Liberal Forum

Blackvegetable » 4 minutes ago » wrote: ↑

4 minutes ago

Thank me first..

Blackvegetable » Today, 7:01 am » wrote: ↑

Today, 7:01 am

Republicans can’t pay for their tax cuts with fantasy revenue sources

https://www.washingtonpost.com/opinions/2025/05/26/trump-tariffs-revenue-big-beautiful-bill/

By Scott Lincicome

Scott Lincicome is vice president of general economics at the Cato Institute.

Et tu, Cato?

Fentanyl-related tariffs on imports from Canada and Mexico — the United States’ two largest trading partners — have been suspended for goods that qualify for the U.S.-Mexico-Canada Agreement. Consumer electronics have so far been exempted from the Liberation Day tariffs — even ones from China. These moves alone cover hundreds of billions of dollars in annual imports into the United States. Trump’s first term also brought major tariff carveouts: According to one recent paper, exclusions probably reduced the value of Chinese imports subject to U.S. tariffs by roughly $100 billion between 2018 and 2022.

Finally, there are broader forces that will shrink federal revenue even further. The tariffs will reduce economic growth by raising input costs, reducing business investment, disrupting supply chains and prompting foreign retaliation. Many economists, therefore, project that the tariffs’ drag will offset any increases in GDP owed to tax cuts. Proponents of Trump’s tax bill are fond of touting dynamic scoring — the idea that tax cuts will stimulate economic activity, thereby boosting future government revenue — yet they ignore that Trump’s tariffs will have the exact opposite effect.

This is assuming the tariffs get paid. High and variable tariffs will also encourage private parties to develop creative ways to reduce or evade these taxes by rearranging their supply chains, exploiting legal loopholes, undervaluing imports, smuggling and engaging in other illicit transshipment. According to a 2004 paper in the Journal of Political Economy, every one‐percentage‐point increase in the tariff rate is associated with a 3 percent increase in evasion — a response so intense, the authors speculate, that “tax increases may even produce a reduction rather than an increase in tax revenues.” More recently, economists with Goldman-Sachs estimate that similar moves during the 2018-2019 trade war with China reduced U.S. tariff revenue by $15 billion, and they expect even larger losses this time around.

YE OF LITTLE FAITH!

WHEN HAS THE SUPPLY SIDE FAIRY EVER FAILED TO PICK UP OUR TAB?

ALL HAIL THE SUPPLY SIDE FAIRY!

So big, so beautiful, such a steaming pile...

https://youtu.be/teBV0EoJJY8?si=GBfVfr3A4MTO0ZVm