Trump's tariffs are equivalent to one of the largest tax increases in decades

Trump's tariffs are equivalent to one of the largest tax increases in decades (CNBC).

A CNBC analysis of data from the Treasury Department ranks the combined $72 billion in revenue from all the president's tariffs as one of the biggest tax increases since 1993. In fact, the tariff revenue ranks as the largest increase as a percent of GDP since 1993 when compared with the first year of all the revenue measures enacted since then, according to the data.

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Now, if only there had been some analysis of this before this tax was enacted. Oh, wait, it didn't go through Congress, so it didn't get a rating:

Such a large revenue measure, according to Pomerleau, if it were a tax, would have been subject to considerable economic analysis from the Congressional Budget Office or the Joint Committee on Taxation for the potential effects on growth, inflation and jobs. No such analysis has been offered or is believed to have been conducted by the administration regarding the current tariffs.

And the revenue measure is by far the largest enacted without congressional approval. Congress, in a series of laws, has ceded to the president vast powers to levy tariffs.

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(emphasis mine). Well, at least the government is getting LOTS of new revenue to pay for those huge tax cuts, right? Oops, nyet.

most economists see them being borne by U.S. businesses and consumers. That is, they are essentially a tax increase. Over time, however, consumers and businesses can reduce this tax hit by substituting away from high-priced goods and Chinese production.

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Well, at leeway only the biggest companies are paying for it. What, nyet again?

Kent Smetters of the Penn-Wharton Budget Model and a former Treasury official during the Bush administration, estimates that the tariff increase will cost the median U.S. household with earnings of $61,000 about $500 to $550 a year. It's the equivalent, he said, of raising the Social Security retirement tax by 1 percentage point to 11.6%.

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So THAT'S what happened to the tax refund I didn't get! (My taxes went up). But, but, but, it's helping American business, right? Well, U.S. consumers and businesses -- not China -- bear the brunt of Trump's tariffs (CBS)

American consumers and businesses are taking the biggest hit in the form of higher prices and costs. That's especially true in areas of the country that typically vote for Republican candidates, like farming communities in the Midwest, according to one recent study by economists from UCLA, University of California, Berkeley, Columbia University and the World Bank.

"The economic evidence to date on this is exactly the opposite of Trump's statement," Chad Bown of the Peterson Institute for International Economics and host of the podcast TradeTalks tweeted. "The impact of the 2018 tariffs has been passed on to U.S. consumers in the form of higher prices. China is NOT bearing the burden of Trump's tariffs."

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Thanks, Obama!

NWRatCon said:

Trump's tariffs are equivalent to one of the largest tax increases in decades (CNBC). Now, if only there had been some analysis of this before this tax was enacted. Oh, wait, it didn't go through Congress, so it didn't get a rating: (emphasis mine). Well, at least the government is getting LOTS of new revenue to pay for those huge tax cuts, right? Oops, nyet. Well, at leeway only the biggest companies are paying for it. What, nyet again? So THAT'S what happened to the tax refund I didn't get! (My taxes went up). But, but, but, it's helping American business, right? Well, U.S. consumers and businesses -- not China -- bear the brunt of Trump's tariffs (CBS) Thanks, Obama!

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Hmm...

Kent Smetters of the Penn-Wharton Budget Model and a former Treasury official during the Bush administration, estimates that the tariff increase will cost the median U.S. household with earnings of $61,000 about $500 to $550 a year.

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OMG! Trump has added nearly a 1% tax. Of course, that is until US consumers have ever more options to buy goods not subject to that added tariff on (selected) Chinese imports or a trade agreement with China is reached to remove/reduce those tariffs.

ttwtt78640 said:

Hmm...



OMG! Trump has added nearly a 1% tax. Of course, that is until US consumers have ever more options to buy goods not subject to that added tariff on (selected) Chinese imports or a trade agreement with China is reached to remove/reduce those tariffs.

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And so we have the first dispatch from fantasy land. Thanks, my friend. I only wish you could generate some substance next time. Given the President's lack of success in every other such endeavor, I marvel at your optimism.

Now, back to reality: The IRS stats are in: Here’s how tax refunds look compared to last year (CNBC).

The average tax refund for the week of April 19 was $2,725 — down 2% from last year’s levels.
Overall, the federal government paid $260.9 billion in tax refunds, which is nearly $5 billion less compared to last spring.

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Wait, I thought the "average" tax filer was supposed to see a reduction in taxes? Well... that's because the "average" is skewed by including the top earners. Those at or below the "median" see no meaningful reduction (1-2%), and their personal expenses and exemptions disappeared or were reduced. Two went up, but again, not meaningfully.

