PDA

View Full Version : Anti free trade taxes




sratiug
08-18-2010, 11:28 AM
Pick the tax that negatively impacts free trade the most, the flat tariff or the income tax, assuming they raise the same amount of revenue.

pcosmar
08-18-2010, 11:36 AM
assuming they raise the same amount of revenue.

I don't like this assumption.

that said I would prefer a tariff over an income tax.

They are already used by others to our disadvantage.

tremendoustie
08-18-2010, 12:22 PM
Tariffs are bad, but the income tax is worse.

I'd rather have someone steal my money when I trade with foreigners, than steal my money no matter how I work or trade.

Zippyjuan
08-18-2010, 12:35 PM
Tariffs don't just mean higher prices on imported goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition from the imports. It also means higher prices on things made from imports like oil or other resources.

tremendoustie
08-18-2010, 12:38 PM
Tariffs don't just mean higher prices on imported goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition from the imports. It also means higher prices on things made from imports like oil or other resources.

That's all true. Neither of these options is anything close to good ....

Anti Federalist
08-18-2010, 12:42 PM
Tariffs are bad, but the income tax is worse.

I'd rather have someone steal my money when I trade with foreigners, than steal my money no matter how I work or trade.

That^^^

Of course, the poll does not have an option for me:

I am not a "free trader". Free trade in the modern context and as it's understood right now is a Marxian fraud designed to destroy the middle class, abolish national sovereignty and reduce working people to grinding, third world poverty levels while increasing the profits to the banksters and ushering in greater global government control over people and business.

Put that in yer' poll and smoke it. ;)

erowe1
08-18-2010, 12:49 PM
I accidentally answered before I read your qualification "assuming they raise the same amount of revenue."

I answered the income tax, mainly on the grounds that it raises more revenue. But if I were to answer the purely hypothetical situation described by your added condition, I would have to say I don't know. For those who think they do know, I'd like to hear their reasoning. It looks like most of the comments so far are not about which tax hampers free trade more, but just which is worse in general, which is not the same thing.

Kregisen
08-18-2010, 01:25 PM
How is the income tax affecting free trade?

erowe1
08-18-2010, 01:33 PM
How is the income tax affecting free trade?

If we had only income taxes, those taxes would effectively be a VAT on American-made goods, raising the prices of those goods relative to imports, and steering American consumers to buy fewer American-made goods and more imports than they would in a free market (where income taxes and tariffs would both be zero).

Import tariffs would do the opposite, increasing the prices of foreign-made goods relative to American-made ones, and steering American consumers to buy more foreign and less American products than they would in a free market.

sratiug
08-18-2010, 01:38 PM
Tariffs don't just mean higher prices on imported goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition from the imports. It also means higher prices on things made from imports like oil or other resources.

Income taxes don't just mean higher prices on domestic goods. They also mean higher prices on imported goods compared to what they would be if they faced more competition from domestic goods. It also means higher prices for all our exports to the entire world, putting them at a competitive disadvantage in the entire world marketplace.

Danke
08-18-2010, 01:44 PM
Of course, the poll does not have an option for me...

Me neither. Not a poll.

erowe1
08-18-2010, 01:44 PM
Income taxes don't just mean higher prices on domestic goods. They also mean higher prices on imported goods compared to what they would be if they faced more competition from domestic goods. It also means higher prices for all our exports to the entire world, putting them at a competitive disadvantage in the entire world marketplace.

The converse is also true.

Import tariffs don't just mean higher prices for foreign goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition.

Kregisen
08-18-2010, 01:50 PM
If we had only income taxes, those taxes would effectively be a VAT on American-made goods, raising the prices of those goods relative to imports, and steering American consumers to buy fewer American-made goods and more imports than they would in a free market (where income taxes and tariffs would both be zero).

But aren't most imports re-sold in the U.S. and thus subject to the same income taxes? I guess that was really my question; I know what affect it would have on domestic goods and services.

Kregisen
08-18-2010, 01:50 PM
The converse is also true.

Import tariffs don't just mean higher prices for foreign goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition.

I wanna completely get rid of both income taxes and tariffs/quotas.

sratiug
08-18-2010, 01:58 PM
The converse is also true.

Import tariffs don't just mean higher prices for foreign goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition.

I agree. See the post I was quoting which made your point. The difference being that if we enact a 15% flat tariff, while it raises the price of Chinese goods sold in the US, it does not raise the price of Chinese goods sold elsewhere. The income tax raises the price of American goods not just in the US, but worldwide. Americans pay the entire tax either way, but one method distorts free trade far more than the other, and that is the income tax.

sratiug
08-18-2010, 02:08 PM
But aren't most imports re-sold in the U.S. and thus subject to the same income taxes? I guess that was really my question; I know what affect it would have on domestic goods and services.

