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<blockquote data-quote="Doublestandards" data-source="post: 6096890" data-attributes="member: 110123"><h2>CAN TARIFFS REPLACE THE INCOME TAX?</h2>Simply put, no. Tariffs are levied on imported goods, which totaled $3.1 trillion in 2023. The income tax is levied on incomes, which <a href="https://home.treasury.gov/system/files/131/Distribution-of-Tax-Burden-Current-Law-2024.pdf" target="_blank">exceed $20 trillion</a>; the US government raises <a href="https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/#federal-revenue-overview" target="_blank">about $2 trillion in individual and corporate income taxes</a> at present. It is literally impossible for tariffs to fully replace income taxes. Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax, and as tax rates rose, the base itself would shrink as imports fall, making Trump’s $2 trillion goal unattainable.A recent <a href="https://www.piie.com/publications/policy-briefs/2024/why-trumps-tariff-proposals-would-harm-working-americans" target="_blank">Peterson Institute policy brief</a> calculated that revenues from Trump’s 10 percent/60 percent tariff proposals would total about $225 billion per year in current dollars. This figure is certainly an overestimate because it does not account for lower economic growth due to the inevitable economic shocks caused by retaliation against US exporters and the losses suffered by the import-dependent manufacturing sector. Exporters would also be hit by an appreciating dollar, as discussed below.[URL unfurl=&quot;true&quot;]https://www.piie.com/blogs/realtime-economics/2024/can-trump-replace-income-taxes-tariffs[/URL]</blockquote>

[QUOTE="Doublestandards, post: 6096890, member: 110123"] [HEADING=1]CAN TARIFFS REPLACE THE INCOME TAX?[/HEADING] [B] [/B]Simply put, no. Tariffs are levied on imported goods, which totaled $3.1 trillion in 2023. The income tax is levied on incomes, which [URL='https://home.treasury.gov/system/files/131/Distribution-of-Tax-Burden-Current-Law-2024.pdf']exceed $20 trillion[/URL]; the US government raises [URL='https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/#federal-revenue-overview']about $2 trillion in individual and corporate income taxes[/URL] at present. It is literally impossible for tariffs to fully replace income taxes. Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax, and as tax rates rose, the base itself would shrink as imports fall, making Trump’s $2 trillion goal unattainable. A recent [URL='https://www.piie.com/publications/policy-briefs/2024/why-trumps-tariff-proposals-would-harm-working-americans']Peterson Institute policy brief[/URL] calculated that revenues from Trump’s 10 percent/60 percent tariff proposals would total about $225 billion per year in current dollars. This figure is certainly an overestimate because it does not account for lower economic growth due to the inevitable economic shocks caused by retaliation against US exporters and the losses suffered by the import-dependent manufacturing sector. Exporters would also be hit by an appreciating dollar, as discussed below. [URL unfurl="true"]https://www.piie.com/blogs/realtime-economics/2024/can-trump-replace-income-taxes-tariffs[/URL] [/QUOTE]

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