Remember everyone. View tariffs as kind of a federal sales tax. Sales tax typically affect lower classes more than upper classes. It will also compete with other sales taxes at other government levels. Those smaller governments rely on it more than the federal government.
Meaning, to grossly oversimplify, this will ultimately cost more for people with less wealth, and it will degrade your local governments ability to provide services due to less income.
To answer OP’s question. They already have plans to pass more tax cuts for the rich (federally). That money has to come from elsewhere. This is one form of the elsewhere.
Well the US collects taxes and a tariff is a tax so yeah, it will generate funds to run the government. I think this is why Trump likes them. He sees a huge influx in the taxes collected. Plus his followers are so stupid they think China/Canada/Mexico is paying them. Win/win for him. No wonder he thinks it’s the greatest word in the dictionary.
The best way to lower inflation is to pull excess cash out of circulation. It’s a correction for the cash influx that we saw through the COVID relief funds.
It’s not a popular choice, but pulling cash out of circulation is necessary to reduce inflation.
Tariffs are just a way to raise taxes and blame someone else for them
They’re furthermore a way to start fights using someone else’s money, that they can then take with impunity. So effectively US citizens are now getting charged a premium to fight a war they don’t want, without a choice.
I recall a war that started over taxation without representation…
Meh, the country dropped a trillion on fucking around with Iraq and voters kept reelecting republicans.
Trump won an election, think about that. After his shit show of a first term… no one in the US gives a fuck
Rich people, in the form of massive tax cuts
“then what’s all the cuts to medicaid and snap and other benefits and programs going to?”
more tax cuts for the rich.
“how about all the other ‘savings’ from ‘doge’?”
more tax cuts for the rich.
“then why is the deficit still growing by billions and billions?”
more tax cuts for the rich.
“when is it our turn?”
never!
Yeah. Remember if you have a side hustle and you get paid over $2500 from Paypal, venmo or cashapp you’ll receive a 1099-k form you have to report it on your tax form. It used to be $20k then it went down to $5k last year and it’s going to go down further to $600 next year.
Not to mention Melon Husk is VERY disingenuous about how much money he’s supposedly saving
This. It sounds like a cynical answer, but it’s ultimately the correct and most concise one.
The rich when tax cuts go into effect. It’s always been a mass transfer of wealth and the plan from the beginning. It’s why we always knew any bargaining was bull.
The last round of tariffs were paid almost uniformly and directly to large farming conglomerates to keep them silent on the matter. The amount actually left over after paying farmers wasn’t much, certainly not enough to cover the damage it did in other industries. There’s no doubt in my mind that it will be turned into a market manipulation scheme wherein they will invest in the subsidized markets after buying stocks in the relevant corporations once the market settles to its new low state.
I wonder if it will tie into their new strategy to buy crypto reserves which only make sense if they are going to skim it.
Of course. They will pump and dump that too, over and over again, with your tax dollars in the “reserve” taking the hit each time while they embezzle what will probably eventually be trillions, just wait, they will not stop looting America until there is nothing left to loot.
Having a crypto reserve makes sense if you plan on tanking the economy and US dollar for profit.
Or if you personally own a lot of crypto and are looking to manipulate the market.
The US government, that’s how import tariffs work.
No one.
Remember, the government is the issuer of the currency. They don’t need to collect dollars in order to spend them.
Imagine a referee removing a point from a participant.
The point doesn’t go anywhere, waiting to be reused, it just gets deleted. The next point to get added isn’t the “same point” in any sense, even though the point total is the same and maybe even some physical point token got reused.
Conceptually, sovereign currency is always on a one-way trip from being spent into existence to being taxed into annihilation.
This is an inaccurate metaphor because the referee doesn’t normally earn points but governments absolutely spend money.
The money is collected by the government and funds budgets.
The referee assigns points to teams, but doesn’t need to collect those points from another team or earn them to assign them out.
It’s a decent metaphor.
No it isn’t because the economic theory at the core, Modern Monetary Theory, is very much NOT accepted as valid in academic economic circles because so much of it relies on unfalsifiable concepts.
It’s a bad metaphor because the core of it is completely incorrect. If MMT was valid why did the bankruptcy of the USSR play out the way it did?
It sounds like you’re saying that when an entity pays the government what they now owe in tariffs, that money simply ceases to exist and is never counted or accounted for again.
Or used for other purposes.
Noone gets it really. The government collects it, but then it “burns” it, just like it does tax revenue.
Found the Randall Wray enjoyer. :)
You’re not wrong. Burning is what they used to literally do in earlier times, and the conceptual model today is exactly the same even if there’s no literal burning.
People don’t like hearing it though. Idk why.
Because it is incorrect? Modern Monetary Theory has incredibly shaky ground upon which it teeters.
How is that? In my view, MMT follows logically from the simple accounting idintity that debits and credits must balance, and the oberservation that the government is the monopoly issuer of its own currency. I’d be glad to hear your perspective though.
