And the best tax is always the lightest - And that would be tariffs

[Anti Federalist]

Rothbard on the negative aspects of consumption and income taxation.

When everything is examined, you are left with Say's maxim, with which Rothbard ends his paper:

"The best scheme of [public] finance is, to spend as little as possible; and the best tax is always the lightest."

If you are going to have taxation, I submit, yet again, that the least intrusive, least aggresive and least harmful, are tariffs.


The Truth About Taxes

by Murray N. Rothbard

http://lewrockwell.com/rothbard/rothbard276.html

This article, a response to Alan Greenspan's call for a consumption tax, originally appeared in the Review of Austrian Economics, 1994, Volume 7, No. 2, pp. 75–90, as The Consumption Tax: A Critique.

The Alleged Superiority of the Income Tax

Orthodox neoclassical economics has long maintained that, from the point of view of the taxed themselves, an income tax is "better than" an excise tax on a particular form of consumption, since, in addition to the total revenue extracted, which is assumed to be the same in both cases, the excise tax weights the levy heavily against a particular consumer good. In addition to the total amount levied, therefore, an excise tax skews and distorts spending and resources away from the consumers' preferred consumption patterns. Indifference curves are trotted out with a flourish to lend the scientific patina of geometry to this demonstration.

[Cutlerzzz]

Protectionism and the Destruction of Prosperity

by Murray N. Rothbard

Monograph first published by the Mises Institute, 1986

Protectionism, often refuted and seemingly abandoned, has returned, and with a vengeance. The Japanese, who bounced back from grievous losses in World War II to astound the world by producing innovative, high-quality products at low prices, are serving as the convenient butt of protectionist propaganda.

Memories of wartime myths prove a heady brew, as protectionists warn about this new "Japanese imperialism," even "worse than Pearl Harbor." This "imperialism" turns out to consist of selling Americans wonderful TV sets, autos, microchips, etc., at prices more than competitive with American firms.

Is this "flood" of Japanese products really a menace, to be combated by the U.S. government? Or is the new Japan a godsend to American consumers?

In taking our stand on this issue, we should recognize that all government action means coercion, so that calling upon the U.S. government to intervene means urging it to use force and violence to restrain peaceful trade. One trusts that the protectionists are not willing to pursue their logic of force to the ultimate in the form of another Hiroshima and Nagasaki.

Read the rest at

http://www.lewrockwell.com/rothbard/rothbard125.html

[Cutlerzzz]

http://mises.org/resources.aspx?Id=2013&html=1


No principle of taxation, [Rothbard] argued, can equal a market system
of fairness. A progressive tax discriminates on the basis of income; the rich
aren't forced to pay more for bread than the poor. Even a flat tax forces that
result, since higher incomes contribute a greater dollar amount than lower ones.

The least harmful tax is a head tax or equal tax: a flat fee low enough for even
the poorest to pay.

[lx43]

Taxation is the power to destroy!

[Warrior_of_Freedom]

I'm tired of it being called income tax. It should just be called what it is, stealing. Tax is fair enough, things need to operate, but for the government to claim ownership of 15-40% of what you earn (depending on your income bracket) is just absurd.

[donnay]

All taxation is theft!

[ClayTrainor]

All taxation is theft!

788

[Keith and stuff]

I agree for the national government, tariffs makes the most sense. For state governments, maybe luxury taxes like tobacco, gambling, lottery and alcohol. For local governments, property taxes are the most fair, as long as people get to vote on the local budgets line by line.

[TheDunk]

I'm not sure how tariffs would effect trade, as I'm not that familiar with that form of taxation. At current spending levels such tariffs would have to be obscenely high to cover government expenses. I'm open to the idea but I could see tariffs (interstate? international on imports? what scheme, how far reaching?) resulting in some problems unless federal government was returned to the smaller more limited role it should have.

[Philhelm]

I'm tired of it being called income tax. It should just be called what it is, stealing. Tax is fair enough, things need to operate, but for the government to claim ownership of 15-40% of what you earn (depending on your income bracket) is just absurd.

I'd take it a step further and call it wage slavery.

[erowe1]

All taxes are bad.

But the two statements of the OP are correct:
1) The lighter the tax the less bad it is.
2) The maximum revenue that could conceivably be taken via tariffs alone is much less than what could be taken by other kinds of taxes.

