Home
/
RELIGION & LIBERTY ONLINE
/
How Trump and Sanders Plan to Raise Taxes on the Poor and Working Class
How Trump and Sanders Plan to Raise Taxes on the Poor and Working Class
Oct 6, 2024 5:19 AM

Imagine that a presidential candidate promised to raise taxes on everyone. Under the new proposal, both the wealthy and middle classes would pay more. But as a percentage of a person’s e, the tax increase would disproportionatelyaffect the poor and working class.

Now imagine that when many blue collar and working poor hear about this tax proposal they have a strange reaction: they cheer and consider it one of the primary reasons to support the candidate. They believe this deeply regressive tax that takes a large portion of their weekly paycheck is just what the American economy needs.

While this scenario may seem too absurd even for the bizarre 2016 election, it is actually happening. In fact, such a proposal has been made by both Bernie Sander and Donald Trump.

Both Sanders and Trump propose increasing tariffs on goods imported from other countries —and increase them significantly.* This isn’t that surprising for Sanders, a socialist who, on the issue of economics, is one of the most ill-informed candidates in modern history. But Trump should (and probably does) understand the detrimental impact tariffs have on the poor. And yet he has proposed an economy-crippling, poverty-increasingtariff.

In 2012, Trump proposed a tariff on China of 25 percent. In 2016 he bumped it up to 45 percent. (He later tried to lie and say he never proposed the 45 percent increase, but there is audio of him making the proposal.) A tariff is simply a tax on imports or exports, so Trump is proposing to raise taxes on imported goods by 25 to 45 percent. (To keep this point in mind, I’ll hereafter refer to tariffs as “taxes.”)

You might be thinking, “ So what? That’s a tax the Chinese have to pay.” But that’s not the way tariffs works. China doesn’t pay the tax — you do. If a tariff on Chinese goods is increased by 25 to 45 percent then you pay 25 to 45 percentmore for those goods.

Here’s a way to think about it. Imagine there are two hamburger stands in town. One is owned by the mayor’s wife, Veronica, and one is owned by a woman who lives in the next town over, Betty.

Of the two, Betty makes the tastier burger. She is also able to charge $1 a burger since she is able to buy her supplies in her own hometown for much cheaper. Veronica’s burgers aren’t quite as good and cost more to make. She has to charge $1.30 per burger.

The mayor decides to implement a new tax of 45 percent on producers (like Betty) who don’t live in the city limits. Since Betty’s profit margin is already low, she has to pass the bulk of the 45-cent tax on to her customers. Instead of $1 she now has to charge $1.35.

So who is better off in this scenario? The only winner is Veronica. Since her burgers are now cheaper, she is likely to sell more. And who is worse off? The customers who now have to pay 30 to 35 cents more for every burger. That is money they could have used to buy other products or services. Now they have to spend additional money on this new tax.

The same principle applies to taxes on goods and services imported from other countries. Customers simply have to pay more for goods and services they used to get much cheaper.

To understand how Trump’s tax increase would affect consumers, take a trip to Target or Wal-Mart and add 45 percent to almost all the prices. That’s money es directly out of your pocket into the hands of the federal government — all to punish you for buying goods that are cheaper to make in China.

Free trade advocates have pointed out for centuries that taxes on imports are evil and destructive. But over the past few decades even liberal economists e to recognize taxes on imports are a bad deal, especially for the poor. Edward Gresser of the Progressive Policy Institute explains why,

[I]magine a group of workers at a hotel. The hotel vice president, an unmarried recent MBA, makes a salary of $110,000 per year. Her secretary is a young, single mother, earning $25,000. And the maid cleaning their hallway, also a single mom, left the welfare system two years ago to begin a minimum wage job.

