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Notes -
Then doesn't this turn into what is essentially an effective consumption tax, which is generally considered one of the most regressive forms of taxation, since percentage of income that goes to consumption is negatively correlated with income? Even worse, imported goods are more likely to be the kinds of goods that the average family spends most of their money on: appliances, groceries, cars, electronics, etc. The excess consumption of the wealthy is largely in the form of luxury services (personal cleaners, drivers, chefs, accountants, lawyers, etc.) or housing, which would be far less affected by tariffs, if at all.
My other concern is that the floor due to higher American wages may in fact be higher that the ceiling you talk about, where most people are just unwilling/unable to buy that good any more.
Which option are you talking about? I do not support a tariff where the revenue doesn’t go to those who have more use for the money. I don’t know the fine print of Trump’s “replace income tax with tariff plan”, but we can imagine a policy where the revenue of a tariff disproportionately benefits the lower through middle classes. Well, if everyone pays the tariff, and if wealthy people pay slightly more of the tariff because they import somewhat more goods, but if all the revenue goes to the lower and middle class, then the lower and middle class wind up having more money at the end of the day, implying that price increases pass on to all consumers equally and no American industry develops.
Unless I’m misreading you, then this doesn’t have to do with % income spent on tariff at all, so it’s simply a case of imported red herring to talk about % of income going to the tariff. Everyone pays tariff, and that total money goes to lower/middle class. I would support that. If that is what you were asking.
But the policy I support is a tariff so high that American industry develops. This has all the benefits of the aforementioned with one key difference: we now see wages rise because there is more middle class employment opportunity and employers must pay more to recruit workers.
Sadly it’s also in wasteful vacations, multiple cars, rolexes, foreign alcohol, cocaine, ayuahuasca retreats, multiple homes, homes that are too big, private jets and yachts, superfluous degrees. If we apply pressure on their finances they are likely to keep the stuff from your list but get rid of the truly crazy amount of inefficient resource waste from my list.
Before that happens the profit margin would evaporate, with the businesses owned by billionaires forced to cut into their profit margin.
How do you picture this money "going back to the middle class?"
Tax deduction or credit to those earning less than 160k a year. Why not? I understand this is functionally just redistribution from wealthy to less, but if you call it a tariff more people will be supportive than “we are literally going to redistribute money now”. It has a nice conservative tinge. But also, this isn’t my steel-man of tariffs per the OP.
I just have strong priors against "government gets all the money then moves it around" so I wanted to clarify.
Well, do you think that Jeff Bezos would not have created Amazon if he didn’t expect to gain hundreds of billions of dollars? Do you think Bezos would not continue to run Amazon if a competitor popped up which reduced his profit by tens of billions of dollars? We would still have Amazon if we literally took billions of dollars from Bezos, so those billions are genuinely just wasted. Inefficiently allocated.
”People rationally decide things” is much better than “the whims of economic chance are magically right about how much profit the founder of Amazon should get”.
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