It shouldn't really need to be mentioned at this point, but sales taxes are extremely regressive. The burden is shouldered by people with lower incomes.
Edit - source: https://taxfoundation.org/taxedu/glossary/regressive-tax/
It should be obvious by now that the whole game is to shift cost and risk to the bottom 90% while shifting profit and wealth even further to loyalists among the top 0.1%.
Viewed through this lens, the whole program is remarkably internally consistent. Tariffs on imports, cuts to corporate taxes, capital gains taxes and estate taxes, indiscriminate across-the-board reductions of 50% or more to regulatory agencies, etc.
Aren’t tariffs just corporate taxes which are paid by big corps who import stuff built overseas?
At least when you incentivize stuff to get built here the money goes to union workers or at least stays within the US.
Also the regulatory cuts are sorely needed at this point. It took longer to get regulatory approval for the Starship rocket than it did to actually build the rocket (the biggest and most complicated rocket ever built).
> Aren’t tariffs just corporate taxes which are paid by big corps who import stuff built overseas?
No, they're not "just" that. Those costs get passed onto the consumer in the form of higher prices. Corporations aren't going to eat the cost out of the goodness of their hearts.
> At least when you incentivize stuff to get built here the money goes to union workers or at least stays within the US.
If a widget from China costs $100 because of tariffs, then American companies who make the same widget have no reason to undercut that since they know consumers have no other options -- effectively raising the price floor.
There are also issues with the "union workers get the money" because we're effectively stiffing the rest of the U.S. population in order to prop up a specific segment of the economy.
> Those costs get passed onto the consumer in the form of higher prices
Not necessarily. The burden of a tax depends on supply and demand price elasticity. If demand is relatively price inelastic, then consumers pay the tax. If it is relatively price elastic, then companies pay via lower profits or reduce supply.
That is true. Not every single cent will be passed on, but there will be inflationary effects regardless.
The American consumers do have other options — other American companies. Who are all held to a higher standard than foreign companies due to sharing a regulatory environment.
So the price may go up, but it will eventually tend toward the natural floor, even if higher than before, taking into account the externalities that were ignored with foreign widgets such as poor working conditions and environmental disregard that happens in certain other countries.
> So the price may go up
No, the prices will go up. As you said, the cost goes up due to better working conditions, wages, etc...
> The American consumers do have other options — other American companies
Yes, but all of American companies will never go below whatever the Chinese widget costs unless tariffs go away.
> American companies will never go below whatever the Chinese widget costs
Why not? If there are 3 American companies with similar costs, would all of them just say “well, the price is the price?” Or would there eventually be one who realizes they can take more market share from the Chinese companies by undercutting them?
> Why not?
It was probably incorrect to say never, and there is another reply to me mentioning price elasticity which applies here for sure.
> eventually be one who realizes they can take more market share from the Chinese
Yes, on a longer timeline that is possible but in the short to medium term, it doesn't seem realistic for domestic producers to undercut and make profit. Initially you're building factories, refining processes, training workers, etc. which requires capital and investment.
Yeah, that's fair. I guess I'm ok with raised prices in the short-term if it brings more stability and better working conditions + environmental management in the long-term.
I feel like it’s out of step to think those promoting tariffs are the same as those who want environmental management and/or that Americans when they have even less money to spend because of higher prices will care to either.
Yeah probably not the environmental management, but likely they are in favor of the other point I made earlier about leveling the playing field by ensuring American companies are competing with others who value similar working conditions and standards to the US, rather than giving an advantage to countries who exploit their workers even more than the US.
Though, I can’t speak for them, and my opinions on reducing the outsourcing to countries who largely disregard the environment and human rights, are my opinions regardless of their motivations
>Those costs get passed onto the consumer in the form of higher prices.
ALL taxes are like this, you are just arguing against corporate taxes at this point.
By your logic we should just make the corporate tax rate 0% so that we can lower the cost of goods even more.
