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.
9 comments:
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.
Can't really disagree with your fine-point analysis. However, Trump's tariffs are more oriented to re-shoring manufacturing to the US; they can then be "converted" to a real consumption tax. But that will be fought tooth-and-nail by a number of interest groups which are very well-monied.
Again, it’s NOT a consumption tax.
Do you have a rattle to shake while in your Preaching High Chair?
Your take on Trump's tariffs is inaccurate, largely because most of your screed has been proved wrong--particularly the "retaliation", but including your "resource mis-allocation" flapjaw. The POINT of the tariffs is to RE-ALLOCATE resources so that US citizens are gainfully employed. Being in a think tank is not necessarily gainful employment.
You just stated you agreed with my analysis. Now you’re backtracking because you realize you are wrong. So in typical fashion you lash out.
While some protected sectors may see gains, tariffs have had little positive impact on overall manufacturing employment, suggesting they actually hindered job growth by increasing costs.
You can be wrong on lots of parts of your "analysis." Admit that.
As to gains in mfg employment: look at the small/medium firms AND realize that it may take more than 3 months to put the party in gear.
Here's a "Good Feeeelzzzz" for you: the tariffs are a consumption tax on FOREIGN goods. Two objectives, primary being to re-shore manufacturing and production to the US.
You don't like tariffs? Have saddzzz.
Just like Trump, you can’t admit you ate wrong.
You make a distinction without a difference and crow about your intellectualoid-ism. Already said that it is a consumption tax on IMPORTS, effectively having dual purposes, not a full-bore traditional one. So take your condescension and put it where the sun never shines.
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