Quote:
Originally Posted by opinionist
If tariffs can replace the income tax, then I say bring it on.
If tariffs can help bring jobs back from overseas, I say bring it on.
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I'm pretty sure neither of those will happen. As regards bringing back jobs to the USA, a small increase in hiring is likely but it's a lot cheaper for companies to simply move to other foreign sources. Adding jobs also means building the factories needed and that requires capital. Still cheaper to find other foreign sources.
The income tax issue is interesting. here's the breakdown.
The federal government collected about $2.2 trillion in individual income taxes in Fiscal Year 2023 — half of all government revenue. U.S. imports totaled about $3.8 trillion in 2023. Therefore, a tariff rate of 58% would have been required to offset income tax revenue that year — but only if imports remained at this level.
A more realistic scenario recognizes that high tariffs would cause companies and consumers to reduce their purchases of imported goods (as these tariffs would make goods more expensive).
History confirms this: when tariffs have increased in the past, import volumes have dropped as companies and consumers reduced their purchases of imported goods. Fewer import purchases means less tariff revenue.
An analysis by the nonpartisan Peterson Institute for International Economics found that 50% tariffs would maximize revenue. Even so, this would only raise about $780 billion in tariff revenues — far less than the amount raised by the income tax.