President Trump has proposed to use revenues from increased tariffs. They even cut or eliminate income tax. It is certainly a valuable effort to exempt more Americans from income tax and lower taxes for other Americans. However, replacing income taxes with tariffs could have negative consequences for Americans whom President Trump wants to support.
If the government replaces tariffs with increased income taxes, it may need to raise tariffs even higher than President Trump's “liberation” tariffs. This will raise more prices and encourage other governments to retaliate by raising tariffs, further disrupting the supply chain, and leading to higher prices and shortfalls. The negative impact of tariffs could potentially reduce income taxes or reduce profits of no.
Consumers can try to avoid customs duties on goods. Massive avoidance of tariffs can lead to imposing tariffs and new taxes. The reason politicians must play the game of “set-off” tax reductions with tax increases is to refuse meaningful cuts in government spending. Politicians' favorite tax is the inflation tax of the Federal Reserve, because it is hidden. It is also the worst tax because it is regressing.
The media and massive spenders of both parties are shouting about how President Trump's budget proposal includes significant cuts in federal spending. But even if all of Trump's proposed $163 billion cuts were enacted by law, the federal government would spend around $1.7 trillion next year on a “discretionary” budget. The cut is less than 8%.
President Trump has proposed many necessary cuts in federal agencies and programs, including those relating to the use of taxpayer funds to promote “oriented,” but his budget will increase military spending to around $1 trillion. Furthermore, there will be no changes to Social Security or Medicare. This means that President Trump's radical spending plans will not cut spending on three of the four biggest items in the federal budget. The fourth is the payment of interest on national debt, and Congress cannot reduce it except to cut expenditures.
Of course, it's unlikely that all, or even most of President Trump's spending cuts will be enacted in the law. Prominent Republicans have already announced their opposition to some of Trump's spending cuts. Republican Defense Hawks, including the chairman of the Senate Armed Services Committee, have criticised President Trump's budget plan to not spend enough money on the military!
The truth is that if the President and Congress were serious about cutting spending, they would start by cutting the Pentagon budget. Most military spending rarely goes to defending Americans in practice. Instead, many military spending depends on maintaining a global empire and lining up in the pockets of military industrial complexes. Does anyone believe that American security depends on the US government maintaining over 700 military bases overseas?
The fiscal crisis facing America is rooted in a larger philosophical crisis. Too many Americans have embraced the notion that the US government has the moral rights and capabilities to run the economy, run the world, and run our lives. This system does not change until people embrace the idea of ​​freedom. Knowing the truth, we must do everything we can to spread the message of freedom, peace and prosperity.
Ron Paul is a former US lawmaker from Texas. This article was originally published at the Ronpaul Institute for Peace and Prosperity and has been reproduced here with permission.