Foreign workers do not pay United States income taxes. It seems logical an international corporation would just mark their cost up for imports to near what they sell the item for in the US and avoid showing a profit for US tax purposes.

erowe1
08-18-2010, 02:10 PM
But aren't most imports re-sold in the U.S. and thus subject to the same income taxes? I guess that was really my question; I know what affect it would have on domestic goods and services.

That would be a factor. But the point I made would still hold. Income taxes and import tariffs would still both distort the market, it's just that factoring in things like what you're talking about would make it more complicated to quantify both of them.

For example, let's take a car that is entirely built in America, except for the steel that is imported. If we had no tariffs and only income taxes, then that steel would be cheaper than it would with no income taxes and only tariffs, but every subsequent step of the production of the car right up to selling it at the dealership would be more expensive, factoring in the cost of income taxes for all the labor in that process. In that same scenario, an imported car would not have all those costs, so it would be relatively cheaper, and we could also say that for any car, the more of the steps of providing it that take place in another country the cheaper it will be to an American consumer.

On the other hand, if we had no income taxes and only tariffs, it would reverse. For a car with only its steel imported and everything else done here, the steel would be more expensive because of the tariff, but every subsequent step would be cheaper. And a car that was also built with American steel rather than imported steel would be cheaper yet, while an imported car would be the most expensive option because the tariff would not just be applied to one small portion of the cost of making the car, but to the cost of the final product.

erowe1
08-18-2010, 02:12 PM
I wanna completely get rid of both income taxes and tariffs/quotas.

I do too. Probably so do most people here.

Kregisen
08-18-2010, 02:12 PM
That would be a factor. But the point I made would still hold. Income taxes and import tariffs would still both distort the market, it's just that factoring in things like what you're talking about would make it more complicated to quantify both of them.

For example, let's take a car that is entirely built in America, except for the steel that is imported. If we had no tariffs and only income taxes, then that steel would be cheaper than it would with no income taxes and only tariffs, but every subsequent step of the production of the car right up to selling it at the dealership would be more expensive, factoring in the cost of income taxes for all the labor in that process. In that same scenario, an imported car would not have all those costs, so it would be relatively cheaper, and we could also say that for any car, the more of the steps of providing it that take place in another country the cheaper it will be to an American consumer.

On the other hand, if we had no income taxes and only tariffs, it would reverse. For a car with only its steel imported and everything else done here, the steel would be more expensive because of the tariff, but every subsequent step would be cheaper. And a car that was also built with American steel rather than imported steel would be cheaper yet, while an imported car would be the most expensive option because the tariff would not just be applied to one small portion of the cost of making the car, but to the cost of the final product.

Gotcha. Thanks!

Brian4Liberty
08-18-2010, 02:25 PM
I am not a "free trader". Free trade in the modern context and as it's understood right now is a Marxian fraud designed to destroy the middle class, abolish national sovereignty and reduce working people to grinding, third world poverty levels while increasing the profits to the banksters and ushering in greater global government control over people and business.

Put that in yer' poll and smoke it. ;)

Smoking! :D

sratiug
08-18-2010, 06:12 PM
Bump for more votes, and to inquire as to whether any of those that claim the flat tariff is more detrimental to free trade than the income tax can please explain why, since I have heard of no justification for this position and I do not believe that any such logic exists.

Austrian Econ Disciple
08-18-2010, 06:14 PM
That^^^

Of course, the poll does not have an option for me:

I am not a "free trader". Free trade in the modern context and as it's understood right now is a Marxian fraud designed to destroy the middle class, abolish national sovereignty and reduce working people to grinding, third world poverty levels while increasing the profits to the banksters and ushering in greater global government control over people and business.

Put that in yer' poll and smoke it. ;)

Frederic Bastiat and John Bright were Marxists? That's news to me.

nobody's_hero
08-18-2010, 06:32 PM
A tariff punishes consumption. An income tax punishes productivity.

Neither is desirable, but if you were interested in growing an economy, axe the income tax.

Anti Federalist
08-18-2010, 08:56 PM
Frederic Bastiat and John Bright were Marxists? That's news to me.

