The more Donald Trump promises to impose dramatic trade tariffs in a possible second term, the more Democrats tell voters that the former president’s policies would effectively impose a new national sales tax on consumers. The Republican candidate has heard these criticisms, and he doesn’t like them.
“I am NOT proposing a National Sales Tax, as the Democrats say in their Advertisements against me,” he wrote on his social media platform, adding that the tariffs would be paid by other countries “and will MAKE AMERICA RICH AGAIN!”
Part of the problem is that Trump, at the most basic of levels, simply doesn’t know what he’s talking about. It’s really just Economics 101: For all intents and purposes, tariffs are effectively taxes paid by businesses, which pass on the costs to consumers. They are not paid by other countries, no matter how many times Trump says otherwise.
The Cato Institute’s Julian Sanchez summarized matters nicely: “It is so, so bizarre that the core of Trump’s policy agenda is based on just lying about how tariffs work at the most basic, 101 level imaginable. It’s not controversial. It’s not even complicated. It’s just a lie. It’s like saying income taxes are paid by leprechauns.”
Complicating matters, however, is that the confused GOP nominee has also raised the possibility of trying to replace taxes with tariffs. NBC News reported:
Trump said ‘there is a way’ to eliminate federal taxes when asked by a voter in New York City last week about whether such a thing would be possible. ‘You know in the old days when we were smart, when we were a smart country, in the 1890s and all, this is when the country was relatively the richest it ever was,’ Trump said. ‘It had all tariffs. It didn’t have an income tax.’
The former president added, “There is a way, if what I’m planning comes out,” suggesting he genuinely believes it’s possible to eliminate income taxes entirely and rely on trade tariffs to replace the revenue needed to fund the government and social insurance programs.
Q: Do you think it's possible to eliminate federal taxes?
— Aaron Rupar (@atrupar) October 21, 2024
TRUMP: There is a way. You know, in the old days, when we were a smart country, in the 1890s — this is when the country was relatively the richest it ever was. It had all tariffs. It didn't have an income tax. pic.twitter.com/vZbzSChEQe
Making matters worse, of course, is the fact that Trump doesn’t really understand tax policy, either. Consider, for example, some of his recent campaign promises.
Work as a first-responder? You get a tax break. Need to buy a generator for your home? You get a tax break, too. An American living abroad? Tax break. Buying a new American-made car? Tax break. Overtime pay? Tax break. Tips? Tax break. Social Security benefits? Tax break.
All of these measures would be added to the tax breaks he signed into law in 2017, which are due to expire, but which he intends to extend, no matter how many trillion of dollars it would add to the national debt.
It’s reached the point at which some of the Republican’s own advisers have been surprised — and a little concerned — about the haphazard nature of Trump’s many campaign promises related to taxes.
How would all of these ideas work? Trump doesn’t know. How much would these tax policies cost? Trump doesn’t know. Who’d benefit from the measures? Trump doesn’t know. How would he get such measures approved? Trump doesn’t know. Why didn’t he pursue any of this during his four-year term in the White House? Trump doesn’t know. The former president doesn’t have answers to any of these questions because — and this is the important part — they’re not actual tax policies. Indeed, the most important thing to remember about Trump’s tax plans is that they’re not actual tax plans. They’re desperate grunts, blurted out without forethought or vetting. As we recently discussed, the Republican nominee is just throwing random tax cut ideas at a wall, hoping they’ll make him more popular. What voters are witnessing are the desperate ploys of a candidate who (a) has no strategy to repair his campaign; (b) assumes voters will hear the phrase “tax cut” and respond in some kind of Pavlovian way; and (c) can’t even pretend to know or care about governing. But Trump is now apparently going further, suggesting the U.S. might not even need income taxes, thanks to tariff policies he only pretends to understand. What could possibly go wrong? This post updates our related earlier coverage.
Steve Benen is a producer for "The Rachel Maddow Show," the editor of MaddowBlog and an MS NOW political contributor. He's also the bestselling author of "Ministry of Truth: Democracy, Reality, and the Republicans' War on the Recent Past."
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