The average household would get a tax cut of $1,610 in 2018, a bump of about 2.2 percent in that average household's income, according to a report released Monday by the Tax Policy Center, a nonpartisan think tank that has been critical of the tax overhaul plan.

However, extremes make averages, and the benefits would be much larger for richer households. A household earning $1 million or more would get an average cut of $69,660, an income bump of 3.3 percent. Compare that with the a tax cut of $870, or 1.6 percent, for the average household earning $50,000 to $75,000

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CHARTS: See How Much Of GOP Tax Cuts Will Go To The Middle Class (npr). So, that paltry 1.6% decrease for the "Median" taxpayer gets absorbed by 1) the tariff tax of 1.1%, 2) the loss of individual deductions and credits, and 3) cost increases for, for example, insurance premiums. Awww... that's not how it is supposed to work, isn't it?

NWRatCon said:

Trump's tariffs are equivalent to one of the largest tax increases in decades (CNBC). Now, if only there had been some analysis of this before this tax was enacted. Oh, wait, it didn't go through Congress, so it didn't get a rating: (emphasis mine). Well, at least the government is getting LOTS of new revenue to pay for those huge tax cuts, right? Oops, nyet. Well, at leeway only the biggest companies are paying for it. What, nyet again? So THAT'S what happened to the tax refund I didn't get! (My taxes went up). But, but, but, it's helping American business, right? Well, U.S. consumers and businesses -- not China -- bear the brunt of Trump's tariffs (CBS) Thanks, Obama!

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But but but you guys want higher taxes!

It's hilarious watching Trumpsters defend tax hikes that will affect them directly and will likely erase any paltry tax cuts that they got while Tweety and his buddies were raiding the treasury. I do feel bad for the farmers, though. Those who haven't grown up around farming don't know just how little that industry needed another obstacle.

NWRatCon said:

And so we have the first dispatch from fantasy land. Thanks, my friend. I only wish you could generate some substance next time. Given the President's lack of success in every other such endeavor, I marvel at your optimism.

Now, back to reality: The IRS stats are in: Here’s how tax refunds look compared to last year (CNBC). Wait, I thought the "average" tax filer was supposed to see a reduction in taxes? Well... that's because the "average" is skewed by including the top earners. Those at or below the "median" see no meaningful reduction (1-2%), and their personal expenses and exemptions disappeared or were reduced. Two went up, but again, not meaningfully. CHARTS: See How Much Of GOP Tax Cuts Will Go To The Middle Class (npr). So, that paltry 1.6% decrease for the "Median" taxpayer gets absorbed by 1) the tariff tax of 1.1%, 2) the loss of individual deductions and credits, and 3) cost increases for, for example, insurance premiums. Awww... that's not how it is supposed to work, isn't it?

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OK, so after a FIT cut of 1.6% the new tariffs (of under 1%) may (temporarily?) reduce that savings to .7% - the horror!

Moderate Right said:

But but but you guys want higher taxes!

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But only on "the rich" and not enough to cover current spending, much less their many proposed spending increases.

ttwtt78640 said:

But only on "the rich" and not enough to cover current spending, much less their many proposed spending increases.

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Funny thing is that if Democrats regain control and put a stop to the Republican tax plan, it will be increasing taxes on the lower classes. And then they will say, "But but but we increased taxes more on the rich than we did the poor".

ttwtt78640 said:

Hmm...



OMG! Trump has added nearly a 1% tax. Of course, that is until US consumers have ever more options to buy goods not subject to that added tariff on (selected) Chinese imports or a trade agreement with China is reached to remove/reduce those tariffs.

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We're looking to get another 4K TV set, but currently the only US made set is from SunBright, and it's not too bad a deal for the money...IF we wanted an outdoor set.

Trouble is, we don't need an outdoor set, we want to put this in the living room.

Checkerboard Strangler said:

We're looking to get another 4K TV set, but currently the only US made set is from SunBright, and it's not too bad a deal for the money...IF we wanted an outdoor set.

Trouble is, we don't need an outdoor set, we want to put this in the living room.

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Trump's newly increased tariffs are not on all foreign made (imported) products they are only on some Chinese made products.

ttwtt78640 said:

Trump's newly increased tariffs are not on all foreign made (imported) products they are only on some Chinese made products.

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For the moment.

Checkerboard Strangler said:

For the moment.

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That is true of any policy change.

