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Tariffs: a sneaky national sales tax [1]
['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']
Date: 2025-03-19
Multiple Republicans over the years have floated the idea of a national sales tax that would allow for the elimination of income tax. This idea can be seen in action at the state level. Currently nine states levy no income tax, and according to this table at Investopedia, 6 of those 9 states are in the bottom half for affordability. The state-level experiment clearly demonstrates that sales, in lieu of income, tax is not a magic formula that suddenly improves cost of living for its residents.
Tariffs don’t show up at the cash register the way that sales tax does. US Customs taxes the goods at import, making the goods more expensive to then retail. It has a similar effect to a sales tax, but there’s rarely a line item on the receipt to show the customer how much more they paid in tariffs. The base price of everything is just more expensive.
Tariffs only apply to goods of foreign manufacture, but very few of us purchase only goods that are of 100% US manufacture. The last 40 years of globalized supply chains, combined with the complexity of modern manufacturing, means that there is little to buy that isn’t subject to some tariff impact. As an example, one might point to vegetable produce as a good with no tariff impact. However, the farmer/distributor is possibly buying foreign fertilizer, foreign harvest equipment, and packaging with a foreign content. Any increased costs will be passed to the consumer.
Trump has bragged that these tariffs will be amazing: “We will take in trillions and trillions of dollars...” Were this the case, certainly the 2017 tax cuts could be made permanent, without needing to resort to the “Baseline” chicanery that’s currently being considered in the House. That nonsense will be another diary.
These tariffs are a step toward the end goal of eliminating the income tax, and transitioning to a regressive national sales tax. If the tariffs are as successful as Trump says they will be, expect further slashing of income and capital gains taxes. It’s all part of the plan.
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