DIMS? - Revenue replacement of Income Tax by Tariffs


Posted On: Tuesday - February 18th 2025 2:23PM MST
In Topics:   Trump  Pundits  Economics  US Feral Government  Taxes



DIMS is an acronym for Does It Make Sense. Oh, of course, the idea of scrapping the personal, or any and ALL, Federal income tax and replacing that revenue with tariffs does make sense in that it would be a great return to a state of much more Liberty and a return to our country's roots*. It'd be VERY welcome to the Peak Stupidity crowd, and hopefully and likely, most Americans. We listed the Top 5 evils of the personal income tax in our Part 3 of our discussion of the odious Constitutional Amendment XVI.** Believe it or not, "The Money!" did not make it to #1 on the list!

In this post, the DIMS? question applies to the even-keeled, still-too NeoCon, but Libertarian and common-sense-oriented Instapundit. He's, in actuality, University of Tennessee Law Professor Glenn Reynolds. Besides his famous blog - one of the first I can recall - Professor Reynolds writes weekly(?) columns for The New York Post***, possibly still USA Today, and he also has a substack column. It's all pretty fair and reasonable, but this Law Professor made a simple mistake in his latest, Abolishing the Income Tax.

Much of what Glenn Reynolds relied on for his substack post comes from the substack post DOGE and Military Cuts Could Enable Eliminating Individual Income Tax by one Brian Wang.**** I like the optimism, the attention to the details of what could be cut included in Mr. Wang's post. The discussion of tariffs is an afterthought in his post, with different numbers, but Glenn Reynolds refers to his important number of $1.2 Trillion in spending that could be cut. Then, though, Professor Reynolds says DOGE may cut $2 Trillion, not $1 Trillion, in annual spending. I don't think so.

Peak Stupidity recently murmured "Uhhh, no..." when it comes to the $1 Trillion in cuts. This Brian Wang, along with those doing the work (work?! It must be a blast!), think otherwise. I'd be glad to stand sit here corrected. I've read various numbers on how much of Social Security pay-out money is fraudulent. There is surely loads of fraud with Medicare/aide, with a significant illegal alien element. The military budget most assuredly CAN be cut, more than in half, quite safely, but we'll see how that goes. I don't know - perhaps I was pessimistically wrong. Perhaps it CAN be done accounting-wise, without hurting those reliant on the SS and Healthcare, but CAN it be done politically?

If the deficit, the amount the national debt goes FURTHER into the red each year, can be cut in half, I'll be amazed. However, that leaves another $Trillion added to the debt each year, roughly '10s levels of accumulation. Interest due stops for no man, not unless you want to default on the whole thing.

Well, that was pretty pessimistic, but, wait, there's MORE! We discussed in the post Budget Cutting v Austerity that, long-term results would be great, but Full-Retard Welfare-State Socialism has the bug feature of being difficult to reverse. So, no matter how many useless people you cut out of the government, they will probably end up using the Welfare State themselves. (Under a looser definition, most who work for Government ARE already using the Welfare State.)

Let me finally get to tariffs, Glenn Reynolds, and DIMS? T I'm surprised he made this mistake, but the Professor's contention that tariffs could cover the loss of income tax revenue***** was based on a mistake.
Estimates are that a 10% universal tariff would bring in about $2 trillion in revenues. Under these circumstances, itโ€™s realistic to talk about abolishing the income tax and still paying down the national debt.
I put his same link in the excerpt here. The writer Erica York of that Tax Foundation article, uses a couple of rectally-extracted numbers to determine how much money tariffs could raise. I don't mind that bit, but keep in mind, without the elasticity and compliance factors, revenue raised would be even higher. The mistake made not therein, but in Glenn Reynold's (quick, I imagine) perusal of those calculations is this, from right in the beginning:
We estimate a 10 percent universal tariff would raise $2 trillion and a 20 percent universal tariff would raise $3.3 trillion from 2025 through 2034, before factoring in how the taxes would shrink the US economy.
Forget the last clause, though it does lead to valid discussion in the post. The $2 or $3.3 Trillion to start with is estimated for a 10 year period. Glenn Reynolds didn't catch that. I would like to inform him, but ...******

