In Trump's latest proposal to send $2,000 checks to most Americans funded by tariffs on imports, a regressive tax that disproportionately affects low-income households, lawmakers and economists alike have expressed skepticism.
The scheme is built on the notion of "revenue-neutral" tariffs, where importers pass on the added costs of duties to consumers. However, this approach has proven detrimental to lower-income families, who already spend a larger share of their income. As a result, they are hit harder by price increases due to tariffs, leading to a significant loss of purchasing power.
The numbers back up this assertion: a study by Yale's Budget Lab estimates that households in the bottom decile will bear 2.4% of their annual income in costs due to tariffs, while those in the top decile will only see an increase of 0.8%. This disparity highlights the regressive nature of the tariffs and their ability to widen economic inequality.
In contrast, countries like Canada have implemented targeted payments to offset the negative impact of consumption taxes on low-income households. The Canadian government's quarterly payments, for example, have effectively reversed the regressivity of its value-added tax (VAT) system, providing much-needed relief to families in need.
To make Trump's $2,000 checks more effective, policymakers could learn from Canada's approach. A smaller payment amount, tied to household income and phased out as income rises, would be a better design. Quarterly or monthly payments instead of one-time checks could also mitigate inflationary effects on aggregate demand.
As the White House considers this proposal, it must acknowledge the significant burden that tariffs impose on lower-income households. By reforming its approach, policymakers can create policies that ease the economic hardship caused by these regressive taxes and promote greater equity in the distribution of tax burdens.
The scheme is built on the notion of "revenue-neutral" tariffs, where importers pass on the added costs of duties to consumers. However, this approach has proven detrimental to lower-income families, who already spend a larger share of their income. As a result, they are hit harder by price increases due to tariffs, leading to a significant loss of purchasing power.
The numbers back up this assertion: a study by Yale's Budget Lab estimates that households in the bottom decile will bear 2.4% of their annual income in costs due to tariffs, while those in the top decile will only see an increase of 0.8%. This disparity highlights the regressive nature of the tariffs and their ability to widen economic inequality.
In contrast, countries like Canada have implemented targeted payments to offset the negative impact of consumption taxes on low-income households. The Canadian government's quarterly payments, for example, have effectively reversed the regressivity of its value-added tax (VAT) system, providing much-needed relief to families in need.
To make Trump's $2,000 checks more effective, policymakers could learn from Canada's approach. A smaller payment amount, tied to household income and phased out as income rises, would be a better design. Quarterly or monthly payments instead of one-time checks could also mitigate inflationary effects on aggregate demand.
As the White House considers this proposal, it must acknowledge the significant burden that tariffs impose on lower-income households. By reforming its approach, policymakers can create policies that ease the economic hardship caused by these regressive taxes and promote greater equity in the distribution of tax burdens.
Trump's plan 2 send $2k checks 2 most americans is lowkey a bad idea 
They're tryin 2 fund it with tariffs on imports, but thats just gonna hurt low-income households more 
Those who already spend like 50% of their income are gonna get hit harder w/ price increases 
. Its like, dont they know how economics works? 
The numbers r clear: bottom decile households pay 2.4% of income in tariffs, while top decile households only see 0.8% 
That's regressive taxation at its finest 
. Maybe Trump's got a good point, but we gotta be careful not 2 just slap people w/ cash without thinkin about how it'll affect them in the long run 
. They're already struggling to make ends meet, and then we throw in some regressive taxes and expect them to be okay with it? Nope.
. Those quarterly payments are a game-changer. Why can't the US just do that instead of sending out big checks all at once? It's not rocket science, folks! 
. And quarterly or monthly payments instead of one-time checks could really help mitigate the inflationary effects... just saying 
.
. Let's create policies that promote equity and make sure everyone feels the economic love 
.
. I mean, think about it - if you make $20k a year and already spend most of it on the essentials, adding another 40 cents here and there from increased prices isn't gonna help 
. We should be aiming for equity in tax burdens, not just slapping people with more debt when they can't afford it 
. It's just not fair.
. Trump should try something like that instead of just throwing a bunch of cash at everyone and hoping they'll be okay 
.
️. Like, what's the point of paying $10 for a slice of bread that's just gonna get mushy and fall apart? And don't even get me started on the environmental impact of all those avocados being imported from Mexico 
. Anyway, back to Trump's proposal... I think it's crazy how some people are saying the tariffs will just be passed on to consumers, like we're just a bunch of robots who can afford to absorb price hikes 
. But seriously, have you seen those YouTube videos where they show how prices change over time? It's wild how much of an impact small changes can have on your daily life 
. And what's with this "revenue-neutral" nonsense? That just sounds like a fancy way of saying "we're gonna screw low-income people over even further" 
. Let's get back to making policies that actually help people, not just lining the pockets of the wealthy 
. This $2,000 check idea is not as helpful as it sounds. I mean, think about it - it's basically a handout for low-income families who are already struggling to make ends meet 
. So yeah, let's take some notes from our friends north of the border and try to come up with something that actually helps people, not just makes their problems worse 
. The whole "revenue-neutral" thing just doesn't add up - if we're gonna hit them with tariffs, shouldn't we help 'em out? 
. Canada's got a better system - targeted payments that actually help low-income families 
.
so trump should def take notes and change his plan lol
.
. It's like they're trying to take away their last bit of purchasing power 
.
. 2.4% for those in the bottom decile and just 0.8% for the top decile? That's like, a total mismatch 
. It's like they're trying to punish people who can least afford it 
. I think we could learn a thing or two from that approach 
. And quarterly or monthly payments instead of one-time checks? That way we don't gotta deal with inflationary effects on aggregate demand 
.
. That's not a tax reform, that's just plain cruel 
.
. We should learn from them, not Trump