Alright, this is part six of the ten-part series of the Trump vs.
Harris tax battle. This one is gonna get pretty fun,
and, and, uh, we could get really into depth if we wanted,
but this is the, like, looking at the tariffs.
So Trump has come out and said, like, well, what if we remove the
income tax altogether and replace it with tariffs.
I want to talk about tariffs, how it might impact you,
or me, or businesses. We'll just kind of talk through that.
I will get into, like, a value,
a VAT tax, like a value-added tax,
like, they have it, it's in some countries in Europe and other countries across
the world. But let's talk about that.
Like, could we really remove
our income tax? Like, could we remove income taxes completely? So, the way my
brain thinks, like, the first thoughts that come to mind are like,
well, if we get rid of income taxes,
are we also getting rid of payroll taxes? So,
you look at your W-2, like a paycheck, you've got payroll taxes on there,
how would we be, like, and that's what funds Social Security,
uhm, and you've got income tax,
that's the federal and state withholding, are we getting rid of all of it?
And I know it's just ideas, people are floating around.
around out there and there are some definite macroeconomic impact,
some major macroeconomic impact that a major shift like that could have and
so we're getting into some of it today. But so replacement,
so if you think of like tariffs, so what if day one Donald Trump
said, uh, there's no more income tax,
we're going to replace it with tariffs. So if you look at the revenue,
I looked up some number, like, the tariffs would have to be like 70%
and a tariff. That's,
that's the company that's importing supporting. The
tariff is like a tax on the value of the imported goods.
And that goes to the government. And then they take the goods,
they, they produce it and they sell it to people in United.
States and then the income taxes are kind of after the fact there.
But I read some number where tariffs would need to be like 70% to
cover all the income tax revenue. And so if,
so I, I want to think about like just brainstorming like what,
what would a tariff of 70% due to the products or
the businesses that import those products.
So if you've got, so say you, you create,
well, let's just say you're a shirt seller,
you sell shirts just for ease of like the,
the product. So you sell shirts,
you import them, freeze your math, you import them at $10 each.
And that would be really high, but you import it at $10 each.
I say there's a 70% tariff on that. Now your cost,
you're out of pocket, $17. So what if,
what if you were selling the no shirts for $25 each,
before instead of getting a $15 profit,
now you've got a $7 profit. Well,
you've still got your, your costs, if you're still paying for logistics,
and you're playing your employees, and say you've got rent on a warehouse,
shipping and advertising, and all the cost for planning a business,
your profit just got cut in half. And so what would you,
what would you need to do to restore your profit?
You'd have to increase your prices. You'd have to increase your prices to cover
the $7 tariff, or that the 70% tariff on your imported goods,
you'd have to raise your price. This is the $32. So the price just
went up of shirts from 25 to 32.
It's a $7 increase. So it's like a,
a 28% increase in the cost of the shirts.
And I just think of that. If, if that was the,
if that simple case applied. Every single product,
if it was a flat tariff increase,
the cost of everything for people to retain profit,
would need to be the same. So, or would need to,
yeah, the cost of everything would go up, potentially.
So what, what's the, why would he come out?
And say that. So, what that would could potentially
do, and, and it's kind of the government's way.
We know that the government, a lot of what the government does,
well specifically with taxes, it's incentivizing or trying to incentivize people
and corporations and businesses to do.
So, what is this,
what is the government saying if, if there was a tariff,
a 70% tariff on all goods coming into the country?
The government is saying, hey, quit doing that,
quit importing goods. We want you to just create those same goods in the
United States. So this,
this is the part, it's like projecting out the impact.
We don't exactly know, like the macro,
the, the economists, they'll, they'll,
they'll be able to project something up better than I would, but whether it's
accurate or not, we don't really know potentially until it starts.
It's not but if,
uh,
yeah. So if, if the government is saying produce more in the United States,
maybe, and maybe there are more tax credits to produce in the United States,
um, that's, that's exactly what the government is saying.
So would it spur a whole new growth of,
uh, like an industrial revolution of new production in warehouses
and manufacturing? Like, would it just completely flip a switch in the United
States when we would we start producing all sorts of things that we've historically
been importing? I don't know.
But I don't know the answer to that.
But, uh, that's, that's kind of the way I would think of it.
And so when, when people come out and say, they're like,
oh, if you, if you have tariffs, no matter what,
it will be bad for the economy or prices are going to go up.
I wouldn't go out and say that. I don't know if prices are going
to go up. It seemed like from a single business perspective,
if they don't change anything and they continue doing what they were doing and
now there's just a tax on the tariffs or a tax on their imports
from the tariffs, that seems to make sense that.
They would, that specific company would increase their prices.
But from the whole scale, like macroeconomics is the whole U.S.
economy, what would happen to it? It's hard to tell for sure on that.
Um, so that's,
that's the tariffs. So we've talked about just tariffs in general and if they
got rid of income tax, how the tariffs would work.
But that, that's how the government would replace income tax with tariffs.
They're kind of related to this. Cause as you all know,
we pay sales tax. Uh,
when we are the end, like the ultimate user,
like the, the last user of a good, we're the consumer of the good,
we pay a sales tax on that, uh,
on most, on most types of products.
There's potentially like a, a value added tax,
like what Europe does. And a VAT tax,
is there, there could be a tax instead of,
As a manufacturer of these goods and products,
instead of kicking the sales tax,
can down the road, the VAT tax is essentially a sales tax that the
manufacturer's paying. Like when you're adding value,
the value added tax, at each stage of the production process really,
Because it moves between companies and moves along that production cycle,
there could be some, some VAT tax.
