Sales Taxes Make America Rich Again? I think not.
I just have to make a comment about the American President and his proclamation a couple of weeks back (Dec. 4, 2018 Tweet) that tariffs would, "Make America Rich Again."
He justified this in part by saying that the treasury was ,"...taking in $billions in Tariffs."
For all of the commotion that this Tweet caused, I didn't hear any of the pundits mention that a Tariff is just a Sales Tax.
Rather than the Sales Tax being collected at the retail level, where the goods pass between retailer and consumer, the tax is collected at the border where the goods pass between factory and distributor (or distributor and wholesaler, depending on the business arrangement) and this tax, along with mark-up is passed along to the final consumer.
Now I know that they call it something different and it's not collected as an add-on at the till in the store but, to the Treasury and to the consumer's wallet, it looks and works exactly the same as a Federal Sales Tax.
And if it looks like a duck....
So the President might as well have tweeted that he was Making America Rich Again by ,"...taking in $billions in Sales Tax."
This might be one way to make 'America' rich but I don't know if it helps the average American to get rich. Or even helps the average American to get by.
I also have to add that, as of a few years ago, if Walmart was its own country it would be China's 5th largest trading partner. That means that Walmart sells more Chinese manufactured goods than most countries.
I'll speculate that the poorest 20% of Americans shop more at Walmart than the richest 20% of Americans. If this is true then the Tariffs (or Sales Taxes) aimed at Chinese goods would be disproportionately paid by the poorest Americans. Those, "... $billions in Tariffs," would be disproportionately paid by the poorest Americans.
I won't say that adding a sales tax to Chinese goods which disproportionately affects the poor is a bad trade strategy. I can't tell how this will turn out. I will say that phrasing it in such a way would make it a much harder policy for the American electorate to swallow.
