4 ms·

The economic incidence of tariffs (like any tax) depends on elasticity. But yes, in general, some portion of the tax will be passed onto consumers. So what? Eco

The economic incidence of tariffs (like any tax) depends on elasticity. But yes, in general, some portion of the tax will be passed onto consumers. So what? Economists agree that taxing consumption is better than taxing income or capital gains: https://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate https://www.npr.org/sections/money/2012/07/19/157047211/six-... (points 3 and 4). A tariff is a consumption tax that’s less than 100% passed onto consumers, which has the effect of discouraging imports. All good things.

shmerl 1y ago
It's not about so what, it's about how many are brainwashed not to understand the obvious thinking they'll get tax reductions, while they are getting tax increases in practice. Same ones elected these people in the first place.
hn_throwaway_99 1y ago
It's a giant pet peeve of mine when people post a link that very superficially backs their argument, but then when you go and read it, it directly contradicts their point. Critical sentence from point 4: "Instead, impose a consumption tax, designed to be progressive to protect lower-income households." Tariffs are the exact opposite of that, they're highly regressive.
- shmerl 1y ago
  Exactly. Unlike income tax, tariffs don't depend on income.
- JKCalhoun 1y ago
  How do you design a progressive consumption tax? Tax only private jets and yachts? Wondering why raising higher-bracket income tax is such a problem.
  - hn_throwaway_99 1y ago
    > How do you design a progressive consumption tax? Tax only private jets and yachts? There are lots of ways to design a progressive consumption tax, but yes, one way is to tax luxury goods at a higher rate than essentials. This is already done in many states, for example, where groceries (or at least "basic" groceries like bread, milk and produce but not prepared foods) are exempt from sales tax. Another way is a sales tax rebate, e.g. where everyone can file for a rebate of sales tax of, say, the first $10000 of goods in a year. So poorer people with lower expenditures end up having a much lower effective tax rate.
    - mitthrowaway2 1y ago
      Another way is to put some sales tax revenue towards funding UBI. This is progressive because people who consume more than average will pay more into it, and people who consume less than average will get more out of it, and busy people don't have to spend their time organizing receipts to claim their sales tax rebate.
      - rayiner 1y ago
        That’s one of the proposals: https://www.cnn.com/2025/08/06/economy/government-tariff-revenue https://www.cnn.com/2025/08/06/economy/government-tariff-rev... “Trump has floated a combination of two options: paying down the government’s multi-trillion debt and sending ‘tariff rebate checks’ to Americans.”
    - danaris 1y ago
      Doesn't that require you to somehow track the sales tax you've paid over the course of the year...? That seems like a pretty onerous requirement for poorer people, who are guaranteed to also be more stressed, working longer hours, etc.
      - hn_throwaway_99 1y ago
        It can would just like the sales tax deduction you can already get for income taxes: you can track them individually, or you can take a lump estimate based on your income (with exemptions for large purchases).
- rainsford 1y ago
  Even then the argument made in the article is a pretty bad one. > Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax... So discouraging consumption is somehow better? I mean maybe it is, but if that's the underlying argument they need to actually make it.
  - rayiner 1y ago
    The article is presenting what a panel of six economists describe as a consensus view of economists!
- rayiner 1y ago
  No, the point about the economic efficiency of consumption taxes is the main point. Making them progressive is just a way to address the perceived downside of being regressive. The fact that consumption taxes are better than investment taxes remains whether or not you do that. (Trump has floated the idea of rebates to address this.) There’s a ton of literature on this, and it led to european countries widely adopting VAT in the 20th century. That’s also why the European countries like France have much higher consumption taxes than the U.S., while having similar corporate taxes. They want to discourage consumption.
platevoltage 1y ago
better for whom exactly?
- rayiner 1y ago
  The economy. Less distortion, incentivizes better behaviors.
mindslight 1y ago
ah yes, raising taxes is great when Dear Leader does it. You do realize you've got about three years until you're waxing eloquently about the virtues of eating the bugs, right?
- rayiner 1y ago
  I’ve been a democrat my whole life. You can find my posts saying we need to raise taxes $2 trillion to match germany.
  - mindslight 1y ago
    Were you writing these posts in support of Trump during the election? Were there a bulk of supporters who agreed with you, thinking that raising taxes and debt would be actual the thrust of Trump's policy - rather than the opposite, but seemingly more popular, critiques based on fiscal conservatism? Heck - do you think there is a bulk of supporters that agree with you now, when stated so bluntly and with the context that you consider yourself a democrat? Can you at least understand that from an outsider watching this arc, it feels like Trump supporters are being led around by the nose - even if the changed policy positions are being championed by completely different individuals than the previously vocal supporters who were concerned with price inflation? As for the specific policy argument - import taxes aren't the usual framing of consumption tax that applies to consumers, but rather they apply to industry as well. Taxing intermediate steps creates a drag on the economy, similar to if we taxed business revenue. And obviously doubling the price of equipment required to set up a new factory is completely contrary to the purported goal of bringing back domestic manufacturing. (Never mind how several decades of following economist prescriptions about spherical cows in a vacuum has created an absolute mess)
    - rayiner 1y ago
      What “changed policy positions?” Trump ran on tariffs in 2016 and in 2024: https://finance.yahoo.com/news/what-trump-promised-in-2016-on-tariffs-and-what-he-delivered-a-lot-080036529.html https://finance.yahoo.com/news/what-trump-promised-in-2016-o.... Are you saying that, in November 2024, you didn’t know that Trump was going to impose tariffs? Trump’s policy didn’t change. What changed is that people became reluctant to defend the actual reason economists oppose tariffs—because they think free trade is good. That’s one of those “spherical cow” arguments with a poor track record. So critics of Trump shifted to attacking tariffs as a “tax.” But economists don’t oppose tariffs for that reason. Economists think consumption taxes are good! And there is no inconsistency between accepting higher prices for foreign goods to further industrial policy, and also opposing higher prices caused by money printing.