We don't have VAT tax in the United States now, but, uh,
as far as replacing income tax,
there might be some type of tax related to that as well.
But then, then I think of, and I'm,
you know, who in this, I'm not really comparing, uh,
like, Kamala Harris hasn't really come out and said anything specific on tariffs
that I've seen. Um, so I'm trying to just talk,
talking about a hypothetical scenario if we had t- tariffs replacing income tax completely.
But if you think of, so think of like someone that is low
income compared to someone that is extremely high income.
So real, like example is like Elon Musk.
So he's, he's come out and said a few times, like, oh, he's,
I think he's. He specifically said, like, he doesn't leave,
live a hedonistic lifestyle.
Like, he has very few, like,
doesn't have homes. Uh,
like personal expenses I'd expect would be pretty low compared to maybe some other
billionaires. But if, if someone is not consuming a lot.
Like, they're not, they don't have personal travel and personal goods.
Like, things they're just doing for fun and personal houses and vacation houses.
Like, they're not consuming a lot. He's more of a creator than a consumer.
Um,
someone like that, if,
if they're only ha- Like, if we only have these taxes on,
um, like on the consumption side,
like with, like sales tax compared to value added tax.
If he's not consuming his tax, and if he didn't have income tax,
his taxes could be really low. If he's consuming a lot less and there's,
say there was no sales tax. Uhm,
but, or if there's no income tax, and the only tax was on like
a sales type of tax on who's consuming it.
So his, his tax bill could be very low,
but he's come out and said he paid like $10 billion in taxes in
recent years. Like a very, very high amount of tax.
And if you're selling, selling businesses or selling stock,
there's a lot of tax that's paid with that. But compare that to like
someone that's low income, like most their income is going towards consuming good.
Like, all their income is going towards just paying f- over life and all
their cost, like as a percentage, all their,
all their expenditures would be subject to some type of tax as compared to
someone that's an investor or a business owner.
Just that increased, the,
the increased net worth and increased value.
There's no income tax. That's all that stuff's not getting taxed,
but the person that's consuming it and living paycheck to paycheck,
they're starting to get buried with tax.
Um, or just, as a percentage of their income,
a lot of it is going towards taxes. Um,
so there's the tax law is so,
So, So complex,
so, so many moving pieces, but there's all sorts of,
all sorts of directions they could go with this, but different tax credits could
help some business to recover, but I, what I,
what I'm, what I'm imagining would actually happen.
Is there, and there might be some tariffs that actually real quick,
I did pull up some of the history of tariffs, so like right now
there are tariffs, there are a lot of tariffs on imports and China kind
of gets, uh, buried a little more than other countries in tariffs,
just cause a huge amount of our imports.
And of course comes from, comes from China.
So if I go, there it is. It's like in the last few years,
like even under the Biden administration, tariffs have been going up,
like on electric vehicles, uh,
solar cells. I think if this is right,
it says electric vehicles tariff. Went from around 25% up to 100%.
So that's, that's the government saying we want the United States to produce vehicles
in the United States. We don't want to import those. Uh,
like solar, uh, the tariffs went from 25% to 50%.
This is just under the Biden administration.
Semi-conductors is planned to go from 25 to 50 steel.
I, I did go look at the history of steel tariffs.
And I remember a few years ago is a pretty big deal,
but United States, we've gone from 40% tariff to 0% tariffs
to 25% tariff. I believe it's like 2018.
There was a big change. Like,
I, I believe it was zero or close to zero.
It went up to 25% in 2018.
Tariffs on lithium ion, but ion batteries.
Are now at 25%. They were at seven and a half percent pretty recently.
And it's planned to go up again in 2026.
So it's kind of been part. Tariffs has been a part of the,
the US economic plan. Um,
it's just been thrown to the front of the, the,
uh, the presidential. But with tariffs,
um,
yeah, I don't, I don't love the blanket taxes.
Well, I don't know. It's, it's kind of weird.
Tariffs specifically are for the imports.
I am definitely pro, like,
production in the United States. And pro America,
like I, yeah, it would love to see even more production in America,
but from the economic scale and this is what the economists do.
They'll look back like, well, this other country does it a lot better.
It's a lot less expensive in America.
We're really good at this. This is like the globalization.
Like the global economy impact.
It's just so, it's so much more than a talking point for a
political, um,
yeah, like a presidential race type of thing.
But yeah, so there, there's some info.
I don't, I won't go too much more. I want to do this,
but wanted to give you info specifically on the tariffs where they're at now
because Donald Trump's plan earlier in the episode.
I mentioned that there would be like, I had run some numbers into cover,
like the income tax that the,
uh, IRS collects their It would have to be a 70% tariff.
And that was the example I ran. Um,
from what I've read, just some of the numbers that Trump has thrown out,
there's like a 20% universal tariff on all U.S.
imports, which is, which is actually lower than some of the current rates.
But on some things that are lower than that,
or zero, it'd be a lot higher, of course.
And then I think he's come out specifically and said, except for China,
China's going to have a 60% tariff. And so that was pretty close to
that 70% example I gave. But, um,
but that's, That's, again, last comment I'll make on this whole thing is just
the tariffs, or it would be the government's way of saying quit importing
and start producing the United States. And so whatever the United States
wants to have produced or the government wants to have produced,
it could be in a specific case. Industry, but with the tax that they
can get pretty specific in what they want to have produced and
the tariff can have a direct impact on that because it could make or
break whether or not it's profitable and whether or not it makes sense to
import or it makes sense to just do it in house and in the
United States. Okay, that's it for now and have a good rest of the
day.
