This is going a LONG post, but it shows why Trump's tariff plan is a stupid fucking idea. (He's thinking of funding the entire federal government with tariffs)
Using tariffs as the primary funding mechanism for the government and abolishing income tax would likely lead to economic instability, inflation, a decline in trade, and potential social inequality. The ripple effects of such a shift would disrupt global trade, reduce U.S. competitiveness, and impose a hidden tax on American consumers, particularly low- and middle-income families, who would feel the impact of higher prices and reduced purchasing power.
Many American companies rely on imported technology, parts, and resources essential for maintaining their competitive edge. High tariffs could limit access to these goods, increasing operational costs and reducing the ability of firms to innovate and invest in new technologies. This would particularly hurt high-tech industries, manufacturing, and other sectors needing specialized materials and inputs not produced domestically at the same quality or price, ultimately lowering productivity and slowing technological advancements.
Income tax is generally progressive, meaning higher-income individuals pay a larger percentage of their income. Tariffs, however, are regressive—they disproportionately affect lower-income households because they increase the cost of goods across the board. This would shift a significant portion of the tax burden onto poorer Americans, exacerbating income inequality. Since poorer households spend a higher proportion of their income on essential goods (many of which are imported), the economic burden of tariffs would fall heavily on them, leading to a greater divide in wealth and access to resources.
Reduced import volume and retaliatory tariffs could prompt companies that rely on international trade, particularly manufacturers and exporters, to downsize or close operations. With decreased access to affordable imported materials, many businesses would have to pass higher costs onto consumers or cut costs internally, likely through layoffs. This contraction would lead to increased unemployment and potentially hurt small businesses and industries dependent on global trade.
In an interconnected global economy, cutting off or significantly restricting trade would almost certainly reduce GDP growth. Tariff revenue is far less stable than income tax revenue. Income taxes provide a predictable, relatively stable source of funding tied to the domestic economy. Tariffs, however, fluctuate with global trade volume and are susceptible to changes in consumer behavior, foreign trade policies, and currency exchange rates.
During economic downturns, people and businesses buy fewer goods, which would reduce tariff revenue precisely when government spending on programs like unemployment benefits would be most needed. This would make the government’s fiscal situation more volatile and unpredictable, potentially leading to a higher risk of deficits or spending cuts in critical areas.
Higher tariffs would lead to inflation as goods and services relying on imported materials or products see cost increases. The Federal Reserve might respond with interest rate hikes to counter inflation, but higher rates would also slow down economic growth by increasing borrowing costs for businesses and consumers. This inflationary pressure could reduce the purchasing power of U.S. households, contributing to a potential recession as consumption declines.
Historically, when the U.S. imposes high tariffs, other countries retaliate with their own tariffs on U.S. exports, leading to a trade war. This cycle would harm American exporters, particularly in industries like agriculture, machinery, and technology, which rely on global demand. Retaliatory tariffs would reduce the competitiveness of U.S. products in the global market, leading to a decline in exports and potentially resulting in job losses in export-driven industries. The ripple effect could extend to international relations, as strained trade relationships could hinder diplomatic and strategic alliances, affecting not just economic policy but foreign policy as well.
Tariffs function as a tax on imported goods. Funding the entire government through tariffs would require a massive increase in tariff rates on all imports, which would dramatically raise the prices of imported goods. Since many goods and resources consumed in the U.S. are imported, consumers and businesses would face much higher costs on everything from electronics and vehicles to raw materials.
Higher costs for imports could reduce demand, but the goods that do get imported would be significantly more expensive. For consumers, this would feel like a hidden tax on essential goods, hurting lower- and middle-income households the most.
Dumbest fucking idea EVER.
Using tariffs as the primary funding mechanism for the government and abolishing income tax would likely lead to economic instability, inflation, a decline in trade, and potential social inequality. The ripple effects of such a shift would disrupt global trade, reduce U.S. competitiveness, and impose a hidden tax on American consumers, particularly low- and middle-income families, who would feel the impact of higher prices and reduced purchasing power.
Many American companies rely on imported technology, parts, and resources essential for maintaining their competitive edge. High tariffs could limit access to these goods, increasing operational costs and reducing the ability of firms to innovate and invest in new technologies. This would particularly hurt high-tech industries, manufacturing, and other sectors needing specialized materials and inputs not produced domestically at the same quality or price, ultimately lowering productivity and slowing technological advancements.
Income tax is generally progressive, meaning higher-income individuals pay a larger percentage of their income. Tariffs, however, are regressive—they disproportionately affect lower-income households because they increase the cost of goods across the board. This would shift a significant portion of the tax burden onto poorer Americans, exacerbating income inequality. Since poorer households spend a higher proportion of their income on essential goods (many of which are imported), the economic burden of tariffs would fall heavily on them, leading to a greater divide in wealth and access to resources.
Reduced import volume and retaliatory tariffs could prompt companies that rely on international trade, particularly manufacturers and exporters, to downsize or close operations. With decreased access to affordable imported materials, many businesses would have to pass higher costs onto consumers or cut costs internally, likely through layoffs. This contraction would lead to increased unemployment and potentially hurt small businesses and industries dependent on global trade.
In an interconnected global economy, cutting off or significantly restricting trade would almost certainly reduce GDP growth. Tariff revenue is far less stable than income tax revenue. Income taxes provide a predictable, relatively stable source of funding tied to the domestic economy. Tariffs, however, fluctuate with global trade volume and are susceptible to changes in consumer behavior, foreign trade policies, and currency exchange rates.
During economic downturns, people and businesses buy fewer goods, which would reduce tariff revenue precisely when government spending on programs like unemployment benefits would be most needed. This would make the government’s fiscal situation more volatile and unpredictable, potentially leading to a higher risk of deficits or spending cuts in critical areas.
Higher tariffs would lead to inflation as goods and services relying on imported materials or products see cost increases. The Federal Reserve might respond with interest rate hikes to counter inflation, but higher rates would also slow down economic growth by increasing borrowing costs for businesses and consumers. This inflationary pressure could reduce the purchasing power of U.S. households, contributing to a potential recession as consumption declines.
Historically, when the U.S. imposes high tariffs, other countries retaliate with their own tariffs on U.S. exports, leading to a trade war. This cycle would harm American exporters, particularly in industries like agriculture, machinery, and technology, which rely on global demand. Retaliatory tariffs would reduce the competitiveness of U.S. products in the global market, leading to a decline in exports and potentially resulting in job losses in export-driven industries. The ripple effect could extend to international relations, as strained trade relationships could hinder diplomatic and strategic alliances, affecting not just economic policy but foreign policy as well.
Tariffs function as a tax on imported goods. Funding the entire government through tariffs would require a massive increase in tariff rates on all imports, which would dramatically raise the prices of imported goods. Since many goods and resources consumed in the U.S. are imported, consumers and businesses would face much higher costs on everything from electronics and vehicles to raw materials.
Higher costs for imports could reduce demand, but the goods that do get imported would be significantly more expensive. For consumers, this would feel like a hidden tax on essential goods, hurting lower- and middle-income households the most.
Dumbest fucking idea EVER.
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