Tariffs or Taxes?

[laijsica]

Let's say that your government decides to cut off (or abolish) the income tax, and decides to live off import tariffs. Would you be okay with that? In the US, President Donald Trump promised that the income collected from tariffs would be enough so that income taxes would no longer be necessary. It could or could not work. Now, let's say the inverse happens where the government abolishes all tariffs (zero tariffs) and decides to leave income taxes in place. Would it benefit the economy?

Either we have tariffs or taxes, but we can't have both. If we had both (especially high tariffs + taxes), the economy would quickly go all the way down the drain. At least, that's my point of view. But I could be wrong.

Thoughts?

If President Donald Trump gives such a response, it could have terrible consequences for the American economy. He only wants to please the rich and has adopted a strategy to make the poor countries of the world poorer. Most countries in the world respect America because of its financial assistance to poor countries and soft foreign policy, but they are being criticized because of its hegemonic policy. After Trump took power, the silent depreciation of the dollar in the world is happening due to the imposition of tariffs on several countries.

The policy of reducing or abolishing income taxes for citizens was his political strategy, but he will not be able to implement it easily in practice. If America, which has the most powerful military in the world, abolishes income taxes from its citizens, the country's economy will be damaged in the long run. This strategy is only a political strategy to please the rich.

The countries of the world that do not want to accept Trump's imperialist policy. Trying to become self reliant and develop a separate financial system, are adopting a strategy of imposing additional tariffs on those countries. It will be suicidal for the American economy in the future. This US strategy is creating fears of long-term damage to the dollar.

[Mummy OS]

Personally I don't think it will be best to depend on tariff alone. It's would be preferable to have both tariff and then income tax and if they can be both maintained and balanced it will be a more better option, some countries might have a big import market so for such a country to depend only tariffs may affect prices for consumers.
The government should be very sure that the tax generated would be put into good use that would help the citizens if that is guaranteed then all measures can be put in place to ensure strict compliance to taxation

[qurbanshah02]

Personally I don't think it will be best to depend on tariff alone. It's would be preferable to have both tariff and then income tax and if they can be both maintained and balanced it will be a more better option, some countries might have a big import market so for such a country to depend only tariffs may affect prices for consumers.
The government should be very sure that the tax generated would be put into good use that would help the citizens if that is guaranteed then all measures can be put in place to ensure strict compliance to taxation

I think that whatever happens, the government should use it well and give full account to its people because it is the people's money that the government uses. There are some countries in which such works are done and they make it easy for their people and in some countries after paying such taxes and tariffs they do not do anything better in their country. Although if all this happens, every country develops a lot and if any country goes against this, then we have their situation before us today and it may not be resolved until they change their thinking. After that they will have some problems but after that their country will be quite peaceful. This thinking has been going on for a long time but no one has acted for this, their luxurious life ends and they do not want to end it, so they do not use it.

[Abiky]

Cutting down the income tax and increasing the tariffs to the importers is not going to make a big change to the end users because at the end of the day all those taxes are going to be paid by the users who consume those products and if their government thinks that it will boost the local product consumption then what is their plan to generate revenue? Increase taxes in other forms like increase thew taxes on fuel, increase the taxes on electricity, increase property tax?

I'm aware that importers ultimately pass down the costs to consumers. But I believe what you pay in the end on tariffs, would be a lot less than what you'd pay on income taxes. Depends on how high the import tariffs are, of course. Combining both high tariffs and a high income tax, is like "poison" to the economy. It's why there should always be a balance between the two, for the economy to keep flowing as usual. In the US, things will get worse because of the high tariff rates imposed by President Donald Trump. Unless, deals between countries are made to a point where tariff rates are flexible enough for consumers to pay. While Americans were promised income taxes would come to an end, I don't envision this happening anytime soon.

Honestly, I can't think of any country which has zero income tax, living entirely off tariffs. Each country has its own tariff rates and income tax system. For what I know, tariffs only apply to physical/tangible goods. But digital goods? That's another subject. It's impossible to tariff digital goods as they're not bound to a single jurisdiction. I hope governments don't mess this one too, or we'll be "toast".