$2 Trillion in tariff revenue yearly?! Leaving the couple of factors aside that would make it higher than $2 Trillion, that would mean we are importing $20 Trillion in goods and services, the kind that could have tariffs levied! The GDP, for what it's worth, is only under $30 Trillion. Does It Make Sense? No. Besides my being surprised Professor Reynolds didn't use his common sense there, my point is that the estimate is $200 Billion yearly instead, about 10% of the personal income tax revenue. I know I've stated about this proportion before just using the method of ... you guess it, rectal extraction. Let me refer to his into that can be seen above:
President Trump has talked about ending the income tax and replacing it with tariffs and spending cuts. Most people pooh-poohed that as unrealistic.
Heh! Indeed. I'm one of them. First, you've got to get the rough numbers right.



* That post comes from way back, last time around - Trump-45 - written in July of '18. It referred to a Pat Buchanan column, among others. Mr. Buchanan was still humming along in '18.

** See more on the, for the most part, other odious Amendments (past the 10 Bill of Rights ones) to the US Constitution using the Topic Key Morning Constitutional.

*** Note Post, NOT Times. The latter would never have him. The former can be pretty fair some of the time. The Post had its important Hunter Bai Dien laptop story squashed by censored anti-Social media just before the '20 election, possibly making the difference along with the cheating.

**** I think I knew this before, but substack writers are allowed an alias name or slogan to go with their accounts. It may or may not be in the URL. Glenn Reynold's is his full name "Glenn Harlan Reynolds", but Mr. Wang's one is NEXTBIGFUTURE. Then, there is a title too. Prof. Reynolds uses his name, Mr. Wang uses that alias, and Ann Coulter has "Unsafe" as her title.

***** Even the personal income tax system itself could use some reverse cuts, let's call them. It would help to get those millions of illegal aliens that get refunds based on their many dependents, down in Guatemala or made up out of whole cloth, as per my friend who worked at H&R Block (until he got disgusted), by kicking their fake-documemted selves off the rolls, hell, out of the country.

****** I thought about emailing him, but it's not been easy to extract his email address. (His HTML tries to open email clients that I don't have.) One has to join up to comment on his substack site. I'm not doing that, and so far I haven't read a comment that corrects this mistake. That doesn't say so much for the commenters, IMO.

Comments:
Adam Smith
Wednesday - February 19th 2025 4:31PM MST
PS: Greetings, Achmed,

https://www.dtcc.com/news/2024/september/09/ficcs-government-securities-division-clears-record-setting
https://i.ibb.co/xqwPmnjS/Cede-Co.jpg

๐ผ'๐‘‘ ๐‘๐‘’ ๐‘Ž๐‘“๐‘Ÿ๐‘Ž๐‘–๐‘‘ ๐‘กโ„Ž๐‘Ž๐‘ก ๐น๐‘‡ ๐‘ก๐‘Ž๐‘ฅ ๐‘ค๐‘œ๐‘ข๐‘™๐‘‘ ๐‘๐‘œ๐‘š๐‘’ ๐‘๐‘Ž๐‘๐‘˜ ๐‘ก๐‘œ ๐‘๐‘–๐‘ก๐‘’ ๐‘ข๐‘ , ๐ด๐‘‘๐‘Ž๐‘š. ๐ผ๐‘ก ๐‘ ๐‘’๐‘’๐‘š๐‘  ๐‘™๐‘–๐‘˜๐‘’ ๐‘–๐‘ก ๐‘ค๐‘œ๐‘ข๐‘™๐‘‘ ๐‘๐‘’ ๐‘ข๐‘ ๐‘’๐‘‘ ๐‘ก๐‘œ ๐‘๐‘™๐‘Ž๐‘š๐‘ ๐‘‘๐‘œ๐‘ค๐‘› ๐‘œ๐‘› ๐‘กโ„Ž๐‘’ ๐‘ข๐‘ ๐‘’ ๐‘œ๐‘“ ๐‘๐‘Ž๐‘ โ„Ž ๐‘Ž๐‘›๐‘‘ ๐‘๐‘Ÿ๐‘’๐‘Ž๐‘ก๐‘’ ๐‘Ž ๐ถ๐ต๐ท๐ถ...

