Replace Income Tax with Tariffs on Imports?

[Jeeves]

OK let's use an example.

You run the roads in a town, including one big toll road. Part of those tolls pay your salary. But to a much larger degree, the tolls go to local schools, and you are considered a hero for funding great schools without having the town go into debt.

Then a new road opens parallel to your road. Your toll income goes down. The town starts going into debt.

In this example, is 'You' the municipal government? Who built this new road? What for? Why did some private enterprise think there was enough income for two parallel toll roads?

What are you going to spend your maintenance budget on? The new road, or the toll road that funds the schools (and pays your salary?)

Why in the world would a government undertake the maintenance of a private toll road?!!

What does this outlandish scenario have to do with manufacturing? Is the US government manufacturing anything that would be endangered by competition from commercial enterprise? Last I heard, it was even contracting out its own responsibilities, like prisons and snow removal.

 

[billvon]

In this example, is 'You' the municipal government?

"You" is a worker for that municipal government.

What does this outlandish scenario have to do with manufacturing?

If you give someone a financial incentive to do something, you should not be surprised when they do it. Even if what they do goes against the public good.

 

[Jeeves]

If you give someone a financial incentive to do something, you should not be surprised when they do it.

Which brings us back to my original question: How does the government gain from the suppression of domestic manufacturing? Alternatively - since I'm still trying to sort out the players in your scenario - How does the government provide incentive for anyone to suppress domestic manufacturing?

 

[billvon]

Which brings us back to my original question: How does the government gain from the suppression of domestic manufacturing?

If companies in the US cannot buy domestic steel (due to suppression of domestic manufacture) they must buy imported steel. If they buy imported steel, the tariff they pay goes to the government.

 

[Jeeves]

If companies in the US cannot buy domestic steel (due to suppression of domestic manufacture) they must buy imported steel.

Okay. How does the government (federal or state?) suppress steel production? Are steel mills not owned by companies? Do the unemployed steel workers not stop paying income tax and start collecting unemployment benefits and/or welfare? A lot of dependent peripheral businesses also go bankrupt, leaving their workers unemployed. House prices plummet; people default in their loans, banks foreclose; health declines; people move away; schools and clinics close... Does a tariff on steel offset all that, plus the lost buying power of those unemployed people?

 

[billvon]

Okay. How does the government (federal or state?) suppress steel production?

Higher prices for mineral right leases
Higher taxes for property owned by steel mills
Slow rolling approvals for new facilities
More restrictions on shipping iron ore

To name just a few.

Do the unemployed steel workers not stop paying income tax . . . .

. . . and several other reasons why it's a bad idea to suppress local production. Of course; it's a dumb idea. Which is why we should not incentivize it. Keep in mind that politicians are chosen for their popularity, not their intelligence or foresight.

 

[Jeeves]

Higher prices for mineral right leases
Higher taxes for property owned by steel mills
Slow rolling approvals for new facilities
More restrictions on shipping iron ore

Which governments have done this?

 

[Seattle]

I'm reminded of the phrase, "when you're in a hole, quit digging"...

 

[Sarkus]

Which governments have done this?

None, because no government has ever used tariffs to fund government spending, such as Trump proposed.


I think you are all agreeing that it is a nonsense proposal by the orange numpty, but billvon is, as I also commented, predicting how stupid politicians might then work such a model, such as artificially increasing demand for imports to generate more income for the government, albeit to the increasing detriment of the society.

Correct me if I'm wrong, billvon, but you're not saying that the model Trump proposed is anything other than stupid?

 

[Jeeves]

I think you are all agreeing that it is a nonsense proposal by the orange numpty

In that case, it doesn't mean anything. It's not like he had a record of keeping promises - except the revenge ones. If he acquires the crown by whatever means, he'll be too busy lining comedians, journalists, jurists and performing artists up against walls without a blindfold to bother about the economy.