The Protectionists, The Free Traders and the Working Class

Karl Marx

http://www.marxists.org/archive/marx/works/1847/09/23.htm

But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.

http://www.marxists.org/archive/marx/works/1848/01/09ft.htm#marx

Karl Marx was in favor of free trade, he was in favor of the repeal of the Corn Laws in England because he knew what it would bring about, a destruction of the British empire and a soul crushing over regulated socialist nanny state.

He was right and within 50 years of enacting "free trade" across the board England was involved in one bloody deadly war, a period of staggering economic decline and another war, so that they are now shadow of what they once were.

And, once again, trade with socialist, subsidized states like the EU or authoritarian prison states like China and Vietnam, or "failed" states like Mexico, is not "free trade".

It is economic and national suicide.

South Park Fan
08-18-2010, 09:35 PM
So because China, Vietnam, and Mexico suffer from protectionist policies, the United States should too? How does it make sense to fight "socialism" with socialism? While you criticize Marx as being a free trader, simply reading his statement would tell you that he "supports" free trade for the same reason you oppose it: Both of you subscribe to a worldview in which mutually beneficial exchanges with people across borders leads to misery. In this sense, it is the nativist position which is more Marxist, since it agree's with Marx's reasoning.

Anti Federalist
08-18-2010, 09:39 PM
So because China, Vietnam, and Mexico suffer from protectionist policies, the United States should too? How does it make sense to fight "socialism" with socialism? While you criticize Marx as being a free trader, simply reading his statement would tell you that he "supports" free trade for the same reason you oppose it: Both of you subscribe to a worldview in which mutually beneficial exchanges with people across borders leads to misery. In this sense, it is the nativist position which is more Marxist, since it agree's with Marx's reasoning.

Because these economies are essentially prison economies. And they are not suffering, they are booming, exploding in growth at our expense.

They are engaged in a trade war and kicking our ass.

Let's ask this, should we have opened trade relations with the USSR and allowed them to export goods made by prisoners of the GULAG?

There is no business model that can compete with state prison labor.

Kregisen
08-18-2010, 10:20 PM
Let's ask this, should we have opened trade relations with the USSR and allowed them to export goods made by prisoners of the GULAG?

Why not?

South Park Fan
08-18-2010, 10:28 PM
There is no business model that can compete with state prison labor.

You might want to look at which side won the American "Civil" War. Regardless of the political undertones, the fact that the North functioned with a primarily free economy allowed them to have a much larger industrial capacity than the South. Several economists have pointed out the inherent disadvantage of slave labor versus free labor, and in the free market, the latter will win more often.

I wouldn't see anything wrong with opening trade to the USSR, maybe that would have caused fewer of them to starve.

Anti Federalist
08-18-2010, 10:45 PM
Why not?

Whoo hoo, you get the award my friend, you are way smarter and more "liberty minded" than I am, since I can't for the life of me come up with a business model that could lower my labor costs to compete with the GULAG or a moral reason with why I would want to support one of the most vicious police state systems the world has ever seen with my business dollars.

Why not just put the convicts to work on what's left of the assembly lines here?

Cheap shit for all, at the barrel of a government gun.

If you can't see what's wrong with that, either you're trolling, or I'm speaking Swahili or some damn thing.


You might want to look at which side won the American "Civil" War. Regardless of the political undertones, the fact that the North functioned with a primarily free economy allowed them to have a much larger industrial capacity than the South. Several economists have pointed out the inherent disadvantage of slave labor versus free labor, and in the free market, the latter will win more often.

I wouldn't see anything wrong with opening trade to the USSR, maybe that would have caused fewer of them to starve.

The North operated under a tariff system both before, during and after the war.

If tariffs are the destructor of an industrial base, how was that possible?

Kregisen
08-18-2010, 10:51 PM
Whoo hoo, you get the award my friend, you are way smarter and more "liberty minded" than I am, since I can't for the life of me come up with a business model that could lower my labor costs to compete with the GULAG or a moral reason with why I would want to support one of the most vicious police state systems the world has ever seen with my business dollars.

Why not just put the convicts to work on what's left of the assembly lines here?

Cheap shit for all, at the barrel of a government gun.

If you can't see what's wrong with that, either you're trolling, or I'm speaking Swahili or some damn thing.

Moral reasons aside, if they're able to produce something at a much cheaper price, why not move your labor to something with a lower opportunity cost?

No need to get hostile. :)

Anti Federalist
08-18-2010, 11:07 PM
Moral reasons aside, if they're able to produce something at a much cheaper price, why not move your labor to something with a lower opportunity cost?

No need to get hostile. :)

Sorry if that came off as hostile, it was meant as sarcastic.;)

I get punchy in these "free trade" threads, because it's the only real rift I have in "our movement". Well, that and border control, but I see those issues as being related.