Yeah. That's possible. I hadn't thought of that. But there is truly no need for that to happen anymore than there is a need for an "income" tax. The only reason these horrible policies exist is because the people running the system are evil and most people are stupid.

I was actually thinking the inverse is also possible. A financial transaction tax would encourage more people to use cash. (Of course a proper 18% interest rate for savings accounts and mortgages would help to pop the asset bubbles.)

Normal people are not the sorts of persons who would be affected by a financial transaction tax. (In fact, we could be generous with the exemptions for normal people. The FTT proposal is aimed at corporations, "governments", huge banks and huge financial institutions.)

Stocks, bonds, derivatives, and other securities are all highly tracked. (These are not cash transactions.) Most of these are processed (and often held) by other huge companies. For example, the Depository Trust & Clearing Corporation (DTCC) processed $3.0 quadrillion in securities in 2023 and has ~85 trillion in assets under managment. A few more fun things about this little company that most people have never hear of...

โ€ข The DTCC's depository holds custody of securities issues from over 170 countries and territories.
โ€ข In 2023, the DTCC settled approximately 953 million securities valued at $446 trillion.
โ€ข As of 2023, the DTCC's depository held custody of more than 1.4 million active securities issues valued at $87.1 trillion.

(And people like to pretend that BlackRock is a big deal with a mere $11.5 trillion in assets under management. Not that it's not a big deal. But it is a much smaller player than some of these other little corporations that few people have heard of.)

It would seem there are already mechanisms in place to process and manage a huge amount of financial transactions. Simply levy the tax here and you can leave everyone else alone.

And if we were really savvy about it there would be ways to tailor these taxes in ways that would discourage the most pernicious economic activities while exempting other normal transactions that are not harmful to the economy.

I really see no other way to fix the situation. (Well, other than default. But that would also hurt common people who had nothing to do with creating this mess.)

It's unfortunate that the criminals masquerading as "government" have been able to do what they have been doing for this long. They are essentially enslaving whole populations of taxpayers with "government" debt obligations. It's really pretty wild to see.

Anyway... I hope you have a nice evening! โ˜ฎ๏ธ

Moderator
Wednesday - February 19th 2025 11:36AM MST
PS: That beats hell out of income tax no matter, but I'd be afraid that FT tax would come back to bite us, Adam. It seems like it would be used to clamp down on the use of cash and create a CBDC.

I know, we're talking stocks & bonds trading, or whatever else, but they'd expand it. I personally would be glad to save my money myself in an old-fashioned bank that paid appropriate interest ABOVE real inflation - couldn't care less about investing in anything other than my own ideas. The more I think about it, the more I like it, but, hey, I'm no Communist.

Of course, I partial to Amendment XXVIIIโ„ข

https://www.peakstupidity.com/index.php?post=3123
Moderator
Wednesday - February 19th 2025 11:28AM MST
PS: You know we were there last summer, Adam, and now that I think about it, even a half mile or mile south of the falls (I'm thinking of the flow between Goat Island and the town, so up from American Falls vs Horseshoe Falls), the river was moving! It may have been going 30-40 there - I guess it narrows or gets shallower, probably the latter, increasing the speed.

Yeah, I should have said "a mile" and "50 knots". Good catch!
Adam Smith
Wednesday - February 19th 2025 11:13AM MST
PS: Good afternoon, everyone!

100 ๐‘ฆ๐‘Ž๐‘Ÿ๐‘‘๐‘  ๐‘ข๐‘๐‘ ๐‘ก๐‘Ÿ๐‘’๐‘Ž๐‘š ๐‘“๐‘Ÿ๐‘œ๐‘š ๐‘œ๐‘›๐‘’ ๐‘œ๐‘“ ๐‘กโ„Ž๐‘’ ๐‘๐‘–๐‘Ž๐‘”๐‘Ž๐‘Ÿ๐‘Ž ๐น๐‘Ž๐‘™๐‘™๐‘ , ๐‘—๐‘ข๐‘ ๐‘ก ๐‘›๐‘œ๐‘ค ๐‘ก๐‘ข๐‘Ÿ๐‘›๐‘–๐‘›๐‘” ๐‘กโ„Ž๐‘’ ๐‘๐‘œ๐‘Ž๐‘ก ๐‘Ž๐‘Ÿ๐‘œ๐‘ข๐‘›๐‘‘ ๐‘Ž๐‘›๐‘‘ โ„Ž๐‘œ๐‘๐‘–๐‘›๐‘” 10 ๐‘˜๐‘›๐‘œ๐‘ก๐‘  ๐‘ ๐‘๐‘’๐‘’๐‘‘ ๐‘ค๐‘–๐‘™๐‘™ ๐‘๐‘’ ๐‘’๐‘›๐‘œ๐‘ข๐‘”โ„Ž...

