4 ms·

I think it's quite the opposite. Tariffs are flat taxes on corporations AND can't be avoided with the tax shenanigans all big corporations use and many small on

I think it's quite the opposite. Tariffs are flat taxes on corporations AND can't be avoided with the tax shenanigans all big corporations use and many small ones can't. Implementation and motivation details aside I'm in favor of small tariffs for all but the most equal trade partners. Corporate taxes have the problem of small business paying much more proportionally than large ones and a flat tax on businesses that rely on cheap foreign labor and goods is deserved. Trump doesn't get to define all of my opinions by me needing to oppose exactly everything he's done. The problem with the current political situation is the establishment in both parties w were too cowardly or useless to address real problems which are now actually being addressed by objectively stupid fascists. And that is the lesson to everyone, get stuff done or get replaced by awful people doing awful things.

mlyle 1y ago
In the long run, tariffs basically all fall on the consumer because producer and distributor behavior is near infinitely elastic. Econ 101 predicts that the party who is less able to adjust behavior in reaction to the tax pays most of the tax. In the short run, this isn't true: firms have goods they need to move.
- tsunamifury 1y ago
  We are in a world economy which actually needs demand more than supply. This is your missing analysis.
  - mlyle 1y ago
    "We need demand more than supply" is a macro diagnosis. But tariff incidence is a micro question. Elasticity analysis doesn’t care whether the world has a demand shortfall or a supply glut. It asks: when a tax raises transaction costs, which side is less able to change behavior? In the long run, suppliers usually have more flexibility than consumers.
    - tsunamifury 1y ago
      I can't believe I'm going to look like I'm defending this but here it goes: The market 'offering' the most demand to the global economy right now is America, by far and away, with a distant second of Europe and Middle East. America has chosen to use tariffs in an attempt to 'tax the demand offered' to the global economy in order to stop the localize debt accumulation of that demand, along with other justifications (rightly or wrongly) of stabilizing global trade and currency. This is at least the THEORY on Tariffs. Its makes a bit more sense than the 'grrr 1950's trade imbalance' story media keeps spinning, but whatever I'm not going to defend it any more than that.
      - mlyle 1y ago
        I'm not talking about trade imbalance. I'm simply saying, tax incidence is predicted by elasticity, and in the long run suppliers have very high elasticity. You can possibly improve trade imbalance with tariffs (though retaliation makes it hard). But it's hard to escape your consumers paying most or all of the costs of those tariffs.
        tsunamifury 1y ago
        I think we agree if I'm understanding you correctly, yes the Suppliers have more elasticity and must ultimately absorb this. I'd say the remaining problem left in our analysis is massive inequality in America leading to enormous consumer elasticity in a small ultra-wealth portion. This I can't figure out
        mlyle 1y ago
        That's the opposite of how tax incidence works. Elasticity means you can change your amount produced in response to changes in price. Producers can’t easily change output, so they bear more of the tax burden themselves. But in the long run, producers can reallocate or exit until they’re producing at minimum(average total cost), which makes supply more elastic and shifts most of the burden onto consumers. This is stuff that's covered in week 4 of a basic microeconomics class. It gets a little fancier with imperfect competition or heterogenous agents, etc, but predicting tax incidence is basically dominated by this even in advanced microeconomics.
- zahlman 1y ago
  This model predicts much higher prices overall than actually observed, especially on the goods deemed most essential (like food). There are many reasons that companies cannot simply charge "what the market will bear".
  - mlyle 1y ago
    You’re mixing up two different questions. "What the market will bear" is a monopoly pricing story. Food is messy because it's a commodity with a whole lot of substitution-- consumers have a high elasticity as a result. We are talking about elasticity's prediction for the share producers and consumers each pay when there is a cost structure or tax change. Incidence theory is well validated and fits observed evidence remarkably well, including in 2019 studies of the effects of the 2018 trade war.
asah 1y ago
WSJ had a nice article on this today: https://www.wsj.com/personal-finance/taxes/corporate-income-tax-wealth-ade5fbb3?st=JbPLxg&reflink=desktopwebshare_permalink https://www.wsj.com/personal-finance/taxes/corporate-income-...
CamperBob2 1y ago
Corporations don't pay taxes. They pass them on to their customers: us. And applying tariffs to tools and raw materials when you're supposed to be trying to bring manufacturing back to your country is... well, let's just say any government stupid enough to do that isn't likely to improve things in any other respect.
- deleted 1y ago
  [deleted]
- hdgvhicv 1y ago
  Invisible hand forces prices down. If tarrifs on imported goods are high then people choose non imported goods (which might be substitutes for goods which can’t be made in America) as there are no tarrifs. They are dangerous though. If country A stops selling to US it sells cheaper to other countries. It also stops importing from the US (and chooses subsidies). Overall everyone loses out - at least in theory, as everyone uses worse substitutes.
  - yibg 1y ago
    If non imported goods were price competitive with imported goods then tariffs won't be needed in the first place. Tariff's are there for artificially force imported good to be more expensive so the previous more expensive domestically produced products become price competitive.
    - dpkirchner 1y ago
      And if the tariff is set too high domestic goods will become more expensive as well as there'd be no reason for a domestic manufacturer to charge substantially less than the price of the imported goods.
      - hdgvhicv 1y ago
        Two domestic manufacturers compete to get more customers by reducing prices, price trends to cost. All tarrifs do is remove foreign competition who have lower costs for a variety of reasons, some which benefit the country imposing the tariff, some not. Neoliberal approach is to always require the cheapest goods, no matter the cost. That’s not the only approach.
graeme 1y ago
>Tariffs are flat taxes on corporations The OP said tariffs are not progressive taxes. You are agreeing with them while believing you are disagreeing. Further tariffs are not specific to corporations. Individuals pay them. Small business pay them. Large businesses pay them.
- folsom 1y ago
  Then you would agree that all corporate taxes are not progressive and are eventually paid by all consumers thus all corporate taxes should be abolished.
  - jemmyw 1y ago
    Corporate taxes are paid on profit. In theory they should not change consumer pricing in a perfect market. They can be seen as a tool to encourage companies to spend more on R&D and capital investment rather than returning profit.
  - graeme 1y ago
    I recall my left leaning economics professor arguing for the abolition of corporate taxes along similar lines actually. You don't really deserve the downvotes other than perhaps for the aggressive tone. (I'm not committing myself to the idea, only that it isn't obviously outside the norms of economic thought)
smohare 1y ago
[dead]
deleted 1y ago
[deleted]
rapind 1y ago
> The problem with the current political situation is the establishment in both parties w were too cowardly or useless to address real problems which are now actually being addressed by objectively stupid fascists. > And that is the lesson to everyone, get stuff done or get replaced by awful people doing awful things. I don't think that the establishment who benefitted from the status quo actually cares nearly as much as they pretend to while the poor and eroding middle class bear the brunt of the suffering. I doubt rich reagonites and clintonites who made a killing off of deregulation and cheap overseas labour have many regrets.