[oyarde]

I'd take it a step further and call it wage slavery. yes , violating the 13th

[Philhelm]

yes , violating the 13th

Yep.


"Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."

[oyarde]

Yep. Exactly , talk about involuntary servitude .....

[oyarde]

I hate taxes , but if you have to have them , maybe tariffs are reasonable , if I was in China , selling chickens to the US , they impose a tariff on my chickens , I switch to ducks and turkeys . If I am selling you auto's , you tariff it , I raise the price to keep my profit margin the same , or sell you bulldozers ....

[Philhelm]

Exactly , talk about involuntary servitude .....

The devil's in the details. Maybe we've all just been secretly convicted, thus making involuntary servitude perfectly legal. :D

[Philhelm]

I hate taxes , but if you have to have them , maybe tariffs are reasonable , if I was in China , selling chickens to the US , they impose a tariff on my chickens , I switch to ducks and turkeys . If I am selling you auto's , you tariff it , I raise the price to keep my profit margin the same , or sell you bulldozers ....

I could even live with a reasonable sales tax (reasonable being enough to sustain what a true limited government would need to operate). If we only had, say, a 5% sales tax and the government wasn't trying to model itself from 1984, I don't think that I'd find the time to complain, even if I agree philosophically that the collection of taxation is ultimately dependent upon the threat or use of violence. At least with the sales tax, the implication of you or your property being owned by the government isn't there.

[oyarde]

I could even live with a reasonable sales tax (reasonable being enough to sustain what a true limited government would need to operate). If we only had, say, a 5% sales tax and the government wasn't trying to model itself from 1984, I don't think that I'd find the time to complain, even if I agree philosophically that the collection of taxation is ultimately dependent upon the threat or use of violence. At least with the sales tax, the implication of you or your property being owned by the government isn't there. Yes , like property tax etc

[Philhelm]

Yes , like property tax etc

I think that one is more overtly egregious than the income tax. So, I take a loan from the bank, spend years paying it off, retire, get sick, and can't pay the property tax. Goodbye home.

[oyarde]

I think that one is more overtly egregious than the income tax. So, I take a loan from the bank, spend years paying it off, retire, get sick, and can't pay the property tax. Goodbye home. Criminal .

[Philhelm]

Criminal .

More like pure evil. What's worse, if someone were to ever make a stand to defend their property, they would be written off as nutjobs. My how far we have fallen. :(

[oyarde]

More like pure evil. What's worse, if someone were to ever make a stand to defend their property, they would be written off as nutjobs. My how far we have fallen. :( I agree .

[phill4paul]

I think that one is more overtly egregious than the income tax. So, I take a loan from the bank, spend years paying it off, retire, get sick, and can't pay the property tax. Goodbye home.

One of the tenants for a free society is personal property possession. We do not have this in America. It is a myth.

[Brian4Liberty]

I hate taxes , but if you have to have them , maybe tariffs are reasonable , if I was in China , selling chickens to the US , they impose a tariff on my chickens , I switch to ducks and turkeys . If I am selling you auto's , you tariff it , I raise the price to keep my profit margin the same , or sell you bulldozers ....

You would want the excise tax to be flat and low. In that case, products from China would still be lower in cases where they are already lower. By keeping it very low, you wouldn't even change buying habits.


I could even live with a reasonable sales tax (reasonable being enough to sustain what a true limited government would need to operate). If we only had, say, a 5% sales tax and the government wasn't trying to model itself from 1984, I don't think that I'd find the time to complain, even if I agree philosophically that the collection of taxation is ultimately dependent upon the threat or use of violence. At least with the sales tax, the implication of you or your property being owned by the government isn't there.

Yep. And with the income tax, everyone is constantly under the threat of IRS SWAT teams and confiscation of your property with no due process.

[Philhelm]

Yep. And with the income tax, everyone is constantly under the threat of IRS SWAT teams and confiscation of your property with no due process.

And forced self-incrimination in violation of the Fifth Amendment.

