A Tariff Would, Too, Fix Our Trade Mess

Ian Fletcher 

Activist Post

I and my employer, the Coalition for a Prosperous America, are unabashed protectionists.  I have written previously about how, for example, a flat tariff on all U.S. imports may well be the key to solving the ongoing trade crisis that is depleting our national wealth and gutting our industries. 

We at CPA believe that a genuine national debate on trade issues will eventually draw public opinion our way.  So it is only fair to answer some of the reasonable-but-mistaken objections raised to our position.

One obvious objection is simply that a tariff is a tax increase. So it is. But it does not have to be a net tax increase if the revenue it generates is used to fund cuts in other taxes. So in order to obtain a “clean” policy debate, in which the tariff is debated purely on its merits as a trade policy, unmuddied by partisan opinions about the total level of taxation, any tariff proposal should be packaged with precisely compensating cuts in other taxes. 

A related concern is that a tariff is a tax on consumption. This is generally better than a tax on income because it rewards saving and avoids penalizing work. Unfortunately, consumption taxes also reduce the progressivity of the tax system because the poor consume, rather than save, a higher percentage of their incomes. So any tax rebate financed by the tariff should also be designed to leave the overall progressivity of the tax system unchanged.