mlyle 1y ago

In the long run, tariffs basically all fall on the consumer because producer and distributor behavior is near infinitely elastic. Econ 101 predicts that the party who is less able to adjust behavior in reaction to the tax pays most of the tax. In the short run, this isn't true: firms have goods they need to move.

tsunamifury 1y ago
We are in a world economy which actually needs demand more than supply. This is your missing analysis.
- mlyle 1y ago
  "We need demand more than supply" is a macro diagnosis. But tariff incidence is a micro question. Elasticity analysis doesn’t care whether the world has a demand shortfall or a supply glut. It asks: when a tax raises transaction costs, which side is less able to change behavior? In the long run, suppliers usually have more flexibility than consumers.
  - tsunamifury 1y ago
    I can't believe I'm going to look like I'm defending this but here it goes: The market 'offering' the most demand to the global economy right now is America, by far and away, with a distant second of Europe and Middle East. America has chosen to use tariffs in an attempt to 'tax the demand offered' to the global economy in order to stop the localize debt accumulation of that demand, along with other justifications (rightly or wrongly) of stabilizing global trade and currency. This is at least the THEORY on Tariffs. Its makes a bit more sense than the 'grrr 1950's trade imbalance' story media keeps spinning, but whatever I'm not going to defend it any more than that.
    - mlyle 1y ago
      I'm not talking about trade imbalance. I'm simply saying, tax incidence is predicted by elasticity, and in the long run suppliers have very high elasticity. You can possibly improve trade imbalance with tariffs (though retaliation makes it hard). But it's hard to escape your consumers paying most or all of the costs of those tariffs.
      - tsunamifury 1y ago
        I think we agree if I'm understanding you correctly, yes the Suppliers have more elasticity and must ultimately absorb this. I'd say the remaining problem left in our analysis is massive inequality in America leading to enormous consumer elasticity in a small ultra-wealth portion. This I can't figure out
        mlyle 1y ago
        That's the opposite of how tax incidence works. Elasticity means you can change your amount produced in response to changes in price. Producers can’t easily change output, so they bear more of the tax burden themselves. But in the long run, producers can reallocate or exit until they’re producing at minimum(average total cost), which makes supply more elastic and shifts most of the burden onto consumers. This is stuff that's covered in week 4 of a basic microeconomics class. It gets a little fancier with imperfect competition or heterogenous agents, etc, but predicting tax incidence is basically dominated by this even in advanced microeconomics.
zahlman 1y ago
This model predicts much higher prices overall than actually observed, especially on the goods deemed most essential (like food). There are many reasons that companies cannot simply charge "what the market will bear".
- mlyle 1y ago
  You’re mixing up two different questions. "What the market will bear" is a monopoly pricing story. Food is messy because it's a commodity with a whole lot of substitution-- consumers have a high elasticity as a result. We are talking about elasticity's prediction for the share producers and consumers each pay when there is a cost structure or tax change. Incidence theory is well validated and fits observed evidence remarkably well, including in 2019 studies of the effects of the 2018 trade war.

