Rand Paul

Rand Paul: 'A Tariff Is Simply a Tax'

Senator tells Reason "most of the businesses in Kentucky are quite worried about a trade war." But will a weak Congress confront Trump?

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Rand Paul talking on Fox this morning. ||| Fox News Channel
Fox News Channel

President Donald Trump's impetuous move last week to announce a steel and aluminum tariff has provoked stronger-than-usual opposition from Capitol Hill Republicans. But will they—and can they—do anything about it?

I put that question today to the most reliably libertarian-leaning member of the United States Senate, Kentucky's Rand Paul, at the end of an interview about his latest attempt to get a floor vote on auditing the Federal Reserve (on which stay tuned to this space). Here's what Paul said:

"Well, I think it's important to remind everybody that a tariff is simply a tax, and that the people who pay it are American consumers. And so in a time when we just have been sort of slapping ourselves on the back at having passed over a trillion-dollar tax cut—that's the right direction, you know, returning people's money to themselves back to its rightful owners—but I think it's going the wrong direction to put taxes on consumers for buying imported goods, and really in the end probably will hurt more Americans than it actually will help.

"I think for every 60 businesses that purchase steel there's one business that makes steel in America, so there's really a lot of people who are going to suffer from rising prices for steel, aluminum, etc. Just in Kentucky we export 20 billion dollars worth of goods and services, including agriculture, every year, and I can tell you that most of the businesses in Kentucky are quite worried about a trade war."

Paul, a longtime critic of congressional abdication on everything from declaring war to passing budgets, is appropriately pessimistic about his colleagues being able to prevent Trump from having his allegedly winnable trade war.

"[F]rom previous Congresses, the trade deals give the president too much power to reverse the deals," he said. "So this is true of almost every single thing we do—any time we pass things we're afraid to actually set it in stone, so we give the president so many waivers to get out of all kinds of international agreements.

"And so he probably has the power, and we have to take that power away….We'll see. If the results of this were bad enough, I think Congress could act; the other possibility is that if the results are bad from this maybe Trump reverses direction."

Stay tuned for more from Paul on auditing the Fed. In the meantime, the latest from John Stossel:

NEXT: The 2010s Have Been a Banner Decade for Unintended Consequences

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  1. I missed you last week, Matt.

      1. And I surely do miss my mange-y dog. RIP Muttley Crue.

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  2. Yes, we are all Libertarians and hate taxes, but wouldn’t a tariff that replaced the income tax and raised just as much revenue be preferable?

      1. Yeah, why the hell would we want to further obfuscate government taxation. I don’t even like payroll taxes because I believe they hide how much we are paying too much.

      2. The only advantage I can see is everyone, as opposed to the top 51%, would have skin in the game. Could do the same with a VAT. Or a flat income tax, for that matter.

        AND…no one is talking about replacing the income tax with tariffs. You’ll get both and like it!

        1. Everyone pays taxes dickface. If you’re not paying taxes you’re probably starving to death and thus would prefer to be paying taxes.

            1. I thought the topic was skin in the game.

              1. Sounds like you misunderstood then. Because MiloMindbender did explicitly mention income tax, as did Francisco.

              2. It is. Why would anyone, especially the beneficiaries, oppose more taxation on the wealthy if their taxes are not increased proportionally? Why not steal more?

      3. Tariff’s were the primary method the FedGov raised revenue at one point in time, but they’ve grown so much that if we expected the same expenditures we have now we’d likely have zero foreign trade if we tried to go back to that. Zero trade and no expenditures…oh…hmm…maybe you’re onto something…

      4. Because an income tax punishes success and hard work. It is a massive perverse incentive.

        1. As opposed to a tariff?

          ALL taxes are a disincentive and stand in the way of wealth creation. Which is precisely why they should be minimized.

          1. Agreed: in Libertopia we’d have minimal taxes of the type that would perfectly suit all libertarians. Easy peasy.

            Until that happens: given the more targeted nature of tariffs (understanding secondary- and tertiary-order impacts are far more broadly felt), they are less offensive to me than whacking everyone trying to make a living.

          2. General (applied to all imports at the same rate) tariffs approximate a consumption tax, so if they are applied evenly then yes, they are more efficient than income tax. Better would be a true national sales tax and elimination of all other taxes.

            1. Or better yet…

              Divide the annual budget by the population and every single person in the US owes that amount.

              THAT is a truly fair tax.

              1. Budget? What budget?

    1. Not if it results in widespread unemployment.

    2. I’m not sure that’s actually Trump’s plan.

    3. Preferable how? It would certainly screw up the economy in one way in place of screwing it up another way. And however an income tax might screw up the working of the market, I’d think pricing out certain goods and inputs that do not originate domestically would screw things up in some terrible ways. So then you get into exceptions and carve outs and loopholes and yada yada.

  3. He is absolutely right. A tariff is simply a tax. And economies adjust to tariffs just like they adjust to all taxes. You can debate the merits of tariffs. But the idea that they are automatically catastrophic or any different than any other consumption tax is absurd.

    1. But the idea that they are automatically catastrophic…

      Way to slap a straw man around. I haven’t seen anyone use the word “catastrophic” or anything like it. What I do see are people pointing out that tariffs do more net harm than good. But nobody is saying the world will end.

