The New York Times reports on Trump’s latest “policy” proposal:
During a Fox News segment on Monday, Mr. Trump took questions at a barbershop in the Bronx. When asked if the United States could potentially end all federal taxation, Mr. Trump said the country could return to the economic policies in the late 19th century, when there was no federal income tax.
“It had all tariffs — it didn’t have an income tax,” Mr. Trump said. “Now we have income taxes, and we have people that are dying. They’re paying tax, and they don’t have the money to pay the tax.”
In June, Mr. Trump floated the idea of replacing federal revenue from income taxes with money received from tariffs. Mr. Trump has not provided specific details of how that would work, and it is unclear if he wants to eliminate all federal taxes, including corporate income taxes and payroll taxes, or only end the individual income tax.
Either way, both liberal and conservative experts have dismissed his idea as mathematically impossible and economically destructive. Even if Republicans control Congress, lawmakers are unlikely to dismantle the income tax system. Yet Mr. Trump’s combination of tax cuts and tariff increases has been central to his political pitch.
“There is a way, if what I’m planning comes out,” Mr. Trump said of ending income taxes.
My cat has a better understanding of history and economics than Donald Trump. Here’s history professor Eric Rauchway, the author of Murdering McKinley: The Making of Theodore Roosevelt’s America writing about Trump’s tariffs for the Bulwark:
“Our country,” he says of that decade, “was probably . . . the wealthiest it ever was because it was a system of tariffs.” His love of the era has become so pronounced that it’s now a fixture of his stump speech, meant to defend the massive tariffs now central to the economic platform he’s promising in a second term. There’s just one problem: Trump’s comments are historically oblivious, evincing no awareness of the depression of the 1890s, whose severity was owed, in part, to the protectionist tariffs he praises.
He goes on to lay out the full history of the disastrous tariff policy of the era. Here are just a couple of highlights:
For as long as there had been Republicans and longer—even during the days of their predecessors, the Whigs—a high tariff had proudly occupied a place in their platforms. In the era before the Sixteenth Amendment, a tariff—a tax on imports—was a major source of federal income. But Republicans wanted tariffs not for revenue, but for protection, as they liked to say: a tariff so high it would render foreign imports undesirable to the consumer. U.S.-based manufacturers could then raise their prices to levels just shy of these tax-induced heights and still appear competitive in the marketplace. Consumers would not buy imports; tariff revenue to the U.S. Treasury would actually fall; the higher prices Americans paid would go into the pockets of American companies.
In theory, these domestic industries would plow their tariff-produced profits into research and development, improving their products and paying higher wages to workers. In practice, this trickle-down theory worked no better in the nineteenth century than it did a century later, and tariffs helped make the owners of U.S. factories into the richest of men.
Through a series of cascading events (including a disastrous pander to western constituencies that undermined confidence in the dollar) these tariffs precipitated a massive depression that lasted for years.
Before the Republicans decided on this course of action, the economy was booming. As has been the continuing pattern ever since, they took that as an opportunity to adopt a trickle down policy so they could line the pockets of the already wealthy while average citizens paid the price. I understand why Trump and his Billionaire Boyz Club like it. I can’t imagine why anyone else would by such an obvious con:
The right thing to do on the heels of the boom on the 1880s and the government surplus might well have been to lower tariffs. But the McKinley Republicans wanted to give something to their Eastern supporters while they were wooing their Western supporters. And, in the way of nineteenth-century Republicans, they thought tariffs were a beautiful thing. They reduced government income, they increased government expenditure, and they undercut foreign investors’ confidence in U.S. reliability, leading to catastrophic effects for ordinary Americans.
Trump is preparting to do the same thing if he gets the chance. Don’t count on his essential stupidity to prevent it. He’s got a whole bunch of billionaires whispering in his ear. He’ll do what they tell him.