So far the comments from the right have been typical deflection and distraction, but I suspect ttwtt might be coaxed into a substantive discussion, so I'm willing to try.

Here's why tariffs are a bad idea and nearly every economist opposes them:
First, they are a drag on the economy. As a result of years of Obama policies, the economy was finally on a solid footing, expanding nearly his entire presidency. Until now, Trump's policies have failed to put a damper on that growth (AND please no BS about how he's "responsible for the current growth," he's barely had any effect, yet. You'll just expose your economic ignorance). GAO has estimated current tariffs (before they are raised) would reduce GDP by .7%.

Second, their effects are uneven and regressive. Tariffs breed tariffs, but where retaliation will strike the economy is often unpredictable (just ask Iowa soy farmers and Wisconsin dairymen). Moreover, as noted earlier, the hidden "tax" of tariffs hits consumers most, and lower income consumers most of all. High income consumers have flexibility, more resilience, and are often in other "markets" anyway (consumption is a smaller share of their spending). Further, tariff revenue is not a predictable source of government revenue, again for reasons cited earlier - primarily avoidance.

Finally, and this is significant, but only touched on previously, tariffs are not subject to congressional input so can run counter to legislative prerogatives. Indeed, a number of the current tariffs (perhaps all) are likely unsupported by a legal basis.

In a suit filed with the US Court of International Trade in New York on Wednesday the American Institute for International Steel and two of its member companies argue that the US president’s move is unconstitutional and challenge his invocation of a 1962 law to impose the 25 per cent tariff on grounds of national security.

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Steel users file legal challenge to Trump’s tariffs (Financial Times). Constitutionally, Congress is suppressed to have the power of the purse. Trumps tariffs are abusing limited permissions congress has given previously.

NWRatCon said:

So far the comments from the right have been typical deflection and distraction, but I suspect ttwtt might be coaxed into a substantive discussion, so I'm willing to try.

Here's why tariffs are a bad idea and nearly every economist opposes them:
First, they are a drag on the economy. As a result of years of Obama policies, the economy was finally on a solid footing, expanding nearly his entire presidency. Until now, Trump's policies have failed to put a damper on that growth (AND please no BS about how he's "responsible for the current growth," he's barely had any effect, yet. You'll just expose your economic ignorance). GAO has estimated current tariffs (before they are raised) would reduce GDP by .7%.

Second, their effects are uneven and regressive. Tariffs breed tariffs, but where retaliation will strike the economy is often unpredictable (just ask Iowa soy farmers and Wisconsin dairymen). Moreover, as noted earlier, the hidden "tax" of tariffs hits consumers most, and lower income consumers most of all. High income consumers have flexibility, more resilience, and are often in other "markets" anyway (consumption is a smaller share of their spending). Further, tariff revenue is not a predictable source of government revenue, again for reasons cited earlier - primarily avoidance.

Finally, and this is significant, but only touched on previously, tariffs are not subject to congressional input so can run counter to legislative prerogatives. Indeed, a number of the current tariffs (perhaps all) are likely unsupported by a legal basis. Steel users file legal challenge to Trump’s tariffs (Financial Times).

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Don't forget to include the taxpayer funded bailouts Trump keeps coming up with to salve the wounds he's giving constituencies that mostly voted for him.

Trump is doing all of this in the most clumsy manner I can imagine. He really is like a kid that can only think in near term (immediate?) binary. Life is more complicated, but Trump has been so insulated from reality that he's yet to figure that out. SAD!

He and Mnuchin are probably shorting the market prior to every one of his idiotic crash inducing tweets. Obama would have been hung for his idiocy. Even if it is positive long term, the near term pain is totally unnecessary. Adults can negotiate without blowing up the markets to make a point.

I had forgotten the bailouts, which substantially reduce any fiscal benefit the government may otherwise have realized. Thanks for that catch.

ttwtt78640 said:

Trump's newly increased tariffs are not on all foreign made (imported) products they are only on some Chinese made products.

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They should be on all products that we can make here.

NWRatCon said:

Here's why tariffs are a bad idea and nearly every economist opposes them:
First, they are a drag on the economy. As a result of years of Obama policies, the economy was finally on a solid footing, expanding nearly his entire presidency.

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GDP was growing, but the standard of living of Americans was at a record low. It's still very near that low. You're starting off here on a shaky footing.

Until now, Trump's policies have failed to put a damper on that growth (AND please no BS about how he's "responsible for the current growth," he's barely had any effect, yet. You'll just expose your economic ignorance). GAO has estimated current tariffs (before they are raised) would reduce GDP by .7%.