[Zippyjuan]

I'm not sure how tariffs would effect trade, as I'm not that familiar with that form of taxation. At current spending levels such tariffs would have to be obscenely high to cover government expenses. I'm open to the idea but I could see tariffs (interstate? international on imports? what scheme, how far reaching?) resulting in some problems unless federal government was returned to the smaller more limited role it should have.
Tarrifs would be a deterent to trade. They would make everything subject to the tarrif (all imports?) more expensive. In responce to our tarrifs, countries would also impose tarrifs on goods we export to them which would hurt US exporters. It would shield US industries from foreign competition which would allow them to charge higher prices for goods and those who rely on imported inputs would face higher costs so their prices would also be higher. No matter where you assess any tax, the money eventualy comes from consumers- it is included in the price of the goods you buy. A tarrif sounds like you are avoiding paying taxes and that foreigners are paying them for you, but they are instead hidden more.
In 2009, tarrifs only accounted for $30 billion in government revenues. Income taxes accounted for $1.2 trillion.
http://en.wikipedia.org/wiki/2009_United_States_federal_budget

Estimated receipts for fiscal year 2009 are $2.7 trillion (+7.1%).

$1.21 trillion - Individual income tax
$949.4 billion - Social Security and other payroll taxes
$339.2 billion - Corporate income tax
$68.9 billion - Excise taxes
$29.1 billion - Customs duties
$26.3 billion - Estate and gift taxes
$47.9 billion - Other


As to your question about trying to cover current government expenses with tarrifs, the US imports about $2 trillion worth of goods a year. It spends roughly $3.5 trillion so if you wanted a balanced budget with today's level of government spending and financed it only via tariffs, you would need a tax on everything you import of 175%. Now once you impose that large of a tax, imports would drop significantly so you would require a much higher tax rate that that in the longer term to continue to collect that amount of money. THat $90 a barrel of oil imported would rise to $157 a barrel. Imported foods (we only produce foods certain times of the year- imports cover the times we can't like tomatos or lettuce in the winter) so food costs would also soar.

[heavenlyboy34]

I could even live with a reasonable sales tax (reasonable being enough to sustain what a true limited government would need to operate). If we only had, say, a 5% sales tax and the government wasn't trying to model itself from 1984, I don't think that I'd find the time to complain, even if I agree philosophically that the collection of taxation is ultimately dependent upon the threat or use of violence. At least with the sales tax, the implication of you or your property being owned by the government isn't there.
The problem again becomes-what's to keep them from raising that to 10,20,30%? Tariffs are the most rational way to go, IMO.

[heavenlyboy34]

Tarrifs would be a deterent to trade. They would make everything subject to the tarrif (all imports?) more expensive. In responce to our tarrifs, countries would also impose tarrifs on goods we export to them which would hurt US exporters. It would shield US industries from foreign competition which would allow them to charge higher prices for goods and those who rely on imported inputs would face higher costs so their prices would also be higher. No matter where you assess any tax, the money eventualy comes from consumers- it is included in the price of the goods you buy. A tarrif sounds like you are avoiding paying taxes and that foreigners are paying them for you, but they are instead hidden more.
In 2009, tarrifs only accounted for $30 billion in government revenues. Income taxes accounted for $1.2 trillion.
http://en.wikipedia.org/wiki/2009_United_States_federal_budget
Yes, but this is an incentive to keep government spending under control.

[Zippyjuan]

Yes, but this is an incentive to keep government spending under control.

The amount of revenues the government takes in or where they get them from no longer acts as any incentive to control what they spend.

[erowe1]

As to your question about trying to cover current government expenses with tarrifs, the US imports about $2 trillion worth of goods a year. It spends roughly $3.5 trillion so if you wanted a balanced budget with today's level of government spending and financed it only via tariffs, you would need a tax on everything you import of 175%. Now once you impose that large of a tax, imports would drop significantly so you would require a much higher tax rate that that in the longer term to continue to collect that amount of money. THat $90 a barrel of oil imported would rise to $157 a barrel. Imported foods (we only produce foods certain times of the year- imports cover the times we can't like tomatos or lettuce in the winter) so food costs would also soar.

There would be no possible way to raise as much through tariffs, no matter how high they were set, as the income tax currently raises. That's a point in favor of tariffs as opposed to other taxes, and the point of the OP.

[Zippyjuan]

Exactly my point- you can't raise enough revenue via tarrifs alone.

And they are not "harmless" either- they would mean higher prices for everything- ending up passed along to consumers. The net effect would be the same as a hidden sales tax.

