Dear Alexander: Well said on your part. The proper libertarian answer is of course no tax at all: anarcho-capitalism. However, if we must have a tax, Murray Rothbard, like you, recommends a head or a poll tax. Thanks, Walter
Dear Marco: thanks for your very thoughtful comment. Let me reiterate in response: I do not favor tariffs. I oppose them. I've been given lemons, and I'm trying to make lemonade. Of course tariff are a tax, paid for by domestic residents. But my claim is that it might well be a better tax than the income tax. Best regards, Walter
Dear Loagan: How would you, I, like to be murdered: shot or hung? Not much of a choice. I only favor tariffs and sales taxes over the income tax because I think the former requires less manpower. It will free up labor to produce goods and services that contribute to real wealth. Best regards, Walter
I like the general approach of your essay, Walter, but disagree with the conclusion. Tariffs don't generate revenue from foreigners as Trump claims. They are a tax on domestic consumers. Either the importer takes a bullet and reduces his profit margins or he passes them on to consumers. Usually some mix of the two. But more egregiously, it fosters inefficiency by supporting domestic industry from competition. And it attempts to restrict freedom of choice of the American consumers. It's saying, "If you dare buy something from a foreigner, we're going to penalize you bigtime, you unpatriotic cretin!"
Your initial sentence says it all. "Every fiber of my economic being cries out against tariffs."
Now while I agree with you that the income tax is a horrid institution, there is a third alternative to both tariffs and the income tax, and that is the sales tax. Properly constructed, the sales tax has a number of benefits. First, it can be selectively applied as it is in Canada. There are no sales taxes on essentials such as groceries. So the truly poor in society do not have to pay taxes if they shop wisely. Secondly, sales taxes as a percentage of the price of the good cost the wealthy who can afford Lamborghinis and Mercedes Benzes more than they cost those of more modest means like myself who drive cheaper imported cars from Korea. Of course this advantage is wiped out completely with exorbitant tariffs on imported cars. And thirdly, sales taxes only apply when you spend money. So a sales tax encourages savings (the accumulation of capital) over spending.
So I think a sales tax is a more efficient and fairer tax, distributing the cost of government to those who can best afford it, but exempting them to the extent they build up capital for investment.
Of course, abolishing an income tax and IRS would be an improvement. Unfortunately, starting with April 2nd we're going to have two evils - both an income tax and tariffs. What devastating effects in practice, in real life, the introduction of these tariffs will have is well summarized by Peter Schiff https://x.com/PeterSchiff/status/1906690596640600283 As for a less harmful tax in theory as a replacement of both all current taxes and tariffs, it is a fix (in amount, not in %) head tax or better a poll tax.
I am curious on your opinion Dr. Block. Are tariffs better than a sales tax or other consumption taxes? What about a flat income tax with tariffs piled on, would that be better than the current tax?
I know that is a lot to tackle, but these solutions seem more likely to happen than the sole adaptation of the tariff and total elimination of other taxes.
Dear Alexander: Well said on your part. The proper libertarian answer is of course no tax at all: anarcho-capitalism. However, if we must have a tax, Murray Rothbard, like you, recommends a head or a poll tax. Thanks, Walter
Dear Marco: thanks for your very thoughtful comment. Let me reiterate in response: I do not favor tariffs. I oppose them. I've been given lemons, and I'm trying to make lemonade. Of course tariff are a tax, paid for by domestic residents. But my claim is that it might well be a better tax than the income tax. Best regards, Walter
Dear Loagan: How would you, I, like to be murdered: shot or hung? Not much of a choice. I only favor tariffs and sales taxes over the income tax because I think the former requires less manpower. It will free up labor to produce goods and services that contribute to real wealth. Best regards, Walter
Dear Jinc: Thanks. Best regards, Walter
I like the general approach of your essay, Walter, but disagree with the conclusion. Tariffs don't generate revenue from foreigners as Trump claims. They are a tax on domestic consumers. Either the importer takes a bullet and reduces his profit margins or he passes them on to consumers. Usually some mix of the two. But more egregiously, it fosters inefficiency by supporting domestic industry from competition. And it attempts to restrict freedom of choice of the American consumers. It's saying, "If you dare buy something from a foreigner, we're going to penalize you bigtime, you unpatriotic cretin!"
Your initial sentence says it all. "Every fiber of my economic being cries out against tariffs."
Now while I agree with you that the income tax is a horrid institution, there is a third alternative to both tariffs and the income tax, and that is the sales tax. Properly constructed, the sales tax has a number of benefits. First, it can be selectively applied as it is in Canada. There are no sales taxes on essentials such as groceries. So the truly poor in society do not have to pay taxes if they shop wisely. Secondly, sales taxes as a percentage of the price of the good cost the wealthy who can afford Lamborghinis and Mercedes Benzes more than they cost those of more modest means like myself who drive cheaper imported cars from Korea. Of course this advantage is wiped out completely with exorbitant tariffs on imported cars. And thirdly, sales taxes only apply when you spend money. So a sales tax encourages savings (the accumulation of capital) over spending.
So I think a sales tax is a more efficient and fairer tax, distributing the cost of government to those who can best afford it, but exempting them to the extent they build up capital for investment.
Of course, abolishing an income tax and IRS would be an improvement. Unfortunately, starting with April 2nd we're going to have two evils - both an income tax and tariffs. What devastating effects in practice, in real life, the introduction of these tariffs will have is well summarized by Peter Schiff https://x.com/PeterSchiff/status/1906690596640600283 As for a less harmful tax in theory as a replacement of both all current taxes and tariffs, it is a fix (in amount, not in %) head tax or better a poll tax.
I am curious on your opinion Dr. Block. Are tariffs better than a sales tax or other consumption taxes? What about a flat income tax with tariffs piled on, would that be better than the current tax?
I know that is a lot to tackle, but these solutions seem more likely to happen than the sole adaptation of the tariff and total elimination of other taxes.