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Tuesday, May 14, 2019

Tariffs bad? What about sales taxes?

The New York Times editorial board is aghast. It editorialized, "Trump's Tariffs Are a New Tax on Americans."

What? Has the board finally meet a tax it did not like?


Of course, tariffs are not new. Tariffs were the nation's first tax. George Washington signed the first one into law on July 4, 1789, on the 66th day of his presidency.

Tariffs provided most of the national government's revenue until the income tax came along. American industry flourished under tariffs, which Democrats opposed. The opposition to tariffs was almost as strong as Democrat support of slavery.

Republicans were the party of abolition and tariffs -- until the Bushes came along.

President Donald Trump wants to end unfair trade agreements. The American-in-name-only companies that benefit from cheap unAmerican labor oppose him. They finance think tanks that churn out studies that show America benefits from consuming without producing.

Alicia Adamczyk of CNBC reported, "A report from Tariffs Hurt the Heartland, a bipartisan campaign against the levies, found that increasing duties on Chinese goods to 25% would cost a U.S. family of four $767 annually and could lead to a loss of over 934,000 jobs.

"If the U.S. imposes a 25% tariff on all Chinese imports, as the president has threatened, the average family could expect to pay $2,294 more annually for goods, according to the report, which also takes into account the tariffs on steel and aluminum imports and assumes China would retaliate."

So $80 billion in revenues from tariffs "could lead to a loss of over 934,000 jobs."

Or more likely, from a historic point of view, it could lead to gaining millions of jobs as Americans buy American to avoid the tariff.

That was why Washington signed the first tariff into law: to gain American jobs. Lincoln did the same thing.

(America flourished after slavery. Lincoln's transcontinental railroad, land-grant colleges, homestead act, and those tariffs provided a foundation for an economy that prospered for 80 years.)

But let us pretend for a moment that $80 billion year in a sales tax (which is what a tariff is) costs 934,000 jobs. How many jobs then did the $291 billion in state and local sales taxes cost in 2016.

3,397,425.

The difference between a sales tax on foreign goods and a sales tax on all goods is that you cannot avoid the latter by buying American.

However, I would rather have a tax on consumption than one on production, which is what an income tax is. Tennessee may have the nation's highest sales tax but it has no income tax. That is the way to go. We should encourage having a productive life.

And we should put America first.

12 comments:

  1. The NYT is in New York from which the wealthy and even middle class is in flight. There was a 2.5 billion dollar budget short this year as a result due only to lower tax receipts. The Times did not blame the 1 billion in wasted tax dollars squandered by the lesbian wife of the NYC mayor on a worthless race based vanity project. No, taxes were just not high enough! Basically NY taxes are so high that any increase in priced in the city will be poorly tolerated. The NYT hates the Midwest rubes, the uneducated pecker heads and low lives who put Trump in office,and rejected their Grifter Queen. Not too many digital subscriptions there either. NYC is the selfish city and always will be. And,Who can trust the press anymore? Not I.

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  2. "That was why Washington signed the first tariff into law: to gain American jobs"

    Oh the economic ignorance of protectionists who insist DC pick winners and losers when they are in power. But rant and rail when the other side picks winners and losers. Its hypocrisy.

    The first American tariff was to protect domestic business from foreign competition. Its called Mercantilism. It had no net effect on domestic jobs an assertion I will prove quickly.

    Centuries ago Frederic Bastiat wrote a classic on "the thing not seen".

    In other words, when consumers have to pay more for goods what is not seen is what they WOULD have done with that money.

    Those American consumers who buy the output of these protected companies have less money to spend on the things they really want to buy. They would like to buy other goods and services, but they cannot afford to do this. So, people in companies inside the United States who would otherwise be able to sell goods and services to these consumers find that the consumers do not make the purchases. Why not?

    Because the government has intervened to protect a company or an industry that is now in a position to sell its output at a price above what consumers would otherwise be willing to pay.

    What happens to jobs in those sectors of the economy that do not get orders from consumers? They disappear.

    One group of Americans, namely, those working in industries protected by tariffs, benefit, but they do so only at the expense of AMERICAN workers in other companies that cannot find buyers among consumers who are victims of government intervention.

    The defender of tariffs cannot understand this. He does not think logically. He cannot imagine the things not seen. All he can see is that an American company goes out of business because of superior foreign competition.

    He does not see the employment that resulted from the savings made available to consumers by the imported goods. His ideology blinds his mind from being consistent and logical; because when you've become so fanatical about a President then rational analysis is a bridge too far.

    So some companies gain American jobs and other companies lose American jobs all over tariffs. The former is seen and the latter is unseen. Case closed.





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    1. The pro-tariff person assumes this: economic freedom is not a good thing. Freedom allows consumers the right to buy what they want. This is bad, bad, bad. We should not allow this kind of freedom. What we need is sales taxes.

