Consistency on taxes and tariffs

Peter Navarro is arguing that the pending tariffs will raise $600 billion a year, which might make them the biggest tax increase in U.S: history.  I am completely against this!  And for reasons I (and Alex) have explained over the years in dozens of MR posts.

I would like to point out one thing, however, in the interests of consistency.  If you too are against the tariffs, and arguing they will raise prices by a noticeable amount, that also means you think most of the tariff will not primarily fall on foreign producers.

In light of that, you might wish to reevaluate your stance on the domestic corporate income tax.  Perhaps quite a bit of that tax also does not fall on producers, due to competitive forces.

To be sure, the two cases are not identical.  The tariff to some extent hits foreign sellers, while the corporate income tax is applied domestically.  (If anything, aren’t relatively large, exporting firms more likely to have some market power?)  And the structures of how the two taxes are assessed differ.  Nonetheless elasticities of supply, demand, and factor mobility usually are the dominant factors in calculating tax incidence, regardless of the details of the tax.

Perhaps those differences between tariffs and corporate taxes all work out so that you can hold the exact mix of position you wish to!  And perhaps you figured all this out in advance, and so this post is not inducing any new thoughts in you.

Or perhaps not.