Thursday, June 6, 2019
Los Angeles Times op-ed: Whatever Trump Gave You in Tax Cuts He’s Taking Away With His Trade War, by Kimberly Clausing (Reed College) & Edward Kleinbard (USC):
President Trump’s 2017 tax legislation cut the tax bills of most middle-class wage earners in 2018 — a fact that the president and his allies in Congress have been trumpeting ever since. Nonpartisan estimates show that the bottom 80% of taxpayers by income received, on average, about $795. But that money wasn’t in anyone’s wallet for long. Their pockets were being picked by other Trump policies.
One big swindle is a result of the president’s trade war. A new analysis published May 23 showed that tariffs on goods from China essentially negated any savings from the 2017 tax cuts — and that was without even accounting for the 5% tariffs he’s threatened to slap on goods from Mexico starting Monday.
Tariffs lead to higher prices, so they wind up being paid by consumers like a hidden tax. Study after study published by economists this year has confirmed that the new tariff payments coming into the U.S. Treasury are ultimately coming from the pocketbooks of Americans, not anyone in China. Even if U.S. consumers buy domestic products, they still wind up paying more; higher prices on imported goods allow U.S. manufacturers to raise their own prices.
When a magician engages in this sort of sleight of hand on stage, we are delighted by the illusion. When the president of the United States does it to hardworking citizens with bad trade and tax policies, the right response is outrage.