You know the world has turned upside down when President Joe Biden is criticizing Donald Trump for a proposal to increase taxes.
Recently, Trump (aka Tariff Man) floated a 10 percent tariff on all imported goods.
Trump told Fox Business Network host Larry Kudlow, “I think, when companies come in and they dump their products in the United States, they should pay automatically, let’s say, a 10 percent tax.”
The White House responded to the proposal quickly, “President Biden strongly opposes plans to hurt hardworking families with higher prices and higher inflation—as even economists who served in the Trump White House warn such an agenda would,” according to Deputy Press Secretary Andrew Bates.
I don’t often agree with the Biden White House, but this is one of those times.
Trump opined that his tax wouldn’t really hurt trade that much, and it “would really make a lot of money.” What I think he means is that a 10 percent tariff on all imported goods would dramatically increase U.S. tax revenues.
How much money? The Tax Foundation provides an estimate. “Former President Donald Trump’s proposed 10 percent tariff would raise taxes on American consumers by more than $300 billion a year—a tax increase rivaling the ones proposed by President Biden.”
But note the Foundation’s really, really, really critical point about who pays that $300 billion tax: consumers.
The issue of who pays a tariff has been a perpetual point of confusion for Trump. For some reason, he thinks the country producing the products being imported by U.S. businesses and consumers pays the tax. That is not the case. U.S. businesses and consumers pay the tax.
It’s hard to know whether Trump is being dense on the issue of who pays tariffs, or just pretending to be dense. The interview cited above was with Larry Kudlow, an economist who served in the Trump White House.
Kudlow knows who pays the tax and has surely explained it to Trump, probably several times—as the Biden White House correctly points out. For whatever reason, Trump has consistently ignored that fact and continues to imply that countries producing the goods pay the tax.
In his 2016 presidential campaign, Trump ran on cutting taxes. Campaigning on imposing a massive tax increase on all Americans sounds more like a Democratic than a Republican plan.
August 29, 2023