posted on 04/03/2025 11:48:35 AM PDT by Pontiac (The welfare state must fail because it is contrary to human nature and diminishes the human spirit.)
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To: E. Pluribus Unum
why doesn’t each state in the US have one against the products of all of the other 49?

Because we're one nation with labor mobility between states. Duh.

You can't have "free trade" without equalization of wages, taxes, and regulations between countries.

Democracies make a choice about what mix best suits them: to allow "free trade" just allows businesses to evade taxes and lower wages.

A tight labor market and tariffs force businesses to make capital investments to raise labor productivity, which is why the US economy did so well between 1945 and 1975.

6 posted on 04/03/2025 11:48:44 AM PDT by pierrem15 ("Massacrez-les, car le seigneur connait les siens" )
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To: E. Pluribus Unum

If they are so good, why doesn’t each state in the US have one against the products of all of the other 49?
***********
Apparently, the writer has never heard of the Commerce Clause.


7 posted on 04/03/2025 11:49:53 AM PDT by yldstrk (Nothing like the truth)
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To: E. Pluribus Unum

Cuts in income tax and vast simplification of the tax code need to be immediate, implemented at same time as tariff increases.


8 posted on 04/03/2025 11:50:17 AM PDT by PGR88
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To: E. Pluribus Unum

Confiscating part of anyone’s self-sufficiency is absolutely immoral and is essentially legal theft.

Taxing their spending is not.


9 posted on 04/03/2025 11:52:51 AM PDT by ROCKLOBSTER (Celebrate "Republicans Freed the Slaves Month")
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To: reed13k

The income tax is worse because I have no choice: if tariffs push up the price of imports I can choose not to buy and save or pay down debt. Income tax, however, is simply taken from me with every paycheck.


10 posted on 04/03/2025 11:53:37 AM PDT by pierrem15 ("Massacrez-les, car le seigneur connait les siens" )
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To: yldstrk
Apparently, the writer has never heard of the Commerce Clause.

I am sure that he has, but he does not assume that his readers have.

Which is probably a good assumption considering the quality of a college education these days.

11 posted on 04/03/2025 11:54:00 AM PDT by Pontiac (The welfare state must fail because it is contrary to human nature and diminishes the human spirit.)
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To: E. Pluribus Unum

The income tax is far, far worse - it makes the government diametrically opposed to the citizenry, and even incentivizes selling out the citizenry for profit.


12 posted on 04/03/2025 11:55:00 AM PDT by T.B. Yoits
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To: E. Pluribus Unum
"Every fiber of my economic being cries out against tariffs."


13 posted on 04/03/2025 11:56:52 AM PDT by HYPOCRACY (Long live The Great MAGA Kangz!)
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To: Red Badger

The author suffers from “socialism”.
The states are aligned by a common agreement.
Constitution
We are not in a trade-comminity with any other nation (world-wide socialist pact).


14 posted on 04/03/2025 12:01:38 PM PDT by Cletus.D.Yokel (Catastrophic Anthropogenic Climate Alteration; The acronym defines the science.)
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To: E. Pluribus Unum

If tariffs are so bad, why the hell does every other country on the PLANET charge us tariffs?!?!

It works for those countries, it’ll work for us as well...


15 posted on 04/03/2025 12:01:52 PM PDT by bayliving (I am a sufferer of DITS - Democrat Induced Touretts Syndrome )
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To: PGR88
Cuts in income tax and vast simplification of the tax code need to be immediate, implemented at same time as tariff increases.

Very true.

First eliminate corporate taxes for all companies owned in the US. Corporations don't have income, people do. Corporations do not pay taxes they collect them.

If we must have income taxes the taxes rate should be the same for everyone.

What is taxable and what is not taxable should be simple and clear to anyone with a high school education. So if they want it to get complicated they had better improve the education given to the masses.

The tax lawyer should be an endangered species.

Since the tax code is a system of campaign fund raising for congress a side effect of eliminating or simplifying the income tax might be more honest congressmen and more honest elections. (wishful thinking).

16 posted on 04/03/2025 12:04:12 PM PDT by Pontiac (The welfare state must fail because it is contrary to human nature and diminishes the human spirit.)
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To: reed13k

Or ask the reverse question: If tariffs are so bad why does other countries use them?

How did China go from like 18th in GDP to second with huge (or in FREEP lingo HUGH and SERRIOUS) tariffs?


17 posted on 04/03/2025 12:08:49 PM PDT by ChinaGotTheGoodsOnClinton (You can vote totalitarians in but you can never vote them out...)
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To: reed13k
And the author is an idiot: “why doesn’t each state in the US have one against the products of all of the other 49? “

From Article 1, section 9, US Constitution:

No Tax or Duty shall be laid on Articles exported from any State

They got around that one.
18 posted on 04/03/2025 12:11:54 PM PDT by Seven_0 (You cannot fool all of the people, ever!)
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To: T.B. Yoits; ROCKLOBSTER
The income tax is far, far worse . . .

Absolutely. Penalizing someone for producing a good or service that someone else values enough to pay for is stupid - unless you're a socialist who is inherently against free trade at any level. But I repeat myself.

Taxes and spending are too high, but for the moment assume we need a revenue-neutral way to fund the government. The options are:
User Fees (bridge and highway tolls, etc.)
Transaction taxes (sales tax, VAT, tariffs, etc.)
Wealth taxes (property taxes whether on real estate, vehicles or any other form of static wealth)
Income taxes.

My list is in order of evil. User fees can be most fair because if you don't use something, you don't pay for it. The problem is one-size-fits-all systems. For example, the Air Traffic Control system is optimized for airlines. When I was flying my Mooney, if I had to pay each time I talked to a controller in the airline-focused ATC system, it would have been prohibitive. But as a goal, reasonable user fees should be the first choice for raising government revenue.

Transaction taxes have the benefit that only those with money to spend pay them. A straight sales taxes on retail sales is considered regressive because lower-income people spend more of their wealth on retail sales, while 'rich' people are buying real estate, or stocks, etc. But a balance can be achieved.

Wealth taxes have the benefit that they keep wealth in circulation. If you are the Kennedys and have enormous static wealth, then your wealth is not generating more wealth. A tax on static wealth provides an incentive to invest it in something that returns more than the wealth tax, which is another very achievable balance.

But income taxes just penalize those who are providing something useful (products or services) and it is always the worst form of taxation . . . unless you (or your constituents) are not doing anything useful. Which is, of course, the case for just about anyone who votes Dhimm.
19 posted on 04/03/2025 12:14:29 PM PDT by Phlyer
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To: E. Pluribus Unum

The author’s silly argument makes sense ONLY if the Income Tax is eliminated, otherwise we have a huge new tax (tariffs - which importers will pay and pass on to consumers) and still have the income tax.


20 posted on 04/03/2025 12:16:33 PM PDT by Wuli
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