Because at some point it has a negative effect.

If you, and everybody else did that, who is going to buy what you produce?

And that is leaving the moral aspect out of it, but in reality, you can't do that and expect to live with yourself.

Kregisen
08-18-2010, 11:10 PM
If you, and everybody else did that, who is going to buy what you produce?

Did what? Produced where you have your lowest opportunity costs?


And that is leaving the moral aspect out of it, but in reality, you can't do that and expect to live with yourself.

Well it's a whole different issue if you refuse to trade with a country that you hate or are soon to be enemies.

South Park Fan
08-18-2010, 11:20 PM
The North operated under a tariff system both before, during and after the war.

If tariffs are the destructor of an industrial base, how was that possible?

That's because you are not comparing their economic system to that of the South. The South failed to properly industrialize because they had a predominately slave economy, which meant that the slaves were working for mere sustainance and not for their own economic improvement. A free worker on the other hand has incentive to improve the quality of his work in hopes of acheiving greater output and thus greater income. Additionally, when you claim that the North operated under a tariff system, I presume that you mean at the federal level, since the states do not have jurisdiction over interstate commerce. You fail to mention that the South was part of that federal government both before and after the war, and thus were too restricted by the North's tariffs. During the war, the North illegally blockaded the South under the Anaconda Plan, thus the South was even more protectionist than the North was during the war, even if not by choice. Additionally, you don't mention that it is possible that the North would have been even more prosperous had they not enacted protectionist policies.

If protectionism is so great, why shouldn't it be enacted at the neighborhood level? Wouldn't our neighborhoods be a lot more prosperous if we didn't trade with people from any other neighborhoods?

sratiug
08-19-2010, 09:26 AM
Bump for more votes, and to inquire as to whether any of those that claim the flat tariff is more detrimental to free trade than the income tax can please explain why, since I have heard of no justification for this position and I do not believe that any such logic exists.

All I hear are crickets...

sratiug
08-19-2010, 09:31 AM
...
If protectionism is so great, why shouldn't it be enacted at the neighborhood level? Wouldn't our neighborhoods be a lot more prosperous if we didn't trade with people from any other neighborhoods?

We don't have neighborhood income taxes. We do have sales taxes. If out of towners were allowed to set up shop in your town and retail goods with no sales taxes while town residents were required to charge sales taxes you would have a better example and the results would be obvious.

tjeffersonsghost
08-19-2010, 09:33 AM
Tariffs don't just mean higher prices on imported goods. They also mean higher prices for domestic goods compared to what they would be if they faced more competition from the imports. It also means higher prices on things made from imports like oil or other resources.

At least my money will be going to employ American workers which would in turn put money in the American economy which would mean we would have money to consume (instead of borrowing) which means we would have more legitimate jobs. Most of the stuff we import can be made right here in the ole US of A. Just sayin..

erowe1
08-19-2010, 09:34 AM
Bump for more votes, and to inquire as to whether any of those that claim the flat tariff is more detrimental to free trade than the income tax can please explain why, since I have heard of no justification for this position and I do not believe that any such logic exists.

I'd like to see reasoning on the answers for this as well. But it's not just one side that has failed to provide any. I don't see any reasons in this thread for either answer.

My personal hunch is that both options distort the economy away from the free trade ideal an equal amount, since you stipulate that they raise equal revenue, and I can't think of (though perhaps someone else can) any better way to quantify the impact of either tax than simply looking at the total revenue it raises.

There may be other reasons to prefer one kind of tax to the other aside from the barriers they place on free trade (such as the large scale invasion of privacy that is inherent in the income tax, or the possibility of avoiding tariffs more easily than income taxes by modification of one's behavior). But those reasons don't relate to the question you asked.

sratiug
08-19-2010, 10:12 AM
I'd like to see reasoning on the answers for this as well. But it's not just one side that has failed to provide any. I don't see any reasons in this thread for either answer.

My personal hunch is that both options distort the economy away from the free trade ideal an equal amount, since you stipulate that they raise equal revenue, and I can't think of (though perhaps someone else can) any better way to quantify the impact of either tax than simply looking at the total revenue it raises.

There may be other reasons to prefer one kind of tax to the other aside from the barriers they place on free trade (such as the large scale invasion of privacy that is inherent in the income tax, or the possibility of avoiding tariffs more easily than income taxes by modification of one's behavior). But those reasons don't relate to the question you asked.

The income tax and the flat tariff are nowhere near equal in distorting free trade. The income tax is many times worse.

