Mitch Daniels, partly responsible for TRA '86, finally admits what we said back in January of '25: it's a consumption tax.
...Even less transparent to the victim than a state sales tax or a VAT, taxation by tariff constitutes a step into consumption taxation, of people at all income levels.
Everyone will have to chip in to the fiscal emergency plan that the country’s procrastinating, irresponsible national leadership, of both parties, has made inevitable. Taxation of consumption, regrettable as it will be, at least has the virtue of weighing less heavily on work and investment, and therefore growth, than further taxation of income. It is likely to be part of the safety-net rescue....
Daniels, writing for his audience, decries the tariffs--but then admits that his tax policies have driven the US into 'walking bankrupt' status. He also fails to mention that a true consumption tax is, generally, "progressive", as the top income people are far more "consumer" than the bottom.
Heh.
1 comment:
No, tariffs are economically inefficient and regressive tools for revenue generation, and equating them to a deliberate consumption tax reform overlooks critical differences in design, transparency, and economic impact.
Not all consumption taxes are created equal. A well-designed VAT or national sales tax applies uniformly and predictably across goods and services, minimizing market distortions.
Tariffs, by contrast, target specific imported goods, leading to inefficient resource allocation, retaliation from trading partners, and higher costs for domestic industries reliant on foreign inputs.
Thus, while general consumption taxes may promote growth, tariff-based taxation often harms it—making them a poor proxy for responsible fiscal reform.
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