Each of these women pays four major federal taxes: e taxes, payroll taxes, excise taxes, and tariffs. The largest of these, the e and payroll taxes, raise $1 trillion and $700 billion respectively, and make up the bulk of taxation on the vice president. The tariff system, bringing in less than $20 billion a year, is the smallest tax, but places a hidden and surprisingly heavy charge on the secretary and the maid.

Gresser notes that the secretary loses three days’ pay to tariffs — twice as much asthe vice president —and the maid likely loses a full week’s pay. The reason: Tariffs are highest on the goods important to the poor.

Keep in mind that Gresser is referring to taxes that were already on imports in 2002. The poor would pay these taxes plus the increase proposed by Sanders and Trump. Since most of the poor and working class do not pay any federal tax, increasing the tax on imports is one of the biggest taxes they’ll ever have.

Why, then, do so many of e workers support this anti-poor policy that’s been presented by Sanders and Trump? There are several reasons.

First, many believe it is necessary to “bring jobs back to America.” The reasons why this isn’t even remotely plausible plicated, so I’ll dedicate a separate post to that issue.

Second, many people can’t seem to grasp that “taxes on producers” are taxes passed on to consumers. Companies sell products to make money. If the government adds a tax that artificially increases the cost of selling the product to a consumer, the tax will be paid by the consumer. Taxes on imports are similar to a pre-paid “sales tax.” Rather than collecting the tax at checkout, the tax is added into the price of the product. The tax may initially be paid by the foreign country, but you reimburse them when you purchase the product.

Third, most people don’t see the tax.Many people believe all price increases are caused by two phenomena: greed and inflation. If prices increases they assume it’s because pany wants to make more profit (hence, pany is being “greedy”) or that the price has been affected by inflation (a general rise is prices). They don’t even think about the taxes paid on imported goods. It never occurs to them that the reason they are paying more is because the government is forcing them to pay more for a product they could (and should) get much cheaper.

Fourth, politicians take advantage of the misperceptions and misunderstandings the American people have about economics. The vast majority of voters not only do not know much about economics, they do not want to be educated. They don’t want a politician (or journalists like me) explaining to them why a particular policy is destructive and makes them worse off. They merely want a politician to tell them what they want to hear and confirm what they already believe. If they think that China is the reason they can’t find a job, then they want a politician to tell them how they are going to punish China.

Fifth, the average consumer in the U.S. simply has no understanding of how taxes on imports affects them. This is especially true of the poor and working class, for the reasons cited above. Many of them therefore trust that a “successful businessman” like Trump must know what he’s talking about. After all, he wouldn’t support the policy if it hurt the poor, would he?

The answer, of course, is that politicians will champion any proposal that will help get them elected. Trump and Sanders are no different. Whether they actually believe that increasing the price of imports will help the American economy is unimportant. What matters is whether their potential voters believe it is true.

Once they are in office they don’t actually have to keep their word and implement the bad policy. And if they do,what does it matter if the poor have to suffer? The presidency is an attractive prize and worth whatever cost the poor and working class have to pay to help them get to the Oval Office.