The negative trade effects caused by the income tax fall entirely on the American workers and producers paying the tax and make our goods more expensive whether sold here or exported and makes imports artificially less expensive here in the US.

The flat tariff (which is also paid entirely by Americans) spreads the negative affects to include imports, minimizes the increase in cost of American production and allows American goods to be much more competitive throughout the world.

South Park Fan
08-19-2010, 10:26 AM
We don't have neighborhood income taxes. We do have sales taxes. If out of towners were allowed to set up shop in your town and retail goods with no sales taxes while town residents were required to charge sales taxes you would have a better example and the results would be obvious.

Then you ought to be pushing for abolition of the income tax, not the imposition of an additional tax to steal people's income.

erowe1
08-19-2010, 10:37 AM
The income tax and the flat tariff are nowhere near equal in distorting free trade. The income tax is many times worse.

The negative trade effects caused by the income tax fall entirely on the American workers and producers paying the tax and make our goods more expensive whether sold here or exported and makes imports artificially less expensive here in the US.

The flat tariff (which is also paid entirely by Americans) spreads the negative affects to include imports, minimizes the increase in cost of American production and allows American goods to be much more competitive throughout the world.

Nothing you said proves that the income tax distorts free trade more. You apparently think that the kind of distortions the income tax makes are more undesirable to you than the kind of distortions tariffs make. But that's a subjective thing.

An objective answer has to measure the total weight of their respective impacts in a dollar amount. And I don't see any way to do that other than to compare the revenues, which your question stipulated to be the same for both. If anyone knows a better way to measure their impacts objectively, I'd like to see it.

sratiug
08-19-2010, 11:13 AM
Nothing you said proves that the income tax distorts free trade more. You apparently think that the kind of distortions the income tax makes are more undesirable to you than the kind of distortions tariffs make. But that's a subjective thing.
...


No it isn't. This is a simple logical problem. If there were no income tax and no tariff and we were to choose one or the other to raise a specific amount of revenue for the federal government, would the flat tariff affect the prices of domestic and imported products more equally than the income tax? Obviously, it would.

The flat tariff raising prices of imports would affect the cost of domestic products much more than the income tax raising the cost of American products would affect the cost of products made in othe parts of the world.

So the slewing of relative prices is much greater with the income tax. Not to mention it is going in a direction detrimental to the Americans paying the tax.

erowe1
08-19-2010, 11:28 AM
No it isn't. This is a simple logical problem. If there were no income tax and no tariff and we were to choose one or the other to raise a specific amount of revenue for the federal government, would the flat tariff affect the prices of domestic and imported products more equally than the income tax? Obviously, it would.


That isn't obvious to me. If the total revenue is the same in both cases, then I think it would logically follow that the total effect the two options would have on all prices would also be the same. They would, of course, effect the prices of different items differently, and one might be more evenly spread out among all items with the other more concentrated on particular things, but the total effect of each option, which is the sum total of all the effects it has on all prices, would have to be measured by the revenue raised, unless you have a better way to measure it, which I'm open to.

tjeffersonsghost
08-19-2010, 11:34 AM
No it isn't. This is a simple logical problem. If there were no income tax and no tariff and we were to choose one or the other to raise a specific amount of revenue for the federal government, would the flat tariff affect the prices of domestic and imported products more equally than the income tax? Obviously, it would.

The flat tariff raising prices of imports would affect the cost of domestic products much more than the income tax raising the cost of American products would affect the cost of products made in othe parts of the world.

So the slewing of relative prices is much greater with the income tax. Not to mention it is going in a direction detrimental to the Americans paying the tax.

Even though prices of products would increase with tariffs at least a consumer has a choice of what he wants to buy. If something is to expensive then maybe he will substitute for that item or not buy that item at all. Then again maybe he will just save that money.

With an income tax there is no choice.

In the end an income tax is worse than tariffs on a free society.

sratiug
08-19-2010, 12:20 PM
That isn't obvious to me. If the total revenue is the same in both cases, then I think it would logically follow that the total effect the two options would have on all prices would also be the same. They would, of course, effect the prices of different items differently, and one might be more evenly spread out among all items with the other more concentrated on particular things, but the total effect of each option, which is the sum total of all the effects it has on all prices, would have to be measured by the revenue raised, unless you have a better way to measure it, which I'm open to.

Maybe it would be the same if the US economy were half the world economy, but it is nowhere near that.