Lol... That's not going to work. 100 yards upstream from the falls is (unsurprisingly) one of the fastest parts of the Niagara River. The rapids in this section reach speeds of up to 68 miles per hour. If you found yourself in this situation you would be ๏ผœs๏ผžwell advised to head to the Canadian shore as quick as possible because the safest place to go over the falls is all the way to the left (when traveling towards the falls) over the horseshoe falls๏ผœ/s๏ผž fucked. The rocks at the base of the American side of the falls are unforgiving.

But enough about that...

Why not a financial transaction tax?
https://taxfoundation.org/research/all/federal/financial-transaction-tax/

๐‘Š๐‘–๐‘กโ„Ž ๐‘กโ„Ž๐‘–๐‘  ๐‘š๐‘Ž๐‘ ๐‘ ๐‘–๐‘ฃ๐‘’ ๐‘ก๐‘Ž๐‘ฅ ๐‘๐‘Ž๐‘ ๐‘’, ๐‘กโ„Ž๐‘’ ๐น๐‘‡๐‘‡ ๐‘ค๐‘œ๐‘ข๐‘™๐‘‘ ๐‘๐‘’ ๐‘Ž ๐‘ ๐‘ข๐‘๐‘ ๐‘ก๐‘Ž๐‘›๐‘ก๐‘–๐‘Ž๐‘™ ๐‘Ÿ๐‘’๐‘ฃ๐‘’๐‘›๐‘ข๐‘’ ๐‘ ๐‘œ๐‘ข๐‘Ÿ๐‘๐‘’ ๐‘‘๐‘’๐‘ ๐‘๐‘–๐‘ก๐‘’ ๐‘Ž ๐‘™๐‘œ๐‘ค ๐‘ก๐‘Ž๐‘ฅ ๐‘Ÿ๐‘Ž๐‘ก๐‘’. ๐น๐‘œ๐‘Ÿ ๐‘’๐‘ฅ๐‘Ž๐‘š๐‘๐‘™๐‘’, ๐‘Ž๐‘› ๐น๐‘‡๐‘‡ ๐‘œ๐‘“ 0.1 ๐‘๐‘’๐‘Ÿ๐‘๐‘’๐‘›๐‘ก ๐‘œ๐‘› ๐‘Ž๐‘™๐‘™ ๐‘ ๐‘’๐‘๐‘ข๐‘Ÿ๐‘–๐‘ก๐‘–๐‘’๐‘  ๐‘ค๐‘œ๐‘ข๐‘™๐‘‘ ๐‘Ÿ๐‘Ž๐‘–๐‘ ๐‘’ $777 ๐‘๐‘–๐‘™๐‘™๐‘–๐‘œ๐‘› ๐‘–๐‘› ๐‘Ÿ๐‘’๐‘ฃ๐‘’๐‘›๐‘ข๐‘’ ๐‘œ๐‘ฃ๐‘’๐‘Ÿ ๐‘กโ„Ž๐‘’ 10-๐‘ฆ๐‘’๐‘Ž๐‘Ÿ ๐‘๐‘ข๐‘‘๐‘”๐‘’๐‘ก ๐‘ค๐‘–๐‘›๐‘‘๐‘œ๐‘ค, ๐‘Ž๐‘๐‘๐‘œ๐‘Ÿ๐‘‘๐‘–๐‘›๐‘” ๐‘ก๐‘œ ๐‘กโ„Ž๐‘’ ๐ฝ๐‘œ๐‘–๐‘›๐‘ก ๐ถ๐‘œ๐‘š๐‘š๐‘–๐‘ก๐‘ก๐‘’๐‘’ ๐‘œ๐‘› ๐‘‡๐‘Ž๐‘ฅ๐‘Ž๐‘ก๐‘–๐‘œ๐‘› (๐ฝ๐ถ๐‘‡) ๐‘Ž๐‘›๐‘‘ ๐‘กโ„Ž๐‘’ ๐ถ๐‘œ๐‘›๐‘”๐‘Ÿ๐‘’๐‘ ๐‘ ๐‘–๐‘œ๐‘›๐‘Ž๐‘™ ๐ต๐‘ข๐‘‘๐‘”๐‘’๐‘ก ๐‘‚๐‘“๐‘“๐‘–๐‘๐‘’ (๐ถ๐ต๐‘‚).