      1. What I do see are people pointing out that tariffs do more net harm than good.

        You say that as if it were a universal, established fact. Unfortunately, it’s not. The only arguments for where tariffs “do more net harm than good” is in trading between nations that are mostly free market and that act mostly rationally; and where you define “harm” and “good” in terms of average economic outcomes. For all other situations, we simply can’t say anything general about the benefits or harm of tariffs at all.

    2. Yup. The USA was for tariffs before it was for income taxes.

      1. Before the income tax the federal government got the vast majority of its income from taxing alcohol. Revenuers. The income tax was put into place in preparation for Prohibition, to make up for the revenue that would be lost. Tariffs were not a significant form of federal revenue. Not only that, but the federal government at that time mostly kept to its roles as defined by the Constitution. It had yet to become the unlimited “Do whatever is necessary and proper to promote the general welfare and regulate commerce” behemoth that is now. So I don’t think the comparison is valid.

        1. You’re wrong about the federal income. Just wrong.

          “Customs duties up until the Civil War accounted for 80-95% of all federal revenue…. At the end of the end of the war in 1865 about 63% of federal revenue was generated by excise taxes, which exceeded the 25.4% generated by tariffs. In 1915 during World War I tariffs generated 30.1% of revenues.”
          US tariffs

          “The first federal budget was about $4.6 million and the population in the 1790 U.S. Census was about four million, so that the average federal tax was about $1/person per year.”
          -wiki (Excise tax in USA)

          1. I double checked and yeah you’re right. I’m not sure where I got that information from.

  4. I’m sort of curious, how is it that the President can impose tariff’s? I realize that it’s a thing, but it seems illogical that this isn’t a Congress/Senate issue in the first place.

    1. Oh…Paul told me.


      [F]rom previous Congresses, the trade deals give the president too much power to reverse the deals. So this is true of almost every single thing we do?any time we pass things we’re afraid to actually set it in stone, so we give the president so many waivers to get out of all kinds of international agreements.

      Sounds like Congress wants to be lined up against a wall since I’m not really even that sure what they do anymore. Don’t we have a King these days?

      1. Yep, though in place of a scepter and a throne he has a pen and a phone.

      1. It’s not a great one, for sure. I was specifically thinking of the enumerated powers of Congress outlined in that article and it seems to me you can’t ‘give’ those powers away. Well, assuming you give a shit about the law which we’re all pretty sure isn’t something Congress is that interested in.

        1. As I said elswhere…

          I wonder how the Nazgul would rule if Congress voted to delegate ALL their powers to the Executive?

          1. I have to start using Nazgul more.

            1. It’s frightfully accurate, and amusing to boot.

              1. What’s nazgul?
                All I found on the Google was a Lord of the Rings character…

                1. Yeah, and Jeff Sessions looks more like Gollum anyway.

    1. It is. And it has weird repercussions for home owners as well. Since the issue was that his home was impounded, if they decide it can’t be impounded because it is a home it seems like this might extend new rights to homeowners as well.

      1. That awkward moment when Seattle looks a little bit like Texas.

        1. Eastern Washington is probably more Texas than Austin honestly. Seattle and King County are the outliers.

          1. Being better than Austin is a pretty low bar, but I’d agree that most of Washington seems ok. I mean, I’d still rather live in Texas but I’ll admit that I like the weather in Washington better.

    2. Horseshit. What is his mailing address?

      1. What’s his mailing address if he lives in a luxury RV and drives around the country?
        What’s his mailing address if he sells his house and takes a round-the-world cruise for a year?
        Maybe he has a PO box.

      2. Typically people that are committed to living in a mobile vehicle use one of the services that low fee states offer (like South Dakota). Things to look for in choosing a state to call your residence are not taxing social security payouts, no income tax, low vehicle registration costs, liberal classification of their vehicle, and a decent property and health insurance environment.

        Most of the services offer scanning and forwarding of mail sent to your ‘mailing address’ and otherwise keep up the appearance that you live at the address they’ve given you.

    3. Whoo Hoo! One more step in shoring up my retirement plan!

      1. Living in a truck was already my retirement plan.

    4. From a libertarian perspective I don’t see a down side to this ruling. Live and let live mutherfuckers.

      1. From a libertarian perspective I don’t see a down side to this ruling. Live and let live mutherfuckers.

        Except, of course, for the Seattle taxpayers who are forced pay for the infrastructure that he is using and whose parking spots he is using up.

        But, hey, why don’t we just declare your living room his home; that way, he gets a nice, warm place to sleep. I don’t see a downside to that either.

  5. Just in Kentucky we export 20 billion dollars worth of goods and services, including agriculture, every year…

    Isn’t Kentucky one of, if not the, biggest pot producer?

  6. And here I had it on good authority that there was literally nothing congress could do if trump wanted a trade war. Absolutely nothing.

  7. Well, I think it’s important to remind everybody that a tariff is simply a tax, and that the people who pay it are American consumers.

    True, but it’s a flat tax on consumption, rather than a progressive tax on income. As such, I prefer tariffs to other forms of taxation.

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