shmerl 1y ago

It's not about so what, it's about how many are brainwashed not to understand the obvious thinking they'll get tax reductions, while they are getting tax increases in practice. Same ones elected these people in the first place.

hn_throwaway_99 1y ago

It's a giant pet peeve of mine when people post a link that very superficially backs their argument, but then when you go and read it, it directly contradicts their point. Critical sentence from point 4: "Instead, impose a consumption tax, designed to be progressive to protect lower-income households." Tariffs are the exact opposite of that, they're highly regressive.

shmerl 1y ago
Exactly. Unlike income tax, tariffs don't depend on income.
JKCalhoun 1y ago
How do you design a progressive consumption tax? Tax only private jets and yachts? Wondering why raising higher-bracket income tax is such a problem.
- hn_throwaway_99 1y ago
  > How do you design a progressive consumption tax? Tax only private jets and yachts? There are lots of ways to design a progressive consumption tax, but yes, one way is to tax luxury goods at a higher rate than essentials. This is already done in many states, for example, where groceries (or at least "basic" groceries like bread, milk and produce but not prepared foods) are exempt from sales tax. Another way is a sales tax rebate, e.g. where everyone can file for a rebate of sales tax of, say, the first $10000 of goods in a year. So poorer people with lower expenditures end up having a much lower effective tax rate.
  - mitthrowaway2 1y ago
    Another way is to put some sales tax revenue towards funding UBI. This is progressive because people who consume more than average will pay more into it, and people who consume less than average will get more out of it, and busy people don't have to spend their time organizing receipts to claim their sales tax rebate.
    - rayiner 1y ago
      That’s one of the proposals: https://www.cnn.com/2025/08/06/economy/government-tariff-revenue https://www.cnn.com/2025/08/06/economy/government-tariff-rev... “Trump has floated a combination of two options: paying down the government’s multi-trillion debt and sending ‘tariff rebate checks’ to Americans.”
  - danaris 1y ago
    Doesn't that require you to somehow track the sales tax you've paid over the course of the year...? That seems like a pretty onerous requirement for poorer people, who are guaranteed to also be more stressed, working longer hours, etc.
    - hn_throwaway_99 1y ago
      It can would just like the sales tax deduction you can already get for income taxes: you can track them individually, or you can take a lump estimate based on your income (with exemptions for large purchases).
rainsford 1y ago
Even then the argument made in the article is a pretty bad one. > Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax... So discouraging consumption is somehow better? I mean maybe it is, but if that's the underlying argument they need to actually make it.
- rayiner 1y ago
  The article is presenting what a panel of six economists describe as a consensus view of economists!
rayiner 1y ago
No, the point about the economic efficiency of consumption taxes is the main point. Making them progressive is just a way to address the perceived downside of being regressive. The fact that consumption taxes are better than investment taxes remains whether or not you do that. (Trump has floated the idea of rebates to address this.) There’s a ton of literature on this, and it led to european countries widely adopting VAT in the 20th century. That’s also why the European countries like France have much higher consumption taxes than the U.S., while having similar corporate taxes. They want to discourage consumption.

platevoltage 1y ago

better for whom exactly?

rayiner 1y ago
The economy. Less distortion, incentivizes better behaviors.

mindslight 1y ago

ah yes, raising taxes is great when Dear Leader does it. You do realize you've got about three years until you're waxing eloquently about the virtues of eating the bugs, right?

rayiner 1y ago
I’ve been a democrat my whole life. You can find my posts saying we need to raise taxes $2 trillion to match germany.
- mindslight 1y ago
  Were you writing these posts in support of Trump during the election? Were there a bulk of supporters who agreed with you, thinking that raising taxes and debt would be actual the thrust of Trump's policy - rather than the opposite, but seemingly more popular, critiques based on fiscal conservatism? Heck - do you think there is a bulk of supporters that agree with you now, when stated so bluntly and with the context that you consider yourself a democrat? Can you at least understand that from an outsider watching this arc, it feels like Trump supporters are being led around by the nose - even if the changed policy positions are being championed by completely different individuals than the previously vocal supporters who were concerned with price inflation? As for the specific policy argument - import taxes aren't the usual framing of consumption tax that applies to consumers, but rather they apply to industry as well. Taxing intermediate steps creates a drag on the economy, similar to if we taxed business revenue. And obviously doubling the price of equipment required to set up a new factory is completely contrary to the purported goal of bringing back domestic manufacturing. (Never mind how several decades of following economist prescriptions about spherical cows in a vacuum has created an absolute mess)
  - rayiner 1y ago
    What “changed policy positions?” Trump ran on tariffs in 2016 and in 2024: https://finance.yahoo.com/news/what-trump-promised-in-2016-on-tariffs-and-what-he-delivered-a-lot-080036529.html https://finance.yahoo.com/news/what-trump-promised-in-2016-o.... Are you saying that, in November 2024, you didn’t know that Trump was going to impose tariffs? Trump’s policy didn’t change. What changed is that people became reluctant to defend the actual reason economists oppose tariffs—because they think free trade is good. That’s one of those “spherical cow” arguments with a poor track record. So critics of Trump shifted to attacking tariffs as a “tax.” But economists don’t oppose tariffs for that reason. Economists think consumption taxes are good! And there is no inconsistency between accepting higher prices for foreign goods to further industrial policy, and also opposing higher prices caused by money printing.