The income tax is a disencentive to buy American paid for by Americans. It is simply illogical to equate its effects to the flat tariff, which is a disencentive to buy imports paid for by Americans. There is no comparison in the magnitude of their effects on free trade. The income tax is an entire order of magnitude greater at distorting free trade.

erowe1
08-19-2010, 12:26 PM
Maybe it would be the same if the US economy were half the world economy, but it is nowhere near that.

The income tax is a disencentive to buy American paid for by Americans. It is simply illogical to equate its effects to the flat tariff, which is a disencentive to buy imports paid for by Americans. There is no comparison in the magnitude of their effects on free trade. The income tax is an entire order of magnitude greater at distorting free trade.

I'm sorry, but so far all you've done is assert this. I don't see any reason for it to be the case.

If you can present actual reasons (and if it's really such a simple and obvious logical conclusion, that should be easy enough), please do.

Also, you might consider writing your reasoning up in an article and submitting it to a peer-reviewed economics journal. It would definitely be a major contribution to the field.

Pericles
08-19-2010, 01:14 PM
That^^^

Of course, the poll does not have an option for me:

I am not a "free trader". Free trade in the modern context and as it's understood right now is a Marxian fraud designed to destroy the middle class, abolish national sovereignty and reduce working people to grinding, third world poverty levels while increasing the profits to the banksters and ushering in greater global government control over people and business.

Put that in yer' poll and smoke it. ;)

That /\/\/\/\/\

sratiug
08-19-2010, 02:59 PM
I'm sorry, but so far all you've done is assert this. I don't see any reason for it to be the case.

If you can present actual reasons (and if it's really such a simple and obvious logical conclusion, that should be easy enough), please do.

Also, you might consider writing your reasoning up in an article and submitting it to a peer-reviewed economics journal. It would definitely be a major contribution to the field.

From your previous post...


That isn't obvious to me. If the total revenue is the same in both cases, then I think it would logically follow that the total effect the two options would have on all prices would also be the same. They would, of course, effect the prices of different items differently, and one might be more evenly spread out among all items with the other more concentrated on particular things, but the total effect of each option, which is the sum total of all the effects it has on all prices, would have to be measured by the revenue raised, unless you have a better way to measure it, which I'm open to.

You admit the flat tariff and the income tax will affect price of different items differently. Indeed they would. And the difference is based on where they are made.

Since the world economy is 5 times as large as the US economy, the average price increase of goods produced outside of the US caused by a US income tax could not possibly be as great as the average price increase of US goods caused by a flat tariff raising the same revenue. That means the income tax must produce a much larger price differential between domestic and foreign goods, and a far greater distortion to free trade.

Where do I pick up my Nobel Prize for economics?

erowe1
08-19-2010, 03:22 PM
Since the world economy is 5 times as large as the US economy, the average price increase of goods produced outside of the US caused by a US income tax could not possibly be as great as the average price increase of US goods caused by a flat tariff raising the same revenue. That means the income tax must produce a much larger price differential between domestic and foreign goods, and a far greater distortion to free trade.

I just don't see how this logically follows. You're still just asserting it. If you could present your complete argument with all the steps included, that would help me, and improve your chances of getting it published.

Kregisen
08-19-2010, 04:50 PM
You admit the flat tariff and the income tax will affect price of different items differently. Indeed they would. And the difference is based on where they are made.

Since the world economy is 5 times as large as the US economy, the average price increase of goods produced outside of the US caused by a US income tax could not possibly be as great as the average price increase of US goods caused by a flat tariff raising the same revenue. That means the income tax must produce a much larger price differential between domestic and foreign goods, and a far greater distortion to free trade.

Where do I pick up my Nobel Prize for economics?

I'm not understanding where you're reaching your conclusion....

This is the original question right?


Pick the tax that negatively impacts free trade the most


So if trying to find out which U.S. policy negatively affects free trade the most, don't we just look at U.S. imports and exports? So if U.S. imports are greater than exports....wouldn't that mean a tariff would do more damage to free trade than an income tax, since tariffs are the ones hurting imports (the majority of free trade between U.S. and world) and income tax is hurting exports (the minority) while the income tax would also increase demand for more U.S. imports? (:confused:) So doesn't that mean a tariff negatively impacts free trade the most?



I've been sitting here thinking about this for like half an hour.....I probably don't even know what I'm talking about but I'm really interested in what the answer is.

erowe1
08-19-2010, 05:37 PM
So if U.S. imports are greater than exports....wouldn't that mean a tariff would do more damage to free trade than an income tax, since tariffs are the ones hurting imports (the majority of free trade between U.S. and world) and income tax is hurting exports (the minority) while the income tax would also increase demand for more U.S. imports? (:confused:) So doesn't that mean a tariff negatively impacts free trade the most?