asah 1y ago

WSJ had a nice article on this today: https://www.wsj.com/personal-finance/taxes/corporate-income-tax-wealth-ade5fbb3?st=JbPLxg&reflink=desktopwebshare_permalink https://www.wsj.com/personal-finance/taxes/corporate-income-...

CamperBob2 1y ago

Corporations don't pay taxes. They pass them on to their customers: us. And applying tariffs to tools and raw materials when you're supposed to be trying to bring manufacturing back to your country is... well, let's just say any government stupid enough to do that isn't likely to improve things in any other respect.

deleted 1y ago
[deleted]
hdgvhicv 1y ago
Invisible hand forces prices down. If tarrifs on imported goods are high then people choose non imported goods (which might be substitutes for goods which can’t be made in America) as there are no tarrifs. They are dangerous though. If country A stops selling to US it sells cheaper to other countries. It also stops importing from the US (and chooses subsidies). Overall everyone loses out - at least in theory, as everyone uses worse substitutes.
- yibg 1y ago
  If non imported goods were price competitive with imported goods then tariffs won't be needed in the first place. Tariff's are there for artificially force imported good to be more expensive so the previous more expensive domestically produced products become price competitive.
  - dpkirchner 1y ago
    And if the tariff is set too high domestic goods will become more expensive as well as there'd be no reason for a domestic manufacturer to charge substantially less than the price of the imported goods.
    - hdgvhicv 1y ago
      Two domestic manufacturers compete to get more customers by reducing prices, price trends to cost. All tarrifs do is remove foreign competition who have lower costs for a variety of reasons, some which benefit the country imposing the tariff, some not. Neoliberal approach is to always require the cheapest goods, no matter the cost. That’s not the only approach.

graeme 1y ago

>Tariffs are flat taxes on corporations The OP said tariffs are not progressive taxes. You are agreeing with them while believing you are disagreeing. Further tariffs are not specific to corporations. Individuals pay them. Small business pay them. Large businesses pay them.

folsom 1y ago
Then you would agree that all corporate taxes are not progressive and are eventually paid by all consumers thus all corporate taxes should be abolished.
- jemmyw 1y ago
  Corporate taxes are paid on profit. In theory they should not change consumer pricing in a perfect market. They can be seen as a tool to encourage companies to spend more on R&D and capital investment rather than returning profit.
- graeme 1y ago
  I recall my left leaning economics professor arguing for the abolition of corporate taxes along similar lines actually. You don't really deserve the downvotes other than perhaps for the aggressive tone. (I'm not committing myself to the idea, only that it isn't obviously outside the norms of economic thought)

smohare 1y ago

[dead]

deleted 1y ago

[deleted]

rapind 1y ago

> The problem with the current political situation is the establishment in both parties w were too cowardly or useless to address real problems which are now actually being addressed by objectively stupid fascists. > And that is the lesson to everyone, get stuff done or get replaced by awful people doing awful things. I don't think that the establishment who benefitted from the status quo actually cares nearly as much as they pretend to while the poor and eroding middle class bear the brunt of the suffering. I doubt rich reagonites and clintonites who made a killing off of deregulation and cheap overseas labour have many regrets.