Replacing income tax with tariffs
A story making the rounds right now is that Trump proposed eliminating the federal income tax and replacing it with tariffs. I don't think this will happen but it does make me reflect again on the idea of income taxes and the history of income taxes.
ChatGPT History:
Pre-Civil War Era: Early Taxation Efforts
1789-1800: The U.S. government primarily relied on tariffs and excise taxes for revenue. Alexander Hamilton, the first Secretary of the Treasury, introduced these as part of his financial plan.
1794: The Whiskey Rebellion was a direct response to the first excise tax on domestically produced distilled spirits, highlighting early resistance to federal taxation.
Civil War and Introduction of Income Tax
1861: To fund the Civil War, Congress passed the Revenue Act, introducing the first federal income tax at 3% on incomes over $800.
1862: The Revenue Act was revised to include a progressive tax structure, ranging from 3% to 5% on incomes above $600, and established the Office of the Commissioner of Internal Revenue.
1872: The income tax was repealed after the Civil War debts were settled, and federal revenue needs declined.
Gilded Age and Push for Tax Reform
1894: The Wilson-Gorman Tariff Act introduced a 2% tax on incomes over $4,000, which was aimed at addressing income inequality.
1895: The Supreme Court, in Pollock v. Farmers' Loan & Trust Co., declared the income tax unconstitutional as a direct tax not apportioned according to state populations.
16th Amendment and Permanent Income Tax
1909: Congress passed the 16th Amendment, allowing for the federal income tax without apportioning it among the states or basing it on Census data.
1913: The 16th Amendment was ratified, and Congress enacted a new income tax law with rates ranging from
1% to 7% on incomes above $3,000 for individuals and $4,000 for married couples.
World War I and Expansion
1917-1918: To fund World War I, the War Revenue Act significantly increased income tax rates, with top rates reaching 77% on incomes over $1 million. The number of taxpayers expanded significantly.
1920s: Post-war, tax rates were reduced during the Harding and Coolidge administrations, favoring economic growth.
Great Depression and New Deal
1930s: The economic collapse led to increased federal spending. The Revenue Act of 1932 raised tax rates again, and the New Deal expanded federal programs funded by taxes.
1935: The Social Security Act introduced a payroll tax to fund the new social insurance program.
World War II and the Modern Income Tax
1942: The Revenue Act of 1942 expanded the tax base, lowered exemptions, and introduced withholding from wages. The top tax rate rose to 94% on incomes over $200,000.
1943: The Current Tax Payment Act mandated withholding from wages, making income tax collection more efficient.
Post-War Era and Tax Reforms
1950s-1960s: High marginal tax rates persisted, but the economy grew. Tax policy focused on economic stability and funding the Cold War.
1964: The Revenue Act of 1964, influenced by President Kennedy, cut top marginal rates from 91% to 70%.
1981: The Economic Recovery Tax Act under President Reagan reduced the top rate from 70% to 50%.
Tax Reform Act of 1986
1986: The Tax Reform Act, a significant overhaul, simplified the tax code, reduced the number of tax brackets, and lowered the top rate to 28% while broadening the tax base.
1990s-2000s: Adjustments and Surpluses
1990: The Omnibus Budget Reconciliation Act raised the top rate to 31% and introduced a phased-out exemption for high earners.
1993: The Omnibus Budget Reconciliation Act of 1993 increased the top rate to 39.6% under President Clinton, contributing to budget surpluses.
2001 & 2003: The Economic Growth and Tax Relief Reconciliation Act and Jobs and Growth Tax Relief
Reconciliation Act under President George W. Bush cut rates across all brackets and introduced tax cuts.
Recent Developments
2010: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act extended the Bush-era tax cuts.
2013: The American Taxpayer Relief Act raised the top rate to 39.6% for incomes over $400,000.
2017: The Tax Cuts and Jobs Act under President Trump reduced the top rate to 37%, doubled the standard deduction, and capped the state and local tax (SALT) deduction at $10,000.
2021: The American Rescue Plan provided direct payments and extended tax credits, increasing federal spending to address the COVID-19 pandemic.
Current Trends and Debates
2024: Discussions continue over tax policy, including proposals for higher taxes on wealthy individuals and corporations, addressing inequality, and managing national debt.
Right. In other words, it's a dumb ****ing idea any way you twist it. Which is what I said.
The depths of Trump's stupidity never cease to amaze me. There are amoeba on Mars with more functioning brain cells than he has.
Jeez man it's not an actual plan you comment on the numbers. It's a directional idea of what he would like (which implies a huge reduction in federal fiscal expenses)
yeah but that would change and states/bigcity would implement new local taxes. I'm fine with local taxes. What I don't like is writing a 6 figure check to the federal government every year and that money going to a Ukrainian pension, war, Biden's cocaine, etc.
