The uncomfortable truth about tarrifs for the liberals 💵

There is an awful uncomfortable reality playing out with Trump’s tarrifs in the minds of liberals  – they’re raising a lot of revenue with a minimal impact on employment and inflation. That’s a good thing as it says something profound about taxation – namely that taxes on business and wealthy don’t have the great of impact on working people as the politicians want you to believe.

Simply said, if tarrifs work without raising inflation or unemployment much then it’s a strong case for higher taxes on the business, the wealthy, and carbon pollution. The government needs more money, with major expenses like social security and the highway trust fund running deficits and currently needing to be bailed out by the general fund which also runs a deficit. In a sea of red ink, we should be finding ways to raise revenue without driving inflation or unemployment.

Indirect taxes are never one-to-one. Competitive pressures leads businesses to eat at least some of the costs. Oil companies aren’t likely to pass all the cost of carbon taxes onto consumers, if it encourages people to adopt electric cars and heat pumps. Taxes also encourage tax-avoidance measures, such as adoption of electric cars and heat pumps. The truth is taxes and tarrifs can bring in revenue and drive change, and not be as painful as they might appear on surface.