Actually, no, I’m not kidding. Keep in mind, the objective is to raise enough money to replace the income tax. That’s a lot of money.
It would be easy enough to structure the tariff to work like a VAT: tariff the increase in value each time the part crosses the border into the US. Other countries have refined VAT systems for decades. Calling it a “tariff” keeps alive the lie that the tax is being payed by foreigners. Casting A has a stated value when it crosses the border from the US to MX. It’s machined in MX, then shipped back to the US. The difference between it’s value when exported, and it’s value when shipped back in, is tariffed. The bracket is installed in an a/c compressor, for instance, in the US, then shipped back to MX, with a new declared value as it crosses the border into MX. The a/c compressor is then installed in a car and shipped back to the US. When the car crosses the border, the value of every part in it, that was exported from the US is deducted from the declared value of the car, then the tariff is charged on the remainder. Easy.
You think these people are going to set up a complicated bureaucracy to track the value added each time a part crosses the border? Good luck with that.
Yes, it could be done. No, they’re not interested in complexity.
How much does a “JC” actually spend, at retail, in a year? $1M? $2M? Repeal the income tax, and all the rest of his $30M annual payday is a free ride.
Beyond that, any company with decent financial controls can track the cost of a part. Just add the tax to the existing cost data, each time it enters the US. Does anyone think a “JC” would care about a few extra computer cycles, for the company, to account for the tax, in exchange for his income tax being zeroed out? For that matter, what would those few extra computer cycles cost the company, vs seeing it’s income tax zeroed out?
The people who would be hammered are the young, who need to buy everything new. We crusty old phartz don’t need to buy much. If there was no income tax on my conventional IRA distributions, or SS benefits, or on divis and cap gains in my cash account, I wouldn’t care if the price of a new washer or fridge doubled., because I would save ten times that in income tax.
I handled the VAT payments and returns in Ireland. Easy to do.
A. Add up the amount paid in VAT.
B. Add up the amount of VAT collected. Exports out of EU = $0 VAT collected on the sale(s).
If A > B, get govt refund of difference (A-B).
If B > A, pay the excess collections to the govt (B-A).
It taxes the rich more than the poor to pay for government services. Simple.
It used to be a very progressive, simple way of leveling wealth inequality.
But the wealthy like inequality, and they don’t think they like government services. They give huge political donations to kill it, and think, “why whittle at something you can finally break?” Simple.
That is why it is targeted for elimination. My suspicion is that, while a Prole spends close to 100% of income, including on durable goods, on which, tariffs are charged, I can’t imagine how a “JC” could spend more than $1-$2M/year. So, while a “JC” may pay tariffs on the durable goods portion of that $1-$2M, the rest of his $30M/year payday gets a free ride.
My brother and I are selling the modest 2 bedroom condo my parents lived in from 1970 until recently. We are in the final stages towards a sale, and the most likely purchaser is a wealthy man who wants it as a home and kitchen for a cook for his mistress, whom he has already moved into the condo complex….
Only slightly related. There was a discussion on a FB page about a ski slope and rope tow that the university I attended set up, in the late 60s, for the enjoyment of the students. One of the respondents to that post, was the head of the university’s ski club in the late 70s, and talked about how they would organize group trips to a resort out west, to ski. He commented that, back then, the resorts tended to be family owned, and affordable. Today, many people are priced out of places that college students could afford 45 years ago.
Seems that, these days, the only way anything can be “affordable” is if the government subsidizes it. FHA/VA mortgages. Fannie and Freddie. State and local tax deductions. Mortgage interest deduction. Guaranteed student loans.
When stuff gets too expensive, people find a way to do without. Then businesses that sell or make stuff go under. Then there is a shortage of stuff, but no one is buying it anyway.
People need food and clothes and housing. They can do with less, but when they can’t buy what they need they find ways to scavenge it. Most ordinary people have been shopping at thrift shops or joining buy nothing groups for years, and every year another financial tier joins the thrift shoppers.
Anyhow, there is going to be a lot of noticeable poverty unless things change pretty soon. Houses with four or five kids to a bedroom, repairs not made, one car for a family (or less), lots of pedestrians. We’ve seen this before, none of it will be new, and it is all quite predictable.
And note that food and housing are not impacted by tariffs. Blue jeans and t-shirts a little. Fuel and utilities no.
In spite of what gets posted here, the sky is not falling. I predict we will survive and stocks will recover. Mostly we are speaking of slowing sales not necessarily recession.
We import huge quantities of fresh fruits and vegetables, seafood, dairy, specialty foods, beverages, candies, chocolates, coffee and teas, and lots more. All of that will cost more starting almost immediately. The supply chain for much of that is measured in days, perhaps a few weeks. Not months.
Housing prices are determined by construction costs, which include (not surprisingly) lumber, which is tariffed. Also included: steel and aluminum (used in framing [rebar] and ductwork), gypsum (drywall), along with other new housing costs like appliances, carpeting, flooring, lighting fixtures, countertops and lots more.
Oh there’s definitely a recession coming. There are already layoffs at auto plants in the US because the components coming from Canada and Mexico are being tariffed and making the cars too expensive for their target market. Stellantis just announced more layoffs yesterday. In Indiana and Michigan.
Stellantis to temporarily lay off 900 US workers as tariffs bite
The five facilities affected by the layoff include Stellantis' Warren Stamping and Sterling Stamping plants as well as the Indiana Transmission Plant, Kokomo Transmission Plant and Kokomo Casting Plant, the company said.
The clothes I wear, come from the third world countries that are being hit with some of the highest tariffs: 'Nam, Bangladesh, Pakistan, and Lesotho. I picked up a couple more pairs of jeans, and a couple more shirt, when Penny’s had a BOGO sale, last December.