[danherbias07]

High tariffs could mean fewer imports, and other countries will probably stay out of trading with the high-tariff country. Even if they have the highest quality of product, there will always be competition that also has a high grade of the same product.
I agree with high tariffs rather than high taxes, but that's only if there's a working system. If it were a brand-new rule, it could become quite a problem for the country adjusting to it. Then, it will surprise other countries trading with you, which could lead to more problems.

I think it will be better to just minimize the taxes for the strong working power of people. Then, a bit of tariffs, especially for foreign products that are super rare or a country that specialized on that product. If there's only one to pick, high taxes might ensure a better economic fund, but it's going to get negative reactions from the people.

[Findingnemo]

Cutting down the income tax and increasing the tariffs to the importers is not going to make a big change to the end users because at the end of the day all those taxes are going to be paid by the users who consume those products and if their government thinks that it will boost the local product consumption then what is their plan to generate revenue? Increase taxes in other forms like increase thew taxes on fuel, increase the taxes on electricity, increase property tax?

I'm aware that importers ultimately pass down the costs to consumers. But I believe what you pay in the end on tariffs, would be a lot less than what you'd pay on income taxes. Depends on how high the import tariffs are, of course. Combining both high tariffs and a high income tax, is like "poison" to the economy. It's why there should always be a balance between the two, for the economy to keep flowing as usual. In the US, things will get worse because of the high tariff rates imposed by President Donald Trump. Unless, deals between countries are made to a point where tariff rates are flexible enough for consumers to pay. While Americans were promised income taxes would come to an end, I don't envision this happening anytime soon.

Honestly, I can't think of any country which has zero income tax, living entirely off tariffs. Each country has its own tariff rates and income tax system. For what I know, tariffs only apply to physical/tangible goods. But digital goods? That's another subject. It's impossible to tariff digital goods as they're not bound to a single jurisdiction. I hope governments don't mess this one too, or we'll be "toast".

Taxation system is highly complicated and I may not have complete understanding about that but if government need x amount of funds to run the government and to spend on development projects and everything they they might split them between income tax, tarrif and other taxes or it could be entirely off from import and everything else is tax free but in later the taxation will become unfair because fewer people will be forced to take the tax burden compared to the split system.

[bhadz]

Income taxes gone but the government will put on the other taxes to the things that we consume. There will be more VAT and other excise taxes that will be applied to these consumables that we need. Going with the tariffs, if our country have been importing things, then they'll have to make things more expensive due to that. To be honest, any initiative is a good one if it's for the people but, it has to be weigh in balance so that not the other sectors are going to be badly affected by it and there will still a balance into all of it. We don't want any domino effect to take in effect because of each of it.

[jaberwock]

Tariffs are not paid by the other nation, why is it so hard to understand this? Lets say an item in China is 100 dollars, if there is no tariff, you buy it for 100 dollars, if there is 100% tariff, then you buy it for 200 dollars, as you can see Chinese company still sold it for same price, you paid more for it instead.

So in an assumption where there is no income tax, you are just making the Chinese company sell you for more, which means you are still indirectly paying it. Frugal people would benefit a lot from this, but people who buy stuff, and companies who have to import stuff will end up paying ten times more than normal and that is why it is not a good idea and unfair to people who own small business'.

[slapper]

You're creating a false choice here.

Tariffs and taxes are not interchangeable. They take money from altogether different places and hit different people. That is more important than whether or not the government gets funded.

High tariffs means that imported stuff is more expensive. Domestic producers can then charge more too as a result of reduced competition. So prices increase across the board. Who gets hurt? People spending their entire paycheck on necessities. Who benefits? Producers who have pricing and whoever owns those companies.

Income tax at least scales with ability to pay. Tariffs don't. They're basically a consumption tax that would fall on people who consume most of their income, which is everybody who's not rich.

And the notion that the tariff's revenue could substitute for that of the income tax is fantasy economics. The numbers just do not get close to that unless you are talking about tariffs so high that trade collapses completely. Then you're picking up nothing anyway because nobody's importing.

Zero tariffs isn't automatically better either though. Sometimes you need them for actual strategic reasons or to counter subsidies elsewhere. But to use them as your primary source of revenue is merely to redistribute the burden of taxes further down and give it another name.

[Odogwu-Blockchain]

Taxes are implemented on the individual citizen of a country while tariff are on the foreign Business between countries, simple as that. The tariff fees are way higher than taxes and both literally brings in more money into the country.