It’s mind boggling because the same people who lambasted Trump for lowering the corporate tax rate in his first term are now lambasting him for wanting to raise tariffs in his second. But these two actions effectively do the opposite of each other, so if you don’t like one you should be happy about the other.
But somehow people are upset about both.
Tariffs are a tax which have the benefit of basically targeting rich mega corps and incentivizing people to build locally and pay their citizens better wages.
The current system makes it financially infeasible to make most things in our own country because companies are forced to compete with foreign slave labor.
Also think of the carbon impact of shipping everything you buy across the entire world just so that you can take advantage of slave labor on the other side of the planet.
> It’s mind boggling because the same people who lambasted Trump for lowering the corporate tax rate
I never lambasted Trump for this and I don't think corporate taxes are particularly effective. I'd rather see something more on the "backend" of earning money like payroll or incomes taxes rather than corporate taxes. They seem like a huge drain for little gain. Especially since rates vary across countries so a corporation could move and game tax structures internationally.
All your arguments about carbon impacts, making things in the U.S. are fine but the whole Trump campaign was railing on how bad inflation has gotten but tariffs would have the worst inflationary impact on everyone. That and Republicans typically don't care about workers' rights or environmental impact so that seems a bit disingenuous to bring up.
Plus, there doesn't seem to be a solid foundation on why we want to bring back manufacturing to the U.S. since we generally want to strive for making more high tech stuff, no? If we suddenly start making lower-level widgets, where are we going to find enough workers to do that without a big influx of immigrants? Immigrants already work the jobs that Americans don't like farm hands.
>I never lambasted Trump for this
Fair enough, that was a bit of a tangent.
>Plus, there doesn't seem to be a solid foundation on why we want to bring back manufacturing to the U.S.
Because the US used to have tons of good paying jobs for normal people who didn't need to get a 4 year degree. Everything used to be made here and we had a booming economy which had opportunities for people from all walks of life, including people who can't or don't want to get a 4 year degree.
>Republicans typically don't care about workers' rights or environmental impact
I think this is definitely not as true as many people think, the right has become a big tent at the moment and there are a lot of people in it who do care about these things. Workers rights do align with bringing jobs back to the US, look at how unions voted in the recent election, they superficially supported the left but most of their members voted for the right.
>where are we going to find enough workers to do that without a big influx of immigrants?
Wages go up, more people are able to live a middle class life, people have children.
Also, most of these jobs are becoming automated, your example of farm hands is a good one actually because a ton of farm work is now being done by robots. It won't be very much longer until almost every ag job is being done by robots. So bringing manufacturing back to the US means that the money stays here, people get better wages, and we have a way lower carbon footprint.
And yes, fewer people are employed because of robots but also SOME will still be employed.
We have been hollowing out the middle class by shipping many good jobs building stuff so that the top 1% can take advantage of slave labor on the other side of the planet. It was not a great idea.
Look at how much of a boon it has been for China, they have used the base of manufacturing jobs to bootstrap their entire economy in record time. Now they have so much manufacturing expertise they are able to do things we physically cannot, but we used to be able to build everything.
> At least when you incentivize stuff to get built here the money goes to union workers or at least stays within the US.
We could frame this another way - if every state in the US enacted tariffs on every other state, would we all be collectively richer or poorer?
Maybe some states could set up their own cottage automotive industry, but overall there is going to be more deadweight loss to the economy than revenue made by the tariffs.
It depends… do the states share a common set of laws and values? Do the benefits of one state profiting transfer in part to other states? Is there a course for grievances to be settled across state lines with reciprocal legal coverage guaranteed? Are living and working standards reasonably similar, allowing companies to fairly compete across state lines?
Those statements are generally not true across countries, but generally are true across states within a country. Things like working standards across countries mean that another country can employ slaves and have uncompetitive costs due to free labor, causing an unfair environment for those same companies forming in countries without slave labor. That is much less likely within the same country.
So it’s not necessarily the same to frame tariffs across states to be similar to tariffs on other countries. There are meaningful differences that make it harder to ensure similar standards across countries, which can make tariffs be meaningful. It helps to account for externalities inherent to lacking the protections mentioned in the first paragraph.