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I'll grant you that tariffs will hurt shareholders. Where is the evidence that this will hurt the working Americans who have seen their jobs shipped to China while they're left to perform menial service jobs, or do nothing?

Moreover, as noted earlier, the hidden "tax" of tariffs hits consumers most, and lower income consumers most of all.

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Most of all? No, this hurts stock holders most of all. The companies with the most China exposure: Intel, Apple, and Caterpillar, all fell by more than 10%!

Dow losers show investors fleeing companies with China business

So while American consumers will have marginal price increases on goods that are a tiny percentage of their overall budget, wealthy Americans (whose wealth is generated mostly through assets, not work) will see their passive income dwindle. You have this precisely backwards.

phattonez said:

GDP was growing, but the standard of living of Americans was at a record low. It's still very near that low. You're starting off here on a shaky footing.



I'll grant you that tariffs will hurt shareholders. Where is the evidence that this will hurt the working Americans who have seen their jobs shipped to China while they're left to perform menial service jobs, or do nothing?



Most of all? No, this hurts stock holders most of all. The companies with the most China exposure: Intel, Apple, and Caterpillar, all fell by more than 10%!

Dow losers show investors fleeing companies with China business

So while American consumers will have marginal price increases on goods that are a tiny percentage of their overall budget, wealthy Americans (whose wealth is generated mostly through assets, not work) will see their passive income dwindle. You have this precisely backwards.

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My friend, if you think the stock market is what determines the health of the economy, we have a lot of education to work on. Frankly, I could give a flying ... poke at a rolling donut how stockholders fare. There are more economic issues, including who is responsible for the poor state of incomes, that can still be discussed, but tariffs are a long way from addressing, much less solving, those issues.

phattonez said:

They should be on all products that we can make here.

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Not so, unless it can be shown that the other nation is cheating in some way. For example we could, of course, make any clothing item here but that is not to say that another nation is cheating simply because they pay their workers less or offer different styles of clothing.

Also, consider that argument from the other side - should all other nations impose tariffs on all US exports?

NWRatCon said:

My friend, if you think the stock market is what determines the health of the economy, we have a lot of education to work on.

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Lol. I'm claiming the opposite.

ttwtt78640 said:

Not so, unless it can be shown that the other nation is cheating in some way. For example we could, of course, make any clothing item here but that is not to say that another nation is cheating simply because they pay their workers less or offer different styles of clothing.

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That is cheating US workers.

Also, consider that argument from the other side - should all other nations impose tariffs on all US exports?

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Yes. See how the Germany steel industry overcame Britian with the help of tariffs (which is likely a big part of why they went to war).
JSTOR: Access Check

phattonez said:

So while American consumers will have marginal price increases on goods that are a tiny percentage of their overall budget, wealthy Americans (whose wealth is generated mostly through assets, not work) will see their passive income dwindle. You have this precisely backwards.

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I'm sorry, my friend, but I think that this is a very simplistic (and inaccurate) assessment of how tariffs affect an economy, and who is most affected. I will try to provide with much more specific citations when I have a chance to sit down and get my references together, but life calls. My immediate response is, there is a lot left to discuss to correct the errors inherent in your arguments. I think this could be fun!

phattonez said:

That is cheating US workers.



Yes. See how the Germany steel industry overcame Britian with the help of tariffs (which is likely a big part of why they went to war).
JSTOR: Access Check

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Nope, that simply allows US workers (or retirees) to buy less expensive (imported) products if they so choose. If Company A pays its workers less than Company B does that is not cheating the workers of Company B thus allowing them to demand a "fairness tax" be placed on Company A's products to drive their prices up to the level of those of Company B's products.

I'm going to go a little pedantic, here, but I feel the need. Here's my hypothesis: a) Tariffs act as a drag on the economy, and b) that affects the lower income strata of the population most (an inverse relationship to income). As a corollary to that discussion, c) I opine that worker wages are not affected by either strong or weak economic performance (but there is a correlation between "good times" and CEO pay that is unrelated to corporate health). I was about to post a long disquisition, but life is interrupting.

ttwtt78640 said:

Nope, that simply allows US workers (or retirees) to buy less expensive (imported) products if they so choose. If Company A pays its workers less than Company B does that is not cheating the workers of Company B thus allowing them to demand a "fairness tax" be placed on Company A's products to drive their prices up to the level of those of Company B's products.

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Except we have a minimum wage law, and other worker protections. How is an American worker supposed to compete? And is paying 10 cents less for a light bulb really worth the lost jobs?