According to reports about Donald Trump's closed-door meeting with Republican lawmakers this past week, the former president proposed an "unfathomably radical" change to the tax system that would benefit the super-rich while causing irreparable damage to the average taxpayer and the U.S. economy.
As MSNBC's Zeeshan Aleem wrote, the former president wants to throw out the current progressive tax system where the rich pay more and replace it with a system where the government would be entirely funded by receipts from tariffs.
As Aleem wrote, that has economists horrified.
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"Trump floated the idea of 'imposing an all tariff policy that would ultimately enable the U.S. to get rid of the income tax.' That is, Trump reportedly discussed abolishing income taxes and making up for all the lost revenue purely through taxes on imported goods," the analyst wrote before adding the result would be "catastrophic for the economy and ordinary Americans."
With Aleem writing the proposal provides "a window into how unserious he [Trump] is about economic policy," he writes that economist Adam Hersh compared the pitch to "dropping a nuclear bomb on a hurricane."
As Hersh explained to MSNBC, "... to make up for the roughly $4.2 trillion in revenue generated through income taxes, the across-the-board tariffs would have to be somewhere around 120% or 130% on incoming goods. In other words, consumers would effectively have to pay an additional sales tax of up to 130% on any imported item. "
The economist added that those numbers could jump even higher as consumers turn away from imported items, which would then lead to an increase in sales taxes to make up for the shortfall to fund the government.
"Trump has displayed significant economic illiteracy in the past. He mainly thinks about global trade as a zero-sum game and tariffs as a means for producing 'winners' and 'losers,'" the analyst wrote before warning, "...in reality his proposal would destroy the wallet of the average American, throw the global economy into discord and provide a huge monetary boon to the wealthy. As is so often the case with Trump, he uses the language of populism to advance plutocracy."
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