Sales tax is not regressive per se. It's just much less progressive than an income tax. Rich people still pay more overall since they spend more money.
An example of a regressive tax would be something like cigarette taxes - poor people would actually spend a larger share of their income since they are also more likely to smoke.
People with lower incomes do spend larger a portion of their money on things that incur sales tax.
Higher income people spend more of their money on investments and other assets.
That is, unfortunately, the point.
That's a feature to the bill's sponsors.
Additionally, in most countries, crimes that carry a monetary penalty are also highly regressive (such as traffic violations like speeding).
This is a very unpopular opinion, but I believe ideally taxes in America should be more a lot more "regressive" like they are in Sweden. VATs are economically more efficient than income tax, and harder for corporations to avoid. Taxes are only actually regressive when the tax dollars don't go back into social services for the people, so that's something that would need to be prioritized first. I suspect that a major reason why the American government is so inefficient with spending is because there is no incentive for them to be, as the majority of tax dollars comes from a minority of high income workers.
https://www.economist.com/united-states/2017/11/23/american-...
I believe the most commonly supported tax strategy by economists is an income tax that goes negative below some threshold.
Personally, I'm open to VAT tax because it would be much easier to incorporate the disposal cost into goods and remove externalities (like pollution).
As you've said, it would be ideal to have strategies in place to lessen the burden on people with lower incomes.
This bill doesn't have any of those strategies or objectives.
It shouldn’t need to be said, and it probably won’t be. Even if it was said, most people probably wouldn’t get it.
I’m sure the libertarian’s are rejoicing right now. As is every VC.
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Currently, the top 50% of taxpayers pay 89% of all federal income taxes. And only about half of Americans pay income tax.
So doing some back of envelope math, that corresponds to maybe about a $200 tax savings for the median citizen. But an increase of about $600 on their purchases.
This is an extremely bad deal even if you are moderately wealthy. Income tax is not an ideal tax, but at least by its nature it's leveraged on people with income. But a sales tax affects you even if you are retired. There is no strategic savings strategy you can use to avoid it.
There's an irony that the last election was supposedly about inflation and the economy - but between this, the tariffs, and the (supposed) foreign policy agenda - we're looking at one of the most expensive US administrations sessions ever.
IOW "burn it all down".
I never thought I'd see anarchists being called "Republican".
To be fair, Republicans have consistently opposed the income tax since the 1800s.
Maybe, but Lincoln established the IRS and the first income tax (today's Republicans descend more from Andrew Jackson than they do from Lincoln, though).
Lincoln's tax was universally hated even within his own party and was only authorized for a few years to pay for the war.
I feel like a lot of folks who use the label "anarchists" don't really understand the concepts behind anarchism.
They aren't anarchists. They absolutely believe in the state and the monopoly on violence, and the legitimacy of their own power. They aren't even eliminating taxation - they just want to replace everything with a sales tax.
The things they want to burn down don't benefit working class people either, just the billionaire class that is surrounding Trump for the next administration (which includes the richest man in the world, Elon Musk)
For as much as I hear about the "deep state" from MAGA, you think they'd want to actually address that by abolishing / reforming agencies like the CIA or NSA.
Everyone who thinks that "deep state" is a problem in the United States should go to any country which does not have "deep state" (e.g. Russia, China...) and see how that works out for them :)
There is precedent for no federal income tax in the United States.
Prior to the federal income tax (1913), all federal government expenses were covered by duties, tariffs, and levies.
The federal government also didn't pay for highways or a standing army then.
I'm sure there are people who want to abolish the IRS and also don't want roads or support a military. But if you can get enough of them in a room together to win a caucus I will eat my hat.
I'd be interested in knowing what the cost of maintaining infrastructure for the US prior to that date was? My gut is this is akin to thinking you could go back to the income you had when you were living with your parents, not realizing that you now have so much more that you have to take care of.