I think a lot of people here would reason the opposite of you. They would say that it's better to export more and to import less and that a trade deficit (imports>exports) is a bad thing, so the option with the greater negative impact on free trade is the one that results in a trade deficit where we import more and export less (i.e. income taxes are worse than tariffs).

I don't look at it that way. I would say that the ideal scenario is the one with zero taxes of either kind, and if that results in more exports than imports so be it, and if it results in more imports than exports so be it as well. The taxation option that has the greater negative impact on free trade is the one that results in the greater divergence of the economy from that ideal. I think figuring that out would be very complicated.

Kregisen
08-19-2010, 08:53 PM
I think a lot of people here would reason the opposite of you. They would say that it's better to export more and to import less and that a trade deficit (imports>exports) is a bad thing, so the option with the greater negative impact on free trade is the one that results in a trade deficit where we import more and export less (i.e. income taxes are worse than tariffs).

I don't look at it that way. I would say that the ideal scenario is the one with zero taxes of either kind, and if that results in more exports than imports so be it, and if it results in more imports than exports so be it as well. The taxation option that has the greater negative impact on free trade is the one that results in the greater divergence of the economy from that ideal. I think figuring that out would be very complicated.

Well I don't see how "free trade" means "America's well-being". I say whatever hurts free trade the most is whatever restricts free trade the most.


I'm not yet sold on us having many more imports than exports necessarily a bad thing. There's arguments for both sides.


I think we should just abolish both completely.

sratiug
08-20-2010, 12:56 PM
I just don't see how this logically follows. You're still just asserting it. If you could present your complete argument with all the steps included, that would help me, and improve your chances of getting it published.

You are correct and I apologize for my stupidity. It doesn't follow because I have confused myself with a few things. I knew the US has basicly a 15% internal tariff now caused by internal federal taxation of all kinds, and was confusing that with the income tax which is a small percentage of that. The income tax could be replaced by a flat tariff of about 15%, so I was assuming the income tax raised US product prices by the same percentage as a tariff would raise imports, and that is untrue.

Thanks for helping me figure out I'm not making a lot of sense, lol.

I still think the income tax is worse than a flat tariff, and there is an inherent difference in taxpayers paying a tax in a way that gives tax free status to foreign goods instead of choosing to make their own goods tax free. One cannot subsidize himself to prosperity but he can easily give away all his money to others and become destitute. Plus there is the proximity factor. Free trade with foreigners is not necessarily equal to free trade with your neighbors.

sratiug
08-20-2010, 12:58 PM
I'm not understanding where you're reaching your conclusion....

This is the original question right?




So if trying to find out which U.S. policy negatively affects free trade the most, don't we just look at U.S. imports and exports? So if U.S. imports are greater than exports....wouldn't that mean a tariff would do more damage to free trade than an income tax, since tariffs are the ones hurting imports (the majority of free trade between U.S. and world) and income tax is hurting exports (the minority) while the income tax would also increase demand for more U.S. imports? (:confused:) So doesn't that mean a tariff negatively impacts free trade the most?



I've been sitting here thinking about this for like half an hour.....I probably don't even know what I'm talking about but I'm really interested in what the answer is.

See the post above, lol.

The income tax hurts free trade within the US.

erowe1
08-20-2010, 01:08 PM
I knew the US has basicly a 15% internal tariff now caused by internal federal taxation of all kinds, and was confusing that with the income tax which is a small percentage of that. The income tax could be replaced by a flat tariff of about 15%, so I was assuming the income tax raised US product prices by the same percentage as a tariff would raise imports, and that is untrue.


Not to nitpick. But that doesn't sound right to me either. I think that all imports come out to something like $2.5 Trillion, and federal revenue from income taxes is something like $1 Trillion. So unless I'm way off in those numbers, a 15% flat tariff on imports wouldn't come anywhere close to raising the same revenue our current income tax does.

And I'm not sure how to figure out what the tariff rate would have to be to make it equal either. One of the factors people have mentioned about tariffs is that they are much easier to avoid paying than income taxes just by buying less imports. But that also means that higher tariffs would inevitably reduce our imports such that each increase in the tariff rate would result in less increased revenue until it eventually even decreases revenue. It seems very possible to me that we could never impose high enough tariffs to make up for the current $1 Trillion revenue of our income taxes (i.e. if we impose a 50% tariff total imports would decrease to below $2 Trillion, and if we imposed a 100% tariff, total imports would decrease to less than $1 Trillion).