Ok, but as Luciom pointed out, this has **** all to do with tariffs.
Jeez man it's not an actual plan you comment on the numbers. It's a directional idea of what he would like (which implies a huge reduction in federal fiscal expenses)
Drinking bleach was also more of a "directional idea" than an "actual plan". In fact, I doubt that man has ever come up with an "actual plan" for anything in his life. But even as a "directional idea", it's obviously pretty moronic on its face.
Drinking bleach was also more of a "directional idea" than an "actual plan". In fact, I doubt that man has ever come up with an "actual plan" for anything in his life. But even as a "directional idea", it's obviously pretty moronic on its face.
one time he planned that a hooker would keep her mouth shut after a payoff. Probably would have worked if he didn't win in 2016. He didn't read the invisible fine print that she would need 20x the amount if he becomes president
one time he planned that a hooker would keep her mouth shut after a payoff. Probably would have worked if he didn't win in 2016. He didn't read the invisible fine print that she would need 20x the amount if he becomes president
Right. He couldn't pull off a scheme to pay off a hooker without ****ing that up, yet you want him to run the country.
The fact that people think this is how tariffs work just because trump says that’s how it works is as unsurprising as it is depressing
Right. He couldn't pull off a scheme to pay off a hooker without ****ing that up, yet you want him to run the country.
when you make the choice between Trump and a weekend and bernies or Hillary Satan Clinton, I have no choice. Plus he is hilarious
Imagine you are in the BB with AA. I open the SB 70% of my stack. You're going to go all in. That's how clear this decision is for me.
when you make the choice between Trump and a weekend and bernies or Hillary Satan Clinton, I have no choice. Plus he is hilarious
Imagine you are in the BB with AA. I open the SB 70% of my stack. You're going to go all in. That's how clear this decision is for me.
Yes, we know that you are a proud MAGA chode. I see you've been sending your wife to the rallies.
They're called "cities" and have higher population density than average. Are you suggesting that blue areas receive more federal aid per capita than red areas?
I am saying that even if in red states, it's still predominantly democrat voters that would suffer if the federal welfare state gets reduced and local welfare gets implemented in it's place
I'm always curious about how these scenarios are run so quickly. Can we citizens have access to the US tax excel model? I'd like to run some tests. Seriously though, its hard to believe what some CNBC analyst fake quant came up with in a matter of days. How can they be implementing all proposed changes to govt spending that they don't even know about to produce these results....that article means nothing
While I agree with this sentiment, it's laughable to think that Trump demands extensive (or any) quant work before he throws this sort of thing out there.
Btw D2 you probably missed the debate on the right in tariffs.
Trump felt Biden has "stolen" his idea when he implemented the insane Chinese tariffs recently. Some of trump base went on Twitter with stuff like "omg Biden actually did something we agree with clear and square".
Trump needed to go allin on tariff insanity to clarify he is the tariff candidate even after Biden put 100% tariffs on Chinese ev.
For some reason trump and Biden think a love of tariffs is common in median voters in purple states
^^Thx for the background.
People but fewer avocados if their prices go 3x and other produce prices "only" grow 20-30%.
People change their cars less often if they cost more. And so on.
Even a Nike enthusiasts would buy fewer Nikes if they cost 3x.
And then there is the "problem" of Nikes and the rest starting to be produced in the USA (which I know is the intended outcome) but then you don't have a tax base anymore.
It's similar to localities funding basic expenses with speed and parking tickets. You can go broke when people
Pretty close to this.
Trump's narcissism, impatience, need for glorification, limited intelligence, and overconfidence in his own intuition make him especially susceptible to crackpottery, especially if the person pitching the crackpottery is able to spin a tale about how Trump will be a hero if he implements the idea.
Trump's narcissism, impatience, need for glorification, limited intelligence, and overconfidence in his own intuition make him especially susceptible to crackpottery, especially if the person pitching the crackpottery is able to spin a tale about how Trump will be a hero if he implements the idea.
Not sure this applies to tariffs.
His love of tariffs (and his idea that NATO allies are taking advantage of America) is one of the very few political positions he never flip-flopped about, and there are videos of him talking in favour of tariffs even decades ago
Not sure this applies to tariffs.
His love of tariffs (and his idea that NATO allies are taking advantage of America) is one of the very few political positions he never flip-flopped about, and there are videos of him talking in favour of tariffs even decades ago
he had a TDS episode...give him some time
Not sure this applies to tariffs.
His love of tariffs (and his idea that NATO allies are taking advantage of America) is one of the very few political positions he never flip-flopped about, and there are videos of him talking in favour of tariffs even decades ago
I agree. That specific comment wasn't really about tariffs.
