the widget maker doesn’t pay the CEOs income taxes. The CEO does.
Do you think a CEO says ‘well, since my income taxes were lowered, I’ll take a reduction is salary this year…’
No I don’t think that
You are making my point.
When the CEO is taxes he demands a higher salary.
To the company, paying that is an increase cost of doing business.
The company does not care if the cost has gone up and
all the cool people call the cost increase a “tariff”
or all the cool people call the cost increase a “CEO tax”
orall the cool people call the cost increase something else.
It’s just math, and the word people use to refer to the cost increase is not part of the equation.
We are discussing income taxes.
I agree tariffs affect pricing because they affect the base cost of the goods.
No, a CEO doesn’t demand a higher wage because of his taxes. He tries to get the highest salary he can regardless of his low or high taxes.
And the company tries to pay him the least possible regardless of his taxes.
The FoxBusiness X account posted this:
BREAKING BILLIONS:
@realDonaldTrump has hit a record high in tariff revenue, collecting a staggering $150 billion from foreign countries since implementing the policy. In July alone, the United States hit a new milestone with $28 billion collected—highlighting the unprecedented impact of his trade agenda.
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Stimmy!
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Hog wash.
Example:
A CEO makes $1m a year (after tax)
His taxes goup $1m a year. he will make nothing. Will he remain a CEO and work for free?
(Substitute any dollar figure you wish)
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Oh I should have mentioned, the US is India’s sinlgle largest export destination. (2% of their GDP.)
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It’s good to see a clear acknowledgement that tariffs reduce quantity and increase prices.
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Same as all taxes always and everywhere.
Company make $1 profit per widget.
Congress decides to tax them
- 10-cents per widget as import tax,
- 10-cents per widget as profit tax,
- 10-cents per widget as some other tax.
In all three cases the price per widget increases.
In all three cases the portion that is passed-on vs ablsorbed is determined by the demand curve
In -->NONE<-- of those cases is that portion determined by the name of the tax.
If his taxes go down to $0 will he take a pay cut?
Well I think we can agree then: taxes on corporations themselves are stupid. I’ve been saying as much for years and years.
But I’m taking us off topic…
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Yes.
In fact many CEO pay packages are structured to maximize tax advantages inlcuidng payment in theform of stock options (taxed at the cap gains rate instead of the income rate, deferred compensation plans etc.
Some CEOs (e.g., Elon Musk, Larry Page) have taken symbolic $1 salaries while receiving massive equity compensation.
Probably the MOST interesting analysis of the Trump tariff proposals comes from the Tax Foundation. (https://taxfoundation.org/)
Understanding why requires some context.
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Groups like the Harvard Budget Lab, and U Penn’s “Penn Wharton Budget Model” shift their proorities and preferences so that (by no coincidence) they always end up supporting whatever the D’s want. They of course oppose the Trump Tariffs. But they are not honest. Who cares what they say.
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Groups like CATO and AEI oppose all tax increases all the time. Of course they oppose the Trump tariffs, and their analysis does a great job of reminding us "Phew! There are still a few honest economists left in the world.
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The Tax Foundation recommends shifting from out current tax system to a consumption based model. If you consume $30k per year you will be $X. If you consume $100k per year you will be taxed >$X.
What makes them interesting is that a tariff, inso far as some of it is pushed onto the consumer, functions a lot like that. A rich family that buys a new car every year and a lot of expesiuve clothes and electronic gear will pay more taxes than the $30k per year family.
Yet, the Tax Foundation still opposes the Trump tariff. Why? becasue it applies only to imports and not to all goods equally.
I really don’t think one can call CATO and AEI “honest economists.” I think the honest economists are sitting in bureaucracies and universities doing research that isn’t based on political outlooks. Of course that research goes almost completely unnoticed. If you want honest, right-leaning economists you might find them at AIER, George Mason and UChicago - Wrong, but honest 
Moving our tax base towards consumption is fine but I don’t think it’s the progressive situation you describe. The propensity to consume among low income people is far higher than high income people so in total, the tax is regressive. of course you could do as many states do and exempt food… and medicine… and clothes…
But the more you move towards a consumption tax the more I think a VAT would be cleaner and less impactful.
A tax of $100 per person is a flat tax.
You can (incorrectly) call it regressive if and only if you compate that to some outside measure such as thetaxpayers height, weight, shoe size, IQ or income.
A tax that increases the more one consumers is progressive.
You can (incorrectly) call it regressive if and only if you compate that to some outside measure such as the taxpayer’s height, weight, shoe size, IQ or income.
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The first truly rich person I ever met was Congressman Bill Clinger of Pennsylvania. I met him in 1983. He had a ncie house, but based on his clothes, his car, his dining habits his vacation habits etc. etc.,
in every other way he lived like a man making $50,000 year or less (today equivalent). His lunch was a BLT sandwich a bag of chips and a diet coke. His care was a 10-year-old hatchback. His suti he bought at the local Sears or the local men’s store in smal town Pennsylvania.
I felt then and feel now that he should have been taxed like a man making $50,000. Later, when I took college econ classes I learned that taxing him that way, insted of taxing away his ability to invest, would also be better for America than our current system.
Tariffs are a step in that direction.
Added:
All my econ professors (except one) had studied at U of Chicago.
They were not big fans of Arthur Laffer (even though I was at the time.)
a consumption tax is not $100 per person. It’s x dollars per dollar spent in a particular manner. That “particular manner” (consumption) is more prevalent among low income people, so they pay a higher portion of their income in consumption tax.
That is correct.
I gave that as an example. I was attempting to set the context.
By your definiton
- a flat tax is “regressive”
- a tax in which rich people pay more because they buy new cars and new clothes and new electronics is "regressive?
Your defintion is hooey.
A poor man spends almost all his income on food, and rent and insurance. Pays very little tariff.
A rich man buys a new BMW, buys his wife imported handbags and buys a new phone every year— Pays a lot of tariff, much more than the poor man. And yet you have still twisted the defintion into “regressive.”
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A flat income tax is not regressive (Though I think it’s stupid). A flat consumption tax is regressive, by definition.
As a share of income, they don’t. Rich people spend a smaller share of their marginal income on consumption than poor people.
A poor man spends his money on cheap clothes imported from Bangladesh and China, cheap food imported from Mexico and Chile. There are few if any US - made subsititutes.
A rich man spends money on a BMW made in South Carolina and pays no tariff. A poor man buys a GM built in Mexico and pays a tariff. We could save them both a lot of money and abolish the tariff!
Again, by definition, regressive.
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No it’s not regressive
a flat tax is flat.
That is why we call it a flat tax.
That is what most people call it.
Only by making a vast ansdsweepiong change, moving miles and miles from the normal deifinition can you then describe a flat tax as regressive.
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Describing a tariff as regressive means going even further off into new-definiton-land.
With a tariff the rich pay more.
With a tariff the rich pay more flatout and more as a percent of their income.
Simple Fact: You are trying to change the definition becasue the normal ones don’t work for you.