And I didn't think anything you said was stupid. I just thought it struck me as an oversimplification of something that I would expect to be very complicated.

Stary Hickory
08-20-2010, 02:58 PM
Flat tax is loads better.

Anti Federalist
08-20-2010, 03:03 PM
There are a couple of practical reasons for tariffs as opposed to withheld income taxation, some have been touched on already.

a) A tariff would be clearly shown as a percentage of cost, like a sales tax. Let everybody know just how much they are paying for government.

b) It would by necessity reduce the size of government. Even if you imposed a 100% tariff it wouldn't come close to extorting the amount of money income taxation does.

Kregisen
08-20-2010, 04:48 PM
And I'm not sure how to figure out what the tariff rate would have to be to make it equal either. One of the factors people have mentioned about tariffs is that they are much easier to avoid paying than income taxes just by buying less imports. But that also means that higher tariffs would inevitably reduce our imports such that each increase in the tariff rate would result in less increased revenue until it eventually even decreases revenue. It seems very possible to me that we could never impose high enough tariffs to make up for the current $1 Trillion revenue of our income taxes (i.e. if we impose a 50% tariff total imports would decrease to below $2 Trillion, and if we imposed a 100% tariff, total imports would decrease to less than $1 Trillion).

Same concept as laffer curve on the income tax.

hugolp
08-20-2010, 05:08 PM
Tariffs are bad, but the income tax is worse.

I'd rather have someone steal my money when I trade with foreigners, than steal my money no matter how I work or trade.

Exactly this.

erowe1
08-20-2010, 08:48 PM
Same concept as laffer curve on the income tax.

Exactly. Only I think the maximum revenue point would be at a much lower rate with tariffs because imports can be substituted with non-imports more easily than income can be substituted with non-income.

sratiug
08-21-2010, 12:57 PM
Not to nitpick. But that doesn't sound right to me either. I think that all imports come out to something like $2.5 Trillion, and federal revenue from income taxes is something like $1 Trillion. So unless I'm way off in those numbers, a 15% flat tariff on imports wouldn't come anywhere close to raising the same revenue our current income tax does.

And I'm not sure how to figure out what the tariff rate would have to be to make it equal either. One of the factors people have mentioned about tariffs is that they are much easier to avoid paying than income taxes just by buying less imports. But that also means that higher tariffs would inevitably reduce our imports such that each increase in the tariff rate would result in less increased revenue until it eventually even decreases revenue. It seems very possible to me that we could never impose high enough tariffs to make up for the current $1 Trillion revenue of our income taxes (i.e. if we impose a 50% tariff total imports would decrease to below $2 Trillion, and if we imposed a 100% tariff, total imports would decrease to less than $1 Trillion).

And I didn't think anything you said was stupid. I just thought it struck me as an oversimplification of something that I would expect to be very complicated.

I was figuring the personal income tax was aroun 300 billion, but that is the corporate income tax. So the corporate income tax could be replaced by a 15% tariff, instead of the personal income tax. Total US taxation imposes an effective 15% internal tariff on American goods. So it could still be argued that a tariff actually increases free trade by reducing the artificial price discrepancy between imports and domestic goods.

The purpose of my original drafted amendment to replace all internal federal taxation with a flat tariff gradually over a period of ten years was to limit federal income. As the tariff increases the global corporations that own our government would work with us to cut government spending to protect "free trade" even though they aren't concerned that "free trade" is already destroyed at least to the same degree now.

Jefferson supported tariffs as the main federal revenue source for the same reason, they cannot be increased beyond a certain limit to raise more revenue.

erowe1
08-21-2010, 01:04 PM
The purpose of my original drafted amendment to replace all internal federal taxation with a flat tariff gradually over a period of ten years was to limit federal income. As the tariff increases the global corporations that own our government would work with us to cut government spending to protect "free trade" even though they aren't concerned that "free trade" is already destroyed at least to the same degree now.

Jefferson supported tariffs as the main federal revenue source for the same reason, they cannot be increased beyond a certain limit to raise more revenue.

That's a good argument in favor of tariffs. But it doesn't really pertain to the original question of comparing tariffs with income taxes with the explicit stipulation that they raise the same revenue.

I definitely admit that there can be good reasons for revenue-neutral tax reforms that shift from one form of taxation to another. But the reasons that are most obvious are all secondary ones that don't pertain to the immediate economic impact of the tax itself at that level of revenue. The fact that tariffs are harder to raise beyond a certain level than income taxes are is definitely a point in favor of having government depend entirely on tariffs for its revenue.