Could probably go further and ask how much it was costing to expand infrastructure? It isn't like they opted for a larger source of income for no reason?
There is also precedent for child labor and slavery in the U.S. Societies are far more complex now and the administration and governance of them are correspondingly more complex.
> Societies are far more complex now
Exactly: we have a superior moral compass. Complexities of society aside, other comments rightfully point out that sales tax has a higher burden the lower the income.
> Prior to the federal income tax (1913)
Also during 1862-1872 and 1892-1895.
> covered by duties, tariffs, and levies
Which come with an equally long history of demonstrated problems, like being economically-inefficient and prone to corruption.
That last concern is particularly relevant given the criminality of the Trump administration: How many suitcases of cash does it take to get a special exception for/against your friends/allies?
I hope all these planned economic measures don't cause another great depression.
Seems like a lot of economic Jenga blocks being removed, with potentially very bad consequences.
Did you say "depression"? Billionaires with assets and money love fire sales! What better way to get even further ahead! Expect a recession or depression. Those coming in don't care about the majority that gave them the only thing they needed (a vote) and only needed it once to further their gains and wealth.
Russia loves this for us.
Fantastic for climate.
Yet another attempt to shift tax burdens to the working class. Yay. (/s if that wasn't obvious)
The tax burden in the US already is mostly on the working class. Corporate tax rates were low and were reduced further during Trump's first term - and Biden made no attempt to raise them.
One should also remember that low minimum and median wages are "pre-burdening" the working class, i.e. constitute a different form of tilting the distribution of economic power, and access to goods and services, away from workers. And minimum and median US wages are quite low relative to the wealth of the US as a whole.
> The tax burden in the US already is mostly on the working class.
not really
https://www.federalbudgetinpictures.com/do-the-rich-pay-thei...
https://taxfoundation.org/research/all/eu/taxing-high-income...
The first link ignores payroll taxes because it doesn't paint the same picture. The second link seems to show the US tax rates are significantly lower for the upper echelon compared to other first world countries.
Whatever the "rate" is, it's largly mute.
The labrynth of deductions, exeptions and other tax havens for the higher echelons of the income brakets makes the listed rate pretty meaningless.
I was more pointing out the second link does nothing to support his statement.
Increasing corporate taxes wouldn't necessarily shift the burden off the working class (though it might). Individuals react to taxes by reducing consumption of 'luxuries', whereas corporations don't experience luxuries, so increases in expenses (including taxes) cause increased prices, reduced wage expenses, reductions in dividends, or reduced capital. Increased prices and reductions in wages (either pay cuts or layoffs) are the most frequent reactions to tax increases, as investors have international alternatives, and so demand maintenance of the value of their asset.
> The tax burden in the US already is mostly on the working class
Blatantly incorrect. 89% of income tax revenue comes from families making $120k or more.
> Corporate tax rates were low and were reduced further
Corporate income tax is a side show. Most money that doesn't get taxed will get paid out either as purchases, salaries, or returned to investors. So either a sales tax, a personal income tax, or a capital gains tax. So a large cut to the corporate income tax only has a small overall effect on the overall tax burden.
Abolishing income tax is secondary to the real goal of abolishing the IRS and handing more power to the oligarchy. Don't get distracted.
The IRS has agents who train with assault rifles. The “oligarchs” do not.
What about all their private security?
The oligarchs just call them police officers.
Do the oligarchs control the police force?
Last I checked the government (IRS) had a monopoly on violence.
> Do the oligarchs control the police force?
Yes. I'm shocked you don't see it but you will eventually.
IRS = very crooked. Take gambling and lotteries. We know house = wins. Yet the IRS grabs huge % of lottery winnings, yet does not allow gamblers to deduct their ticket costs = a huge unearned windfall for the IRS. Here in Canada the CRA (functions like IRS) is fair, lotteries are not taxed and thus no deductions for tickets. Seems to be a relic of religious oppression - IHMO
Other than lottery winners, who cares? Is there some reason lottery winnings (or other forms of gambling) should be treated gingerly?
