Frank's Musings

Let’s admit it—The main reason for Trump’s tariff proposals is to offset the reduction in federal revenue that will be caused by his lowering of income tax rates for high-income individuals. Pretty surely, increased tariffs will be inflationary and only shift more of the federal budget burden onto middle class taxpayers.

Clearly, the administration wants to find a way to assuage the class of its biggest political donors. Perhaps a better way to palliate both those taxpayer groups would be to institute a luxury tax on the purchase of conspicuous consumption items. These goods include expensive homes and cars, large yachts, private aircraft, and other luxury items, the prices of which exceed the median level by, say, 50% or more.

Not only would this policy shift responsibility for reducing social divergences more equitably to those who have been blessed with a greater share of life’s rewards; it would give high-income earners a means of control over the size of their contribution to making possible attainment of the American dream by deciding to limit  their showpiece acquisitions.

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