Trump and Harris Both Favor Tax Hikes That Would Hurt Ordinary Americans

The costs of steep tariffs and a higher corporate income tax extend far beyond the advertised targets.

Former President Donald Trump wants to increase tariffs, while his Democratic opponent, Vice President Kamala Harris, wants to raise the corporate income tax rate. They say you need not worry about the consequences of these tax hikes because someone else will pay the tab.

Don't believe them. Both proposals would impair economic growth and impose substantial costs on ordinary Americans, extending far beyond the advertised targets.

Last year, Trump proposed a "universal baseline tariff" of 10 percent, more than four times the 2023 trade-weighted average. More recently, he has pitched a general rate as high as 20 percent. He thinks Chinese imports should be subject to an even steeper tariff: 60 percent, maybe more.

When Trump set off a disastrous trade war by raising tariffs during his first term, he claimed the cost was borne by exporters. "China is bearing the entire burden of the tariffs," his top trade adviser averred in 2019.

Although tariffs are designed to raise the prices of imported components and finished goods, Trump is still pretending they do not hurt American businesses and consumers. Analyses of Trump's tariffs tell a different story.

In 2020, for example, Pablo Fajgelbaum and three other economists reported that "U.S. consumers have borne the full incidence of U.S. tariffs," which was consistent with the results of another study published the same year. Fajgelbaum and his colleagues calculated a net U.S. economic loss of $16 billion a year, which rose to $25 billion when they considered the impact of retaliatory measures by other countries.

The Tax Foundation estimates that a 10 percent general tariff "would raise taxes on American consumers by more than $300 billion a year," "reduce the size of the U.S. economy by 0.7 percent," and "eliminate 505,000 full-time equivalent jobs." Retaliation could "further reduce U.S. GDP by 0.4 percent and eliminate another 322,000 full-time equivalent jobs."

Trump's proposed tariffs, including a 60 percent levy on Chinese goods, "would reduce after-tax incomes by about 3.5 percent for those in the bottom half of the income distribution," the Peterson Institute for International Economics estimates. They "would cost a typical household in the middle of the income distribution at least $1,700 in increased taxes each year."

Just as Trump ignores those costs, Harris wants voters to believe that raising the corporate income tax rate from 21 percent to 28 percent is simply a matter of "ensur[ing] the wealthiest Americans and the largest corporations pay their fair share." But that is true only if you overlook the broader economic impact of that change, which would hurt non-wealthy Americans as employees, consumers, and investors.

"Studies have shown that the corporate income tax is the most harmful tax for economic growth," the Tax Foundation warns. On the flip side, recent research indicates that the Trump-backed 2017 reduction in this tax rate, which moved the U.S. from the high end among industrialized countries to the middle of the pack, "significantly boosted domestic investment."

By raising the cost of doing business in the United States, a higher corporate tax rate inhibits investment, drives down wage and benefit growth, encourages offshoring of jobs, and reduces the return on retirement savings. "Under a 28 percent corporate rate," the Tax Foundation estimates, "GDP would fall by $1.84" for "every $1 of higher revenue."

It gets worse: "In the long run, when the economic effect of that higher rate fully phases in, we estimate an even steeper drop in GDP of $2.19 for every dollar raised." Although Harris promises that "no one earning less than $400,000 a year will pay more in taxes" under her fiscal plan, that does not mean people of relatively modest means will be spared the indirect costs of sticking it to "the wealthiest Americans and the largest corporations."

Like Trump, Harris wants voters to overlook the predictable results of her tax agenda. In both cases, Americans should be asking the questions that the candidates are keen to dodge.

© Copyright 2024 by Creators Syndicate Inc.

Comments

[Stupid Government Tricks]

It still amazes me how anyone with a brain can claim tariffs aren't taxes and don't raise prices. National security is an entirely different argument, but it's just as dishonest if the proponents won't admit that tariffs are taxes and raise prices.

Even some people who understand that raising business taxes raises prices refuse to admit the same for tariffs. I do not understand such stupidity.

[sarcasmic]

All the Trump Boyz you defend say that tariffs are paid by importers. They’re protective and revenue awesome. They’re magic.