[Zippyjuan]

duplicate.

[overcastpatriot]

Tariffs funded this country for over 200 years. In fact if you look back on election history the big issues of the day were usually tariffs, trade, and national banks.

[erowe1]

Exactly my point- you can't raise enough revenue via tarrifs alone.

And they are not "harmless" either- they would mean higher prices for everything.

Of course they're not harmless. But the amount of harm they (and any other tax) do is commensurate with how much they raise. The less they can raise, the less potential for harm they have. Since tariffs have less of a potential amount they can raise than other taxes, they also have less of a potential for harm.

And you absolutely can shrink the federal government to a size that could be paid for by tariffs alone. Why do you think you can't?

[Philhelm]

The problem again becomes-what's to keep them from raising that to 10,20,30%? Tariffs are the most rational way to go, IMO.

That's a good point, but I was speaking in hypotheticals. If the sales tax were low, and if our government was truly limited. But that's just the reason that I warned one of my friends who would be paying less taxes under the 9-9-9 plan. I tried to tell him that once we get the national sales tax in, it will be raised in the future no doubt.

[Zippyjuan]

Of course they're not harmless. But the amount of harm they (and any other tax) do is commensurate with how much they raise. The less they can raise, the less potential for harm they have. Since tariffs have less of a potential amount they can raise than other taxes, they also have less of a potential for harm.

And you absolutely can shrink the federal government to a size that could be paid for by tariffs alone. Why do you think you can't?

How low do you think you can go in spending? What would you consider a "reasonable" tariff amount? Ron Paul has said he would not cut Social Security or Medicaid/ Medicare. Can't get rid of the interest on the debt. Let us start with those three items. Leave in a little for national defense and you are already up to about $2 trillion in spending which would be a 100% tarrif.


Mandatory spending: $2.173 trillion (+14.9%)

$695 billion (+4.9%) – Social Security
$571 billion (+58.6%) – Unemployment/Welfare/Other mandatory spending
$453 billion (+6.6%) – Medicare
$290 billion (+12.0%) – Medicaid
$164 billion (+18.0%) – Interest on National Debt

[erowe1]

How low do you think you can go?

The absolute lower limit is zero.

This country got along fine for a long time without those entitlements. I see no reason it can't again.

As someone else said, reducing government to a size that could be funded by tariffs alone would merely be taking it back to what it was 100 years ago.

Again, all this is a reason for why tariffs are less harmful than other taxes. You seem to be saying the opposite.

[Zippyjuan]

The absolute lower limit is zero.

This country got along fine for a long time without those entitlements. I see no reason it can't again.

As someone else said, reducing government to a size that could be funded by tariffs alone would merely be taking it back to what it was 100 years ago.

Again, all this is a reason for why tariffs are less harmful than other taxes. You seem to be saying the opposite.

Spending 100 years ago was $700 million (probably not adjusted for inflation) http://federal-budget.findthebest.com/l/12/1910. I used an inflation calculator and came up with that being worth $16 billion today. Interest on the debt alone today is near $200 billion so that is quite unrealistic. Just to cover that interest on the debt would require a 10% tarrif on all imports.

[Nathaniel1984]

A 'resonable' plan, would be that the federal government sell of 90% of its property, including all of its land, and such.

Otherwise, they should just default on the debt, take the massive hit, and get over it in the years to come, rather than spreading everything out over decades of slow death and destruction, and inflation.

[apex]

A tariff would make imports more expensive which would result in AMERICA actually competing and manufacturing something to compete with that price. People will stop buying cheap Chinese crap if its not cheap anymore. Tariffs might not work immediately but in the long run it would work by america creating manufacturing jobs and making american stuff cheaper.

[heavenlyboy34]

The amount of revenues the government takes in or where they get them from no longer acts as any incentive to control what they spend.
I meant that if tariffs become to high and drive prices up too much, the citizenry will see the causation easily and demand lower tariffs.

[Zippyjuan]

I meant that if tariffs become to high and drive prices up too much, the citizenry will see the causation easily and demand lower tariffs.
I agree- which is why it would be very hard to get taxes changed to a tariff in the first place. They know it would mean higher prices. Ditto for the "fair tax" or national sales tax. People would not support it.

