By: Marc Morial
“You can’t really run a campaign where you’re like: I want to cut taxes for rich people and raise them on the poor. So instead, it’s all of this smoke-and-mirrors distraction about how foreigners are taking advantage of us … It’s a story that, if you don’t know any economics and you haven’t stopped to think about it, sounds appealing. And the more people who buy that story, the more he can do this fiscal switch and have an excuse for the tax cuts.” — Kimberly Clausing
President Trump says “tariff is the most beautiful word in the dictionary.”
The beauty, for him, is that it allows him to avoid the word “tax.”
“If a candidate announced a tax increase on the poor and middle class to fund a tax cut for the rich, voters would soundly reject that proposal,” UCLA tax law professor Kimberly Clausing wrote in the New York Times. “But tariffs wrap this fiscal switch in a veneer of nationalism.”
In other words, if it looks like a tax and sounds like a tax and raises prices for the average American like a tax, we call it a tax.
Trump imposed a massive, job-killing tax increase on American consumers this week, one of a dizzying array that he has threatened, withdrawn, postponed, or introduced. The uncertainty has thrown the U.S. stock market into chaos and stymied economists’ efforts to precisely calculate the potential damage.
The 25% tax on all steel and aluminum imports that went into effect this week — on top of a 20% tax on Chinese imports Trump already imposed — could cost the U.S. 100,000 jobs in the aluminum industry alone.
Trump’s proposed tax increases combined could cost the U.S. a stunning 600,000 full-time jobs.
One calculation of a combination of proposed tax increases estimated an annual household cost of more than $2,600 a — more than 17% of the annual income of a full-time worker earning the federal minimum wage.
Trump has offered a nonsensical and ever-changing list of rationales for his tax hike agenda, from the absurd notion of forcing Canada to become a U.S. state to raising revenue to fund child care?
In reality, his wildly-unrealistic predictions of revenue from these tax hikes are meant to justify yet another tax break for billionaires. And because poorer families spend a greater percentage of their income on the affected products, the burden of that tax break falls squarely on their backs.
Trump’s 2017 tax shift reduced federal revenue and produced the third-largest increase in the federal debt of any president in U.S. history – and the largest for a president who wasn’t trying to fund a war.
And a trade war didn’t work the last time he tried it. Nearly every dollar raised through increased tariffs on Chinese imports went to bail out the farmers who were casualties of his trade war. His tax increase on imported metals sent prices soaring for cars, tools, and machines even as those industries’ output shrank to the tune of $3 billion.
As Moody’s chief economist Mark Zandi said, “It’s just a lose-lose for everybody.”
Marc Morial is president/CEO of the National Urban League.