Not gingerly, just reflect the correct profit/loss = since the house wins, it is a defacto double tax
So maybe don’t gamble?
Lottery ticket costs are deductible, but only up to the amount of your lottery winnings. E.g., if you bought 1000 $1 tickets and won $12000, you could deduct $1000.
It works for Somalia, I'm sure we can all strive to get to that level one day.
That's apparently what the majority of the country wants.
This is my expectation if this is signed by the orange idiot.
I upvoted because you were downvoted and I suspect most of HN thinks you are kidding (maybe you are or aren't, please do explain), but it appears like it was only last year they enacted a similar policy: https://somalipublicagenda.org/wp-content/uploads/2024/11/SP...
The US also cancelled a large amount of their debt (previously 96% of the country's GDP was going toward servicing it): https://www.theguardian.com/global-development/2024/nov/06/s...
I don't have any opinion but I do have thoughts about how the US is operating on a very different scale (who will cancel our debt, and at that scale does it matter?).
It was tongue-in-cheek but not kidding. Somalia is on a list of only 16 countries in the world without an income tax, all the others have a single industry generating most of the income for the population (tourism or oil).
I sincerely hope this gets enacted. It would be great for states like California to stop subsidizing states like Louisiana.
I was thinking the same, I live in one of those states too.
But I expect if not done with great care, we will be in for a real bad economic ride.
Edit: The more I think about this, this could morph into a Federal Sales Tax, keeping or reducing the Income tax (for the rich of course) as it makes its way through.
Indeed we will but I think we are past the point of having a long term stable republic. Stuff like this bill and withholding aid to California normalize in liberal states the idea that secession is a possibility. We are entering in an era where it is going to be more than just crazy right wing nut jobs that talk secession.
It doesn't really have to be that way, does it? Yes, they're very loud right now, but what's preventing a set of (non-MAGA) voices from presenting a coherent counter that includes concern for efficiency and effectiveness, but still with, you know, united states.
It's almost like there's a lot of lead in DC water, since the level of discourse hardly rises above nutty...
I’m a liberal and I favor secession. It doesn’t have to be this way but it is this way now. There are major power imbalances. Neither chamber of Congress has proportional representation. Several times in recent elections the Presidential candidate with the majority of the votes did not win. In my mind the American Republic died when the insurrectionist leaders didn’t go to jail.
> In my mind the American Republic died when the insurrectionist leaders didn’t go to jail.
That was the point where I stopped investigating Republican positions. Their subsequent actions have demonstrated that it was a waste of time in trying.
"Arguing with an idiot is like playing chess with a pigeon. It’ll just knock over all the pieces, shit on the board, and strut about like it’s won anyway."
This quote feels pretty much what's happening in DC these days. And if one side is being a pigeon, there's nothing the other side can do to force them to work together.
And the worst part is being a pigeon is effective in this day and age of social media. Until the voters actually value mature leadership, we're deadlocked into this shit covered chessboard.
Trump's plans to prevent California from receiving disaster relief are only the beginning; the Republicans will spend the next four kneecapping blue states while trying to move the country towards Gilead. I'd favor secession if I lived in California; they're the 5th largest economy in the world and can definitely survive independently.
Morph into a federal sales tax? This bill literally proposes one
Yes, but eliminates Income Tax, I added that the Income tax will be kept, maybe in a reduced manner.
Unless you abolish all federal welfare of all kinds, the rich states' people are going to subsidize the poor states' people. California doesn't need Louisiana, but almost every state east of the Rockies does. Because that's where the Mississippi River ends. And where huge amounts of oil and natural gas are harvested.
After Katrina, when I got power back, I read people online complaining vehemently about how high gas prices were. Meanwhile, I'm sitting in my house with one path out of the neighborhood that is clear of trees on the road, and no gas because there's no power to the pumps. Lucky me, I had filled up our cars as it was coming in and wasn't scheduled to work for several days after it hit.
My daily drive to get ice (which was being trucked in; it was August in the South) was the only thing I used the cars for.