[erowe1]

Spending 100 years ago was $700 million (probably not adjusted for inflation) http://federal-budget.findthebest.com/l/12/1910. I used an inflation calculator and came up with that being worth $16 billion today. Interest on the debt alone today is near $200 billion so that is quite unrealistic. Just to cover that interest on the debt would require a 10% tarrif on all imports.

So, from what you're saying, the government would have to stop paying entitlements and repudiate its debts if it were to be reduced to funding itself only with tariffs.

How again am I supposed to see those as bad things?

A $16 Billion/year budget for the federal government seems like plenty to me. I don't see anything unrealistic about that. Of course people who felt like they wanted more of their money to go to the government would be free to make donations.

[Pericles]

We do have a historical example - Jefferson's second inaugural address:

"At home, fellow citizens, you best know whether we have done well or ill. The suppression of unnecessary offices, of useless establishments and expenses, enabled us to discontinue our internal taxes. These covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary vexation which, once entered, is scarcely to be restrained from reaching successively every article of produce and property. If among these taxes some minor ones fell which had not been inconvenient, it was because their amount would not have paid the officers who collected them, and because, if they had any merit, the state authorities might adopt them, instead of others less approved.

The remaining revenue on the consumption of foreign articles, is paid cheerfully by those who can afford to add foreign luxuries to domestic comforts, being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens, it may be the pleasure and pride of an American to ask, what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States? These contributions enable us to support the current expenses of the government, to fulfil contracts with foreign nations, to extinguish the native right of soil within our limits, to extend those limits, and to apply such a surplus to our public debts, as places at a short day their final redemption, and that redemption once effected, the revenue thereby liberated may, by a just repartition among the states, and a corresponding amendment of the constitution, be applied, in time of peace, to rivers, canals, roads, arts, manufactures, education, and other great objects within each state. In time of war, if injustice, by ourselves or others, must sometimes produce war, increased as the same revenue will be increased by population and consumption, and aided by other resources reserved for that crisis, it may meet within the year all the expenses of the year, without encroaching on the rights of future generations, by burdening them with the debts of the past. War will then be but a suspension of useful works, and a return to a state of peace, a return to the progress of improvement."

[Anti Federalist]

domiciliary vexation

Well, fuck me, ain't we got that in spades these days!

+rep for the quote

[thomas-in-ky]

Our county government is funded primarily by:

1. Property tax

2. Insurance tax (all insurance except health insurance)
I hate taxes, but I hate this one less than the property tax. Why? Because, with the exception of auto liability insurance (which is compulsory), one can pretty much avoid paying this tax by avoiding insurance. Insurance is essentially gambling, and those that like to insure everything are already trading money for security.

3. Gasoline tax
Collected by the state and apportioned to the counties and cities based on a formula. This money must be spent on road maintenance, although local governments look for ways to divert it.

4. Phone tax
Ostensibly for the 911 dispatch center.

[heavenlyboy34]

I agree- which is why it would be very hard to get taxes changed to a tariff in the first place. They know it would mean higher prices. Ditto for the "fair tax" or national sales tax. People would not support it.
Only if government is too big/expensive. But, you're probably right-it would be difficult to get people to stop using "public monies" enough to make it (tariffs) a feasible plan in the near future.

[heavenlyboy34]

We do have a historical example - Jefferson's second inaugural address:

I also +reppeth thee. :cool:

[low preference guy]

Interest on the debt alone today is near $200 billion so that is quite unrealistic. Just to cover that interest on the debt would require a 10% tarrif on all imports.

Why pay the debt? Default and teach them a lesson: never again lend money to the U.S. government.

[heavenlyboy34]

Why pay the debt? Default and teach them a lesson: never again lend money to the U.S. government.
;) Nice! :) Perhaps student debt slaves should do that too? Whatcha think?

[low preference guy]

;) Nice! :) Perhaps student debt slaves should do that too? Whatcha think?

Harder question. I don't know off the top of my head.

[Dreamofunity]

User fees/charges are probably the most fair, and most efficient, especially if the revenue is earmarked for the specific service from which it was collected as this would allow for demand revelation. But, user fees as the whole system of taxation just begs the question as to whether competition in those services would be allowed, and if you're attempting to make those services and taxation as market-like as possible, why not just privatize those services.