Tariffs: Economic Blunder?

Or Optimal Method of Funding Government?

Let’s have a straightforward conversation about something that touches every one of us—how we fund our government. This isn’t just about dollars and cents; it’s about the kind of society we want to live in, one where freedom, fairness, and prosperity go hand in hand. The goal is to find a funding system that raises the money government needs to provide basic constitutional services without stepping on your liberty, prying into your private life, or slowing down the economy.

Leftists and libertarians both have been criticizing and blaming President Trump for instituting an aggressive regime of tariffs, claiming this hurts free trade, reduces economic activity, causes inflation and a cornucopia of other terrible side-effects. They say the Smoot-Hawley Tariff of 1930 caused the Great Depression (which started in 1929). Are tariffs deserving of such ridicule? And if not, what’s the real source of undisclosed opposition to them?

Ronald Reagan wisely said, “If you want more of something, subsidize it; if you want less of something, tax it” (Reagan, 1983).

• If you tax work, and you discourage effort.

• If you tax saving, and you reduce investment.

• If you tax property, and you weaken ownership.

Optimal government funding should focus on taxing what we’d rather discourage—like over-consumption or reliance on foreign goods—while leaving room for more of what we want, like hard work, investment, community, and economic growth.

We’ll take a journey through history to see why America’s founding fathers preferred tariffs over other taxes, and why socialists pushed for taxes that redistribute wealth, which I’ll argue is a bad idea that hurts us all. We’ll lay out the standards we should use to judge what’s best and explain why bad taxes need to go. We’ll hear from the founding fathers, great economists, and other leaders to shed light on these ideas, keeping things simple so you can see the big picture without getting lost in the details.

A Historical Journey

To understand where we should go with government funding, let’s start by looking at where we’ve been. When America was born in the late 18th century, the founding fathers were coming off a hard-fought revolution, sparked in part by unfair taxes imposed by the British—like the Stamp Act of 1765, which taxed paper goods, and the Townshend Acts of 1767, which hit imports like tea (History of taxation in the United States). Those taxes, imposed without the colonists’ consent, were a big reason for the cry of “no taxation without representation.” After winning independence, the founders wanted a system that kept government small and respected individual freedom.

It should be noted first of all that the total level of government spending is the biggest issue, with how that funding is achieved being secondary, since no matter how you fund a very small government, the burden will be less than with the funding needs of a very large one. Thomas Paine, in Common Sense (1776), stated, “Society in every state is a blessing, but government even in its best state is but a necessary evil,” implying that taxes and regulations should not overburden any group, rich or poor (Paine, 1776). But contrary to my anarchist friends, it is in fact a necessary evil since all alternatives are worse, and so must be funded to provide basic criminal justice and foreign defense protections. Benjamin Franklin, in a 1783 letter to Robert Morris, noted, “Our new Constitution promises permanency, but in this world nothing can be said to be certain, except death and taxes” (Franklin, 1783). But those taxes needn’t be overbearing. Franklin again, in his 1758 essay The Way to Wealth, cautioned, “It would be thought a hard government that should tax its people one-tenth part of their time, to be employed in its service,” suggesting over 10% would constitute punitive taxation (Franklin, 1758). That being said, the mode of funding is also of great importance, as I will argue below.

The founders turned to tariffs—levies on imported goods—as their main way to raise money.

• George Washington, in his 1790 State of the Union Address, noted their effectiveness, saying, “The revenues of the present year, from the duties on imports, have been more productive than could have been expected,” showing how reliable they were for the young nation (Washington, 1790).

• Alexander Hamilton, the first Treasury Secretary, saw tariffs as a way to build up American industry while