*Two of the other major candidates, Ted Cruz and Marco Rubio, prefer to decrease or eliminate tariffs. It’s hard to tell where Hillary Clinton stands. She has flip-flopped on the issue of free trade so often that it’s difficult to know where she has landed at any particular time.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Live from Rome: Faith, State, and the Economy: Perspectives from East and West
Watch our new conference series live from Rome on April 29 at 10:00 a.m. EST. The embedded player below will display our conference stream when it es available. You can also visit the event on our Livestream page in order to see more information and to ask questions during the event. ...
Is Knowledge Of Religion Important To Culture?
We Americans are rather ignorant about religion. We claim to be a religious folk, but when es to hard-core knowledge, we don’t do well. The Pew Forum put together a baseline quiz of religious knowledge – a mere 32 multiple choice questions – and on average, Americans only got about half of them right. A few sample questions (without the multiple choice answers): Which Bible figure is most closely associated with leading the exodus from Egypt?What is Ramadan?In which religion...
Art at Acton: ‘Perpetual Order’ and the Struggle for Permanence
Yesterday, I had the honor of contributing to a panel discussion on the art of Margaret Vega here at the Acton Institute. Her exhibition is titled, “Angels, Dinergy, and Our Relationship with Perpetual Order.” Some fuller coverage may be ing on the PowerBlog, but in the meantime I have posted the text of my presentation, “Death and the Struggle for Permanence” at Everyday Asceticism. Excerpt: Angels … represent hope amid the human struggle for permanence in a life so characterized...
Burke vs. Paine on Choice, Obligation, and Social Order
I recently read Yuval Levin’s new book, The Great Debate: Edmund Burke, Thomas Paine, and the Birth of Right and Left, and found it remarkably rich and rewarding. Though the entire book is worthy of discussion, his chapter on choice vs. obligation is particularly helpful in illuminating one of the more elusive tensions in our social thought and action. In the chapter, Levin provides a helpful summary of how the two men differed in their beliefs about social obligation and...
Why Resegregation Happens—And How School Choice Can Fix It
With its decision in Brown vs. Board of Education, the Supreme Court ended systemic racial segregation in public education. Now, sixty years later, courts have released hundreds of school districts from enforced integration—with the result being an increase in “resegregation” of public schools. Numerous media outlets have recently picked up on a story by the investigative journalism nonprofit ProPublica about schools in Tuscaloosa, Alabama. According to the report: In recent years, a new term, apartheid schools—meaning schools whose white population...
The Love Of A Father And The Economy Of Family
255 Triathlons (6 Ironman distances, 7 Half Ironman), 22 Duathlons, 72 Marathons (32 Boston Marathons), 8 18.6 Milers, 97 Half Marathons, 1 20K, 37 10 Milers: That’s a lot of miles. A lot of training. A lot of numbers. It’s an economy of sorts for athletic achievement. These are some of the stats for Team Hoyt, the father-son team of Dick and Rick Hoyt who have raced together for 37 years. Rick was born with cerebral palsy in 1962, and...
A Brief Theology of Trees
In conjunction with Arbor Day — a day dedicated annually to public tree-planting in the U.S. and other countries — Ashley Evaro offers a brief theological reflection on the role of trees in the story of our salvation: Christians should care about National Arbor Day (to those who don’t know, that is today). Even if you are not a devoted celebrator of trees, it is worth your time to stop and consider what wonderful things trees are. Not only are...
Does Religion Do Us Any Good, Even If We’re Not Religious?
Is there any societal reason to protect religion? That is, do we get anything out of religion, as a society, even if we’re not religious, and is that “anything” worth protecting? Mark Movsesian thinks so. In First Things, Movsesian says religion does do good for a society – a good that is worthy of protection. Religion, munal religion, provides important benefits for everyone in the liberal state—even the non-religious. Religion encourages people to associate with and feel responsible for others,...
The Glory of God and the Goal of Good Laws
“The goal of all good laws is first and foremost the glory of God, then the good of one’s neighbor, privately and, most important, publicly.” –Girolamo Zanchi The following es from Thesis 3 (above) of Girolamo Zanchi’s newly translated On the Law in General.Though the work passes a range of topics, from natural law to human laws to divine laws, this particular es in his first foundational chapter on what the law actually is—its goals, classifications, and functions. If the...
Sisters of St. Francis’ Unholy Agenda
Religious shareholder activism continues its war on affordable, domestically produced energy in a campaign that can only be described as unholy. The first casualties of this war are the nation’s 10.5 million job seekers, the millions more who have quit looking for work, and the poor. The 2014 proxy resolution season finds the Sisters of St. Francis of Philadelphia joining other shareholders to force a May 2014 vote at Chevron Corp., which would require pany to report hydraulic fracturing (aka...
Related Classification
Copyright 2023-2024 - www.mreligion.com All Rights Reserved