Lewis: The biggest tax hike in history that no one knows about
I hate taxes. Yes, I know they are necessary for certain things, but it still doesn’t mean that I like paying them. I come from a time when the word “conservative” meant that you favored small government and frugal government spending. The word conservative seems to have taken on a whole new definition these days — one that is more about social views than fiscal policies.
Question. Which president is responsible for our country’s largest single tax increase? Joe Biden? Bill Clinton? Barack Obama? Obama comes in at No. 2 with the Affordable Care Act which cost taxpayers $76.8 billion in its first year. (Note: if you look at this in constant dollars this ranking drops but, in any case, it was the second largest since 1993). The ACA was big but, whether you like “Obamacare” or not, as least most Americans got something in return.
So, are you ready? The award for the largest single tax increase goes to Donald Trump. What is more amazing is that he accomplished it without any approval from Congress. Is your head spinning right now? Mine was when I discovered both that this was possible, and the magnitude of the numbers involved.
In 2019, the Trump administration imposed almost $80 billion in new taxes on individual Americans — the largest tax increase in history! All from a single person with no need for approval from Congress. What went on here? How did this happen? The trick was that, technically, he did not impose a “tax.” Instead, he imposed “tariffs,” most of which were directed at China.
The goal of tariffs is to force the reduced consumption of a particular thing, usually from a particular country or region to either punish the country and/or to make your domestic market more competitive. It sounds admirable, but most experts agree — tariffs don’t work.
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Trump’s logic was that if we increased the import tax on steel, for example, (which he did to a whopping 25%!) then all of the U.S. steel mills would expand and there would be more jobs, yadda yadda yadda. Almost all experts knew this was complete fantasy thinking, but Trump went ahead anyway.
So, what happened? We import more steel today than ever, and our domestic output has shrunk. When steel got more expensive, so did oil, as an example, because you need a bunch of steel for pipe in every new well. An oil consulting firm calculated that U.S. oil drilling costs increased by 30% solely because of these tariffs. The next time you curse when you are filling up your car, remember to give thanks where it is due.
Trump’s stated goal was that the tariffs would help American industry and punish China but they have achieved the opposite result. A recent study by the US-China Business Council indicates that these Trump policies (along with the China retaliations) have cost the U.S. 245,000 jobs. The whole aim of this lunacy was to make America strong, but it was like putting a gun to our heads and saying, “stop or I’ll shoot.”
The U.S. government brought in $79 billion in 2019 from tariffs, more than twice the number from the two previous years. Since the point of tariffs is to change behavior, when more revenue comes in from tariffs, it is a clear signal that they are not working. According to Forbes, these tariffs now cost U.S. families more than $2,000 each year.
Beyond the fact that this was a terrible idea in the first place, it is hard to understand why the current administration is not taking action to correct the mistake. President Biden says he is still “thinking about it.” Really? Last year we imported more than $3 Trillion dollars worth of goods from China which was a 31% increase! While the reciprocal tariffs on U.S. agriculture are hurting us, there is little to no evidence that these tariffs are having any impact other than increasing costs.
With inflation and no ability to grow our own industries (because of the worker shortages), for the sake of American households the Biden administration needs to stop this madness and roll back the largest tax increase in U.S. history.
Mark Lewis, a Colorado native, had a long career in technology, including serving as the CEO of several tech companies. He retired from technology last year and is now writing thriller novels. Mark and his wife, Lisa, and their two Australian Shepherds — Kismet and Cowboy, reside in Edwards.