      This person says he's in favor the free market. But he is not in favor of the free market. He is just another defender of the idea that the state should send out a man with a badge and a gun, and stick the gun in the belly of the consumer. "You can't buy this, boy. You don't have the right to buy this. I've got this badge. I've got this gun. I'm not to let you buy that. You got that, boy?"

      This person is a mini-tyrant. He cannot think logically. He believes that the President should send out people with badges and guns and stick those guns in the bellies of American consumers. He thinks it's moral. He thinks it's a good economic policy.

      He can't think straight. He cannot imagine the fallacy of the things not seen. He literally cannot follow a very short chain of economic reasoning.

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  3. Interesting - are you talking about a national sales tax?

    And using TN as a model?

    To replace income and FICA taxes?

    Maybe you can trust MATH?

    A national sales tax -- that so called consumption tax -- Fairtax -- is only partially a sales tax. Naturally, being a goofy ass fraud, there are close to 4 TRillion, yes, 4 trillion in "other" taxes that have nothing to do with sales, nothing to do with retail, but they have the dishonesty and desire for fraud that

    1) they call it a personal retail sales tax, even in the introduction to the legislation.

    2) In their legislation and "research" to support the fraud are those close to 4 trillion in other taxes that have nothing to do with retail or sales.

    3) Only 1.26 Trillion can possibly come from a retail sales tax of 23% --- that whole "math thing -- if retail sales are 5T, which is a generous estimate.

    Yet thousands of fools fell for it, Mike Huckabee ran for President on it, FOX Spews talking heads, including their "financial" people pushed it -- Hannity even appeared at "rallys' for the fraud.

    CATO Institute spoke highly of it, Grover Norquest loved it. Mike Pence was one of 100 sponsors and went around praising this goofy ass fraud.

    It would be hilarious if it were not so sad.

    The point is this: lying bastards are good at slogans and fooling stupid people -- people too stupid to read the fine print.

    WE need an entirely new tax code, But as long as so many are so easily fooled-- who instantly think their intuition is precisely right, no matter how goofy it actually is, and who don't seem to GAF what the math is, nor even curious enough to check.

    So don't feel bad. You have a lot of company when it comes this. SInce no one is putting forth an honest tax code (because not a big market for honest tax codes), yours is no worse.

    See http://fairtaxgoofy.blogspot.com

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  4. In fact your idea is more honest that the calculated and deliberately fraudulent Tairtax which is actually fund raising scam

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  5. I hate when I have to cross into Tennessee to buy something. The sales tax is massive. I trust in PDJT and his economic team.

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  6. Reports are that of the first 25% tariff imposed was mainly sucked up by China. 21% absorbed by China and 4% by US consumers.
    Great Britain's government told citizens the VAT would supersed the income tax. Instead they have both. The only way to change the income tax would be by constitutional amendment. So, IMO, if a FAIR tax or another fixed type tax is imposed, the income tax has to be eliminated and the rate could only be increased by 4/5 vote in each House.

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  7. Chinese goods are wholly subsidized directly or indirectly by the Chinese government.

    This, inherently, gives them a competive cliff, not edge. It means that the vast expenses to ship products over the oceans are negated.

    Tariffs are the only answer. Period. Even the father of modern economics, Adam Smith, recognized this.

    Why has and is Harley Davidson buidling factories overseas? To better serve it's customers? Not by their own executive's words. It is to avoid foreign tariffs. So, domestic manufacturing goes away, our unemployment goes up, and the multiplier effect of jobs occurs in other countries.

    To assert that tariffs is, in essence, mercantilism as anon has done is a distortion and misrepresentation.

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  8. How about, right now, real world examples of just how bad US tariffs are or will be ...

    https://www.cnbc.com/2019/05/13/williams-sonoma-ceo-says-it-shifted-operations-ahead-of-tariff-hikes.html

    "In December, Williams-Sonoma announced that it would open a facility in Tupelo, Mississippi, in January and add hundreds of jobs to manufacture upholstered furniture. Alber said it’s beneficial to bring jobs back to the United States because “the cost from the freight coming from Asia offsets the costs of the labor,” as the company learned after opening its first Sutter Street Manufacturing unit in North Carolina."

    Yeah, more US jobs. Oh. The. Horror.

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    1. "We looked at opening another unit in Tupelo and then bolstering up our other two West Coast and East Coast manufacturing units,” Alber said. “And so we’re hiring … 500 people, and we’ve got 140 right now in Tupelo. We need to hire more, and we need to hire more on the coasts, as well.”

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  9. Rupert's boys are panicked about DJT. Fox News has been running a virtual tape loop about the evils of tariffs for weeks now. I can't watch it anymore. Switching to OAN.

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  10. US jobs increase with tariffs on trade. If somebody uses some "logic" or "model" which results in fewer jobs, it's almost certainly a fraud.
    Yes, consumers may pay more; some a LOT more. But the buyers more often buy American, and the produces more often produce more in American -- both responses to avoid / reduce the tax, but also both increasing US jobs.

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