A few days ago, former President of the United States, Donald Trump, launched a truly terrible, and in fact, unviable economic proposal. I am aware that many readers who usually read the media will think: “What a novelty.” But in doing so, they are letting the Republican Party candidate in the upcoming presidential election next November benefit from the soft intransigence of rock-bottom expectations, rather than holding him to the standards that should be applied to any presidential candidate. A politician should not be allowed nonsense just because he says nonsense all the time.
But in some ways, the most interesting thing about Trump’s latest horrible idea is the way his party has responded, with the kind of submissiveness and paranoia that would normally be expected in places like North Korea under Supreme Leader Kim Jong-un. a.
What Trump has reportedly proposed is an “all-tariff policy” in which taxes on imports of goods and services replace income taxes. Why is it a bad idea?
First of all, the numbers do not add up to the balloon probe that the former president has launched. Annual income tax collection in the United States is around $2.4 trillion; imports, 3.9 billion. At first glance, this would seem to indicate that Trump’s idea would require an average tariff rate of around 60% to make economic sense. But high tariffs would reduce imports, so tariff rates would have to rise even more to earn the same amount of revenue, which would reduce imports even more, and so on in a hellish loop. How high should the tariffs go? I did a cursory calculation using very favorable assumptions for Trump and arrived at a tariff rate of 133%; In reality, there is probably no tariff rate high enough to replace income tax.
And if we really replaced income taxes in the United States with import tariffs, we would in fact be dramatically increasing taxes on working-class Americans while giving the country’s big fortunes a big tax cut, because the tax Income tax is quite progressive and falls most heavily on wealthy taxpayers, while tariffs are, in effect, a kind of sales tax that falls most heavily on the working class.
So this is a really bad idea that would be very unpopular if voters learned about the consequences its implementation would have on the real economy.
But here’s the kicker: How did the Republican National Committee respond when asked about it? Causing their representative to declare: “The idea that tariffs are a tax on American consumers is a lie pushed by subcontractors and the Chinese Communist Party.”
Now, economists have been saying that tariffs have been a tax on domestic consumers for about two centuries; I guess, according to the arguments of the Republican party members, they have been working for China all this time. Yes, there are exceptions and caveats, but if you imagine Trump is thinking about optimal tariff theory, I have a degree from Trump University that you might like to buy.
Still, look at how the same committee responded to a relevant political question: insisting not only that the Dear Leader’s nonsense is true, but also that anyone who disagrees is part of a sinister conspiracy against the interests of the United States.
Don’t take it lightly. It is further proof that the MAGA [acrónimo del eslogan que popularizó Trump durante su primera campaña electoral a las presidenciales “Haz que Estados Unidos vuelva a ser grande”] It has become a dangerous cult.
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