But a case where the amount of tariff charged by an external countries is higher, the ability of a country to afford such amount between many external countries would be way too costly, I think.

[Shadiq]

Will replacing one of the income tax and import duty with the other solve the problem? Will it reduce the cost? Having an income tax means that you have to pay money directly to the government, which is known as income tax. If income tax is stopped and you start relying on customs, the danger may increase further, the price of goods will continue to increase due to additional import duty (if local production is low). Due to which the users of the goods will have to pay additional price. Even if you do not have to pay income tax, you will have to pay taxes to the government through the price of everyday goods.

Another risky area will be created, imposing additional duty on foreign goods for the purpose of revenue generation can create instability in the international market, when countries unite and ignore you or change the market, what will happen to you? So I think, to keep a country's economy running, there should be both income tax and import duty at a normal level. Import tariffs can be reduced or increased to acceptable levels to benefit local producers, but relying on tariffs for revenue generation can be unwise.

[UmerIdrees]

Let's say that your government decides to cut off (or abolish) the income tax, and decides to live off import tariffs. Would you be okay with that? In the US, President Donald Trump promised that the income collected from tariffs would be enough so that income taxes would no longer be necessary. It could or could not work. Now, let's say the inverse happens where the government abolishes all tariffs (zero tariffs) and decides to leave income taxes in place. Would it benefit the economy?

Either we have tariffs or taxes, but we can't have both. If we had both (especially high tariffs + taxes), the economy would quickly go all the way down the drain. At least, that's my point of view. But I could be wrong.

Thoughts?

Firstly, not all countries can impose tariffs as then the other nations may simply boycott them and not do any business with them. Economies like the USA are different, and they are probably the only ones that can impose tariffs and collect decent revenue to give relief to their citizens by eliminating taxes.

On the other hand, governments impose taxes on their citizens as this is the most common and easy way to collect revenue from the general public. Also, in the underdeveloped countries, the corrupt governments only collect taxes and do not facilitate the public in any way. They use taxes as a tool to suppress their citizen and collect easy money.

[letteredhub]

Let's say that your government decides to cut off (or abolish) the income tax, and decides to live off import tariffs. Would you be okay with that?

It will be beneficial to employees obviously because their salary wouldn’t lessen by taxes anymore. It’s not really a personal preference but rather question of capability. Can a country really live off import tariffs without collapsing their economy?

What's the volume of total importation the country makes per annum to make gains from tariff that would be sufficient to manage the country's economy to compete with it's counterparts. A moderate tariff plus taxes is what can comfortably keep a country's from collapsing.

Either we have tariffs or taxes, but we can't have both. If we had both (especially high tariffs + taxes), the economy would quickly go all the way down the drain. At least, that's my point of view. But I could be wrong.

Thoughts?

If a country in this scenario the US decides to live off only tariffs, it will hurt other countries and may hurt them back in the process. But if Trump says that tariffs would be enough it only means it will be difficult for other countries to export products to the US.

Of course other countries would be retaliating within the percent in tariff they get just as we saw in the tariff war between the US and other countries as Trump was raising some countries tariff.  At that point of tariff hike it's actually the citizens that suffers because supply for certain products would reduced causing high demand and high price as well.

[Abiky]

Tariffs are not paid by the other nation, why is it so hard to understand this? Lets say an item in China is 100 dollars, if there is no tariff, you buy it for 100 dollars, if there is 100% tariff, then you buy it for 200 dollars, as you can see Chinese company still sold it for same price, you paid more for it instead.

So in an assumption where there is no income tax, you are just making the Chinese company sell you for more, which means you are still indirectly paying it. Frugal people would benefit a lot from this, but people who buy stuff, and companies who have to import stuff will end up paying ten times more than normal and that is why it is not a good idea and unfair to people who own small business'.

In some sense, tariffs can be seen as a sort of income tax. If they're low, it won't cause any problems to the local economy. However, this comes at the cost of increased imports and reduced domestic production. The inverse happens if tariffs were to be high.

Now, income taxes are a better way to help fund the government. Except that the rich usually finds ways to avoid paying such taxes and get away with it. With tariffs, everybody pays no matter their economic status. It makes sense to eliminate income taxes and leave moderate tariffs in place. I'm no economic expert, so I could be wrong.