[JesseAz (5-30 Banana Republic Day)]

Less than 24 hours after I corrected you you are already back to your strawman. Lol.

Meanwhile you’ve been insisten for months that taxes need to be raised due to the deficit. Yes I can provide links.

You seemingly prefer kamalas 5T tax plan than the 50B in tariffs currently existing. You’d rather tax income and us industry than ever even think about taxing Chinese products even despite their hundreds of billions in theft from American corporations.

You’re a democrat sarc lol. Tax Americans. Tax their income. Tax their savings. Tax thei investments. But do nothing that would maybe effect the dependence on cheap Chinese shit. Ignore supply shift. Just tax as democrats want to do.

[sarcasmic]

Take things out of context, check.

Binary thinking, check.

Strawman, check.

Lies, check.

Wednesday, check.

[VinniUSMC (Banana Republic Day 5/30/24)]

Is that your "How to Troll" checklist? Try not doing those things, just once.

[DesigNate]

“When Trump set off a disastrous trade war by raising tariffs during his first term”

Disastrous? Please.

[sarcasmic]

Tariffs make stuff more expensive. For people already fucked, it just makes it worse. But look at all those union jobs that were saved!

[DesigNate]

Yes, taxes tend to do that.

The Trump/Biden tariffs have hardly been “disatrous”, especially when people weren’t all that fucked until the actually disastrous Covid response.

[sarcasmic]

Depends on who measures it.

Inflation is defined as rising prices, and tariffs raise prices.

You can connect the dots.

[DesigNate]

I think we started this conversation a few weeks ago on another thread, but I don’t think we got to finish it, so forgive me if I’m repeating myself.

If inflation is broadly defined as a general increase in prices across the economy, how would targeted tariffs (even protectionist ones) accomplish that? Because to my knowledge, Trump nor Biden did across the board tariffs on all foreign goods. Yes I know there might be second or third order effects (this widget costs more because the steel used had a tariff), but those wouldn’t necessarily affect the entire economy, AND it seems to discount the fact that a lot of companies adjust their supply chain to avoid the tariffs (if they’re able to).

I just don’t see how they could be considered “disastrous”. Mind you I’m not opposed to tariffs as one of the less bad forms of taxation, so I might be a little biased, but I think there are other tax proposals that would actually be disastrous, economically.

[JesseAz (5-30 Banana Republic Day)]

Sarc has stated in the past that tariffs on China is a global tax on all imports. He is completely ignorant to the economic theory of supply shift.

[sarcasmic]

Because to my knowledge, Trump nor Biden did across the board tariffs on all foreign goods.

I thought Trump wanted across the board tariffs, like a "wall", with higher ones on Chinese goods.

I just don’t see how they could be considered “disastrous”. Mind you I’m not opposed to tariffs as one of the less bad forms of taxation, so I might be a little biased, but I think there are other tax proposals that would actually be disastrous, economically.

Tariffs can be protectionary or for revenue. They can't be both because each defeats the other's purpose. I'm not opposed to tariffs for revenue. What I oppose is protectionary tariffs.

[DesigNate]

I don’t recall him saying he wanted across the board tariffs. I do recall him telling the EU (maybe the G20) that he was prepared to drop all tariffs on their imports if they dropped all tariffs on ours.

Regardless, neither of them actually installed across the board tariffs so there’s no way they would have caused inflation. (Edit: I mean in the overall sense, because some items price increases does not = inflation.)

[sarcasmic]

As far as "disastrous" goes, while I think that's a bit hyperbolic, I've also got wiggle room in my budget. If I did not then I might consider everything at Dollar General becoming more expensive because of where it was made a disaster.

[DesigNate]

It’s ridiculously hyperbolic, which was my original point.

I don’t think anyone here is saying that tariffs won’t increase the price of something (at least for inelastic demand items). But there’s just no way that the $50Billion generated from them was more disastrous than the drunken spending of the last 3 years.

And last time I shopped at Dollar General, most of the items I found were from Mexico and Thailand, FWIW, so not even sure tariffs would apply to them.

