source: https://www.zerohedge.com/personal-finance/get-rid-it-trump-suggests-hell-soon-slashend-income-tax
Trump is still signaling that he wants to replace income tax with tariffs.
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what are the odds this actually happens?
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would it be a good thing? a bad thing? something in between?
personally, I think the idea is definitely novel. it does nothing to address the rot within DC or the ridiculous amount that we are overspending and losing to money laundering. however it does shift the source of income to be external, rather than internal.
with current income tax, the government is funded based on the prosperity of its people. the more money people make, the more the government is funded.
in a system where tariffs replace income tax, the government is funded based off of foreign trade. the more it's people consume foreign products, the more the government gets funded.
this could arguably further encourage globalization of the US economy, which is the opposite of MAGA. it would also further cement the United States as a consumer economy, and make it even tougher for it to be a producer economy.
as for the odds of it happening, I would say it's slim to none. income tax was a temporary war measure, and we all know how that turned out. the government never expires temporary measures. assuming the tariffs are held up in the supreme court, the more likely scenario is that we have income tax and tariffs going forward.
Fuck. That's a good point and one I didn't consider. Even if it doesn't encourage globalization, it might encourage local governments to put up roadblocks to domestic competition, locking in current globalization.
Why wasn’t that the case before the income tax was implemented?
Oh right, because we also taxed exports back then, which meant all of our production remained here, rather than be sent to the rest of the world to make them stronger.
I don’t understand why it would force globalization
logically, if the US government can only be funded by the purchase of foreign goods, then the government has a financial incentive for the citizens to purchase foreign goods over domestic goods. there is no federal sales tax, and with income tax gone, the government gets nothing from people buying and selling within our borders.
it stands to reason that the government would do everything it can to hinder domestic production and encourage overseas purchases. they have many levers to influence this, including taxation and regulation.