TACO Wednesday

Eyecu2, this tax is more regressive than you might think. Walmart Shoppers, that is to say, the American middle class, takes it on the chin. Originally Posted by Tiny

So the OBBBA gives a modest tax cut to the middle class, which they are already getting now, and cuts social services like SNAP and Medicare, and now we should expect more taxes in the form of higher prices from Trump’s dumbass tariffs.

This is the perfect example of how our government is making rich people richer and poor people poorer.

My fear is that if someone on the right doesn’t fix this inflation and recession will follow. Especially if Trump replaces Powell at the fed with a sycophant willing to do whatever Trump wants.

Worst analogy ever.

Let’s simplify it. The poor and middle class bear the brunt of the tariffs. The other countries do not pay the tariffs, they are paid by the importer and then usually some part of that is increased pricing so it’s a business tax on the merchant and a sale tax on the end purchaser. The exporter does just fine since the cost pressure is not on them as much as on the retailer and end purchaser.

The whole idea of offsetting the trade imbalance through tariffs and other countries lowering their trade barriers is fine for some sellers but for the most part makes little difference. The other country must still have a market for American goods. American goods cost too much for most countries so the number of sales will generally be low regardless of the amount of the tariff that country imposes or as Trump wants lowers their tariff. Other counties can lower their tariffs and their citizenry still may not purchase American goods due to price or patriotism. In either event, nearly every country will come out better from this relative to the US. This whole thing is a fools folly but what would we expect from Trump.

As for Chickening Out, of course he will do so again August 1 because it’ll be inflation inducing and were he to actually not chicken out as he keeps doing, the markets will collapse again as they did the first time. The only reason they remain stable now is that everyone knows he will fold, cave, chicken out or whatever you want to call it.

Worst analogy ever. Originally Posted by 1blackman1

You're just jealous because you didn't think of it.

Let’s simplify it. The poor and middle class bear the brunt of the tariffs. The other countries do not pay the tariffs, they are paid by the importer and then usually some part of that is increased pricing so it’s a business tax on the merchant and a sale tax on the end purchaser. The exporter does just fine since the cost pressure is not on them as much as on the retailer and end purchaser. Originally Posted by 1blackman1

That's overly simplistic. See my complete post that TxDot quoted above. The foreign supply chain and American consumers, employees and shareholders share the burden.

The best solution to our trade deficit, if you believe it needs fixing, is to increase private savings and decrease the government budget deficit. Carried far enough, this would have the effect of making it where we produce more than we consume and thus run trade surpluses. I explained why in recent months. Texas Contrarian explained it better or at least a lot more succinctly. Sadly you were in banned land at the time.

So the OBBBA gives a modest tax cut to the middle class, which they are already getting now, and cuts social services like SNAP and Medicare, and now we should expect more taxes in the form of higher prices from Trump’s dumbass tariffs.

This is the perfect example of how our government is making rich people richer and poor people poorer.

My fear is that if someone on the right doesn’t fix this inflation and recession will follow. Especially if Trump replaces Powell at the fed with a sycophant willing to do whatever Trump wants. Originally Posted by txdot-guy

I agree with part of that TxDot, although I don't think our government is necessarily making rich people richer and poor people poorer. Everybody's become better off. Yes, inequality rose until the first Trump administration. That was mostly because of technology and globalization. Technology improved the lot of the skilled and educated more than others. And globalization kept wages of less skilled Americans from rising as much as they would have otherwise. But lower income, middle income and upper income people benefited from both.