[Overt]

"Inflation is defined as rising prices, and tariffs raise prices."

Suggesting that inflation is caused by tariffs is just as wrong as saying inflation is caused by greed.

If you raise a tariff on a good, that good becomes more expensive. If that item has inelastic demand (i.e. people will pay that new price without reduced demand), then they have less money to spend on other things. They will buy fewer of those other things, and those other products will have negative price pressure on them. Overall, because the consumers don't have EXTRA money to spend on the tariff, prices on other things will go down as less is demanded.

Likewise, if demand is elastic (i.e. people's demand goes down at that higher price), then tariffs will cause the consumers to buy less of the tariffed products. The inputs into those products will therefore have less demand, and the prices on those items will have negative pressure.

Tariffs increase the expense of a couple things but they don't increase the money supply. As a result, the only way people can pay for the increased cost is to reduce spending on other stuff, or buy fewer items (reducing velocity, and therefore prices).

[sarcasmic]

That's a long, roundabout way of saying that tariffs raise prices but because they don't affect the money supply those higher prices don't count as inflation.

[David Perry]

How about you read what he said instead of just the first sentence? Or are you choosing to be obtuse?

'they will buy fewer of those other things, and those other products will have negative price pressure on them. Overall, because the consumers don’t have EXTRA money to spend on the tariff, prices on other things will go down as less is demanded.'

[sarcasmic]

When tariffs are across the board, "other things" become more expensive too.

[David Perry]

Which means you refuse to understand his basic explanation. Wow. Re-read what he said. I even quoted the pertinent part for you.

[sarcasmic]

Trump wants an across-the-board tariff on all imports combined with higher targeted tariffs.

What part of "across-the-board" do you not understand?

[David Perry]

I used to get some entertainment reading the back and forth, which you were a portion of. Your argument here is just dumb, and makes it obvious you are just being contradictory. Cool, have fun with that.

[DesigNate]

But sarc, tariffs aren’t across the board, and even with him saying he wants to do that, that can’t possibly be responsible for the inflation that’s happening right now.

[JesseAz (5-30 Banana Republic Day)]

Want to know what other policies you support that rise demand and thus raise prices?

[JesseAz (5-30 Banana Republic Day)]

Tariffs cost 50B a year. The spending on illegals you support is 150B. Discuss. Both end up as expenses. Yet you cheer for the latter while raging slat the former. And yes I can even link to your statements we need higher taxes.

Won't even get into the cost from consumers due to regulations. Hilarious you choose to completely ignore much bigger costs as you tilt at windmills.

[sarcasmic]

This is officially called the fallacy of relative privation, colloquially better known as appeal to worse problems, or children are starving in Africa argument.

[David Perry]

Seriously? Trying to label something a logical fallacy so you can refuse to address it? Wow.

How about this. He acknowledges the cost due to tariffs, and then points out the relative larger cost of illegal immigration. He then points out your abject hypocrisy about screaming about the former (when he also points out you are pro-higher taxes) and completely ignoring the latter, a cost three times higher.

This isn’t a ‘lets not do anything about problem A because problem B is worse’ which you lobbed out there (incorrectly I might add), this is a ‘hey I am willing to deal with problem A because I see other positives, how about we address problem B (which is 3 times worse)?’

Do better.

[sarcasmic]

He acknowledges that tariffs have cost, throws out a red herring, then attacks a strawman. Fuck him. Everything he says is in bad faith.

[Bertram Guilfoyle]

"Whoof, whoof, whoof. Go chase cars on the highway."

Would the above be an example of good faith arguing?

[JesseAz (5-30 Banana Republic Day)]

That’s not a red herring. It is demonstrating you have no principles and prefer anti trump narratives (despite the same narrative applying to every administration in US history) while intentionally ignoring the much greater harm being done.

You aren’t principled. You’re a biased hack.

How is directly arguing against your idiocy arguing in bad faith dumdum? You can never respond when the holes in your unprincipled corporate narratives are mentioned. It is pathetic. Lol.

And this after you once again lied about stances here just a few posts above after being corrected literally less than 24 hours ago. And even given links to demonstrate why it was a lie.

[sarcasmic]

red herring: a clue or piece of information that is, or is intended to be, misleading or distracting.

For example, on the topic of tariffs a red herring would be “Look at those immigrants over there! Over there! Look!”

Do not take my failure to address all of your lies and false premises as implicit agreement. I am not agreeing with anything in your post. Again, my not refuting your lies and false premises is not implicit agreement.

[JesseAz (5-30 Banana Republic Day)]

Your use if that fallacy is meaningless. Because in this case the comparisons matter. You are laser focused on a splinter when a tree had fallen into the house.

It matters.

You don’t actually care about the problem, the accrued costs to citizens. You ignore the major costs and focus on a small part of it in order to ignore the major costs. The real fallacy is ignoring the burning building but pointing to a still burning match just outside.

The fact is in general libertarians support consumption taxes to income taxes. Yet in your world where you demand tax increases you only approve of income taxes.

On top of that your belief system leaves to an advantaged market where bad players, Cilhina, receive no push back. China steals from others so you can ve advantaged through china’s theft, hardly a libertarian take.

Costs from tariffs is such a small expense in government revenues as to be virtually meaningless, but its importance to you as a talking point is all that matters. Because it is the talking point you can use against Trump. Even while ignoring Democrats proposing the same, prior conservatives you long for doing the same, etc etc l

You’re an unserious person. Just an anti trump troll who more often than not defends the bad acts of the left. Only purpose is to distract from those acts, see Kamala thread yesterday.

[sarcasmic]

If you want a serious conversation, stop packing so many false premises and lies into your posts. If I don't refute them all then you will say I implicitly agree. So I must refute every single one. But when you stack them like bricks it's just not worth the effort. This tells me that you're not interested in a conversation. You're just grandstanding against a man of straw.

[SQRLSY]

https://reason.com/2020/01/22/trump-campaigned-on-saving-factory-jobs-but-u-s-manufacturing-just-went-through-a-year-long-recession/
Clear-cut case below, showing the UTTER FAILURE of protectionism in general, and Trumpist protectionism specifically:

Meanwhile in the real world…
https://reason.com/2019/04/22/trumps-washing-machine-tariffs-cleaned-out-consumers/
Trump’s Washing Machine Tariffs Cleaned Out Consumers
A new report finds the tariffs raised $82 million for the U.S. Treasury but ended up increasing costs for consumers by about $1.2 billion.
PROTECTIONISM DOESN’T WORK!!! DUH!!!
Protect American washing-machine makers from Chinese competition? The FIRST thing that American washing-machine makers do, is jack UP their prices… AND the prices of dryers to boot, too! To SOAK the hell out of all of us consumers!!!
From the above-linked Reason article about washing machines…
“All told, those tariffs raised about $82 million for the U.S. Treasury but ended up increasing costs for consumers by about $1.2 billion during 2018 … (deleted). Although the trade policy did cause some manufacturers to shift production from overseas to the United States in an effort to avoid the new tariffs, the 1,800 jobs created by Trump’s washing machine tariffs cost consumers an estimated $820,000 per job.”

Summary: Nickels and dimes to the USA treasury; boatloads of pain for consumers. USA jobs created? Yes, at GREAT expense! Putting these 1.8 K workers on a super-generous welfare program would have been WAY better for all the rest of us! Plus, you know the WORKERS don’t make super-huge bucks (no $820,000 per job for THEM); the goodies flow to the EXECUTIVES at the top of the washing-machine companies! The same ones who play golf with The Donald, and join him for gang-banging Spermy Daniels! Essentially at our expense!

[Davy C]

There is basically no tax that would have no negative effect on people's wallets. And no tax is not an option; our debt is already dangerously large.

[Knutsack]

These are the pictures chosen for each candidate?
Who does this?

[DesigNate]

I noticed that too.

[Uncle Jay]

Both missed the target when it came to taxes.
The onerous income tax needs to be eliminated and replaced with some other form of taxation like a national sales tax or something akin to it.
Also, if we absolutely, positively must have a corporate tax, at least reduce to about 2 - 5 % some the little guy has a better chance of improving their station in life.