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Trump plans largest wealth transfer in history [1]

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Date: 2024-06-25  

Joseph Stiglitz and 15 other economists are warning that Trump’s proposed tariff hike of 10% across the board and a 60% hike for Chinese goods would cause inflation to spike. That seems reasonable, but there is another side to the story.

Trump plans to raise tariffs to pay for extending his 2017 cuts to income taxes that overwhelmingly favor the wealthy. With Trump’s tariffs, consumers will pay over $300 billion per year in higher prices, while the wealthy keep their lower income taxes. In short, Trump plans to transfer over $300 billion per year from consumers to the wealthy, making it the largest wealth transfer in history.

Raising tariffs on the products that people buy or that go into the goods they buy would ultimately be passed on to consumers in the form of higher prices, while the revenues flow into the national treasury. That revenue would partially offset the revenue loses from the Trump 2017 tax cuts that Trump promises to extend.

Given that in 2023, the U.S. imported $3.848 trillion, the increase in prices to consumers would be on the order of $349 billion, without even counting the higher rate for Chinese goods. It is unlikely that a 60% rate would be paid for much of the $448 billion in Chinese goods, because many Chinese goods would likely be diverted through other countries to avoid the higher rate. Even if some imported goods are replaced by domestic production, we are still looking at hundreds of billions of new taxes ultimately paid for by consumers.

At the same time, the CBO estimates that extending the Trump tax cuts will add $4.6 trillion to the budget deficit over ten years. That averages to $460 billion per year. Those tax cuts overwhelming favor the wealthy.

In sum, consumers will pay over $300 billion per year in higher prices, while the wealthy keep their lower income taxes. It amounts to a sales tax for all so that the rich can pay lower income taxes.

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[1] Url: https://www.dailykos.com/stories/2024/6/25/2248639/-Trump-plans-largest-wealth-transfer-in-history?pm_campaign=front_page&pm_source=latest_community&pm_medium=web

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