Krugman: Trading income tax for tariffs Trump's terrible idea

[Yo_Mama_Been_Loggin]

By Paul Krugman / The New York Times

A few days ago Donald Trump floated a truly terrible, indeed unworkable economic proposal. I’m aware that many readers will say, “So what else is new?” But in so doing, you’re letting Trump benefit from the soft bigotry of rock-bottom expectations, not holding him to the standards that should apply to any presidential candidate. A politician shouldn’t be given a pass on nonsense because he talks nonsense all the time.

But in a way the most interesting thing about Trump’s latest awful policy idea is the way his party responded, with the kind of obsequiousness and paranoia you normally expect in places like North Korea.

What Trump reportedly proposed was an “all tariff policy” in which taxes on imports replace income taxes. Why is that a bad idea?

First, the math doesn’t work. Annual income tax receipts are around $2.4 trillion; imports are around $3.9 trillion. On the face of it, this might seem to suggest that Trump’s idea would require an average tariff rate of around 60%. But high tariffs would reduce imports, so tariff rates would have to go even higher to realize the same amount of revenue, which would reduce imports even more and so on. How high would tariffs have to go in the end? I did a back-of-the-envelope calculation using highly Trump-favorable assumptions and came up with a tariff rate of 133%; in reality, there’s probably no tariff rate high enough to replace the income tax.

https://www.heraldnet.com/opinion/krugman-trading-income-tax-for-tariffs-trumps-terrible-idea/

[LetMyPeopleVote]

1. Why Trump's radical new idea on taxes is impossible to defend

MSNBC’s Chris Hayes described Donald Trump's vision on tariffs as “one of the most deranged policies” of all of time, and it’s worth understanding why.

Link to tweet

https://www.msnbc.com/rachel-maddow-show/maddowblog/trumps-radical-new-idea-taxes-impossible-defend-rcna157707

It was last year when Team Trump made clear that the presumptive GOP nominee, if given a second term, intended to impose massive new tariffs, which a Washington Post report said would set the stage for a “global economic war.” CNBC reported late last week that the Republican candidate went a step further in describing his vision while speaking with congressional allies.

Donald Trump on Thursday brought up the idea of imposing an “all tariff policy” that would ultimately enable the U.S. to get rid of the income tax, sources in a private meeting with the Republican presidential candidate told CNBC.

MSNBC’s Chris Hayes described this as “one of the most deranged policies” of all of time, and it’s worth understanding why. As the Washington Post’s Catherine Rampell explained in her latest column:

The expected costs of Trump’s recent tariff proposals would be staggering. For example, his plan for a universal 10 percent tariff coupled with a 60 percent tariff on Chinese goods would more than wipe out any savings most Americans would get from extending his 2017 income tax cuts, according to estimates from the Peterson Institute for International Economics. The bottom 80 percent of households would see a tax increase on net.

In other words, most Americans, including the entirety of the middle class, would end up paying more, not less, under Trump’s vision. Why? Because Trump’s tariffs would make products cost more, and since working families spend a greater percentage of what they make on these products, they’d end up worse off......

To be sure, a common refrain over the last few days is that Congress would never approve such a radical agenda. Perhaps not, but Republican Rep. Byron Donalds appeared on NBC’s “Meet the Press” over the weekend, and when asked about Trump’s tariffs policy, the Florida congressman said, “There’s some merit to it.”

There really isn’t.

[everyonematters]

2. If he even tried a modest initiation of this, I believe it would throw the country and maybe the world into a recession

. The economy would not be able to adjust in time to avoid the calamity. It's a bad idea anyways because the burden would fall mostly on the working class and the poor who spend a high degree of their income on essentials which they will be paying more for. To avoid a recession, the transformation would have to be incremental.

[oasis]

3. Trump's 1st term tariffs on China

backfired big time. Orange Turd ended up bailing out midwestern farmers w/billions of taxpayer dollars.