So that means that a 1% tax on all securities would raise $7.7 trillion over a ten year period. And if we taxed it at say 7% like I pay on groceries then we're looking at some real revenue. Perhaps even enough to eliminate the ๏ผœs๏ผžslave tax๏ผœ/s๏ผž so called income tax and the federal debt.

Probably won't happen because it makes too much sense. โ˜ฎ๏ธ

Moderator
Wednesday - February 19th 2025 9:56AM MST
PS: "... way too many..." Yes we all make mistakes.

Anyway, SafeNow, for you and M, people do get used to what the government "provides". That's why it's hard to back out. It could take many years, but that only works if the people don't let Big Gov't pols take back over.* They'd probably double USAID next time!


* Also, that assumes the Government doesn't go broke in the meantime due to the course it's been on for too many years... 100 yard upstream from one of the Niagara Falls, just now turning the boat around and hoping 10 knots speed will be enough ... throttles till at idle right now though... putting the fuel in... better hurry!
Moderator
Wednesday - February 19th 2025 9:51AM MST
PS: Thanks for that, M. For others reading, who don't feel like going to substack:

UPDATE: Well, this is embarrassing. I misread the $2 trillion revenue figure, which is over ten years, not annual. So Iโ€™m comparing a ten-year revenue figure with a one-year revenue figure. Only one solution: Cut more! And the error doesnโ€™t affect my comments on how much compliance with the Internal Revenue Code costs. But still: My apologies, I just somehow read that as per year, each year from 2025-2034. Homer nods. Me, I just fuck up occasionally. But I always try to correct errors when I notice them.

We all make mistakes. I did not see a correction in the 34 comments on substack. However, Instapundit has a comments section (didn't used to when I started reading) that usually gets way to many for me to want to get started. It's possible a commenter there told him, or just some reader friend or an email.

But, still. Does It Make Sense? No. How could we have $20 Trillion in imports yearly (based on that 10%)? He didn't take that step to think this.
Moderator
Wednesday - February 19th 2025 9:44AM MST
PS: Ha, Alarmist, that'd make it pretty pricey! I'm sure it'd still be worth it to have one's own Congresscritter. Some people want a sailboat or an old Corvette. Others want Congresscritters. To each his own...
SafeNow
Wednesday - February 19th 2025 8:09AM MST
PS
โ€œAnd that's the key point - what can the most people live with in terms of how limited the federal government can be.โ€ - Commenter M

Superb point. In fact, about two months ago, an op-ed in The War Street Journal addressed exactly this. It was written by a Republican congressman. The concept was that a broad swath of impeccable polls would ascertain the โ€œlive withโ€ parameters; and the polls would be such terrific ones that this process would confer a high degree of legitimacy upon the result. Of course the problem is that the nasty people would have low poll numbers demographically, but would have a high capacity to wreck social peaceโ€ฆand so, you placate them.
M
Wednesday - February 19th 2025 7:44AM MST
PS
A subscriber must have commented on this, or he re-read it. He's put in a correction at the bottom of the article.

His solution is "We need to cut more!" Not disagreeing there, but I suspect you can't get there and still have government do the things most people want it to do.
And that's the key point - what can the most people live with in terms of how limited the federal government can be, and how much does that cost?
The Alarmist
Wednesday - February 19th 2025 5:51AM MST
PS

Abolish both Tarifs and Income taxes, and simply sell lottery tickets for all elected and appointed positions. Make the lobbyists really buy their puppets.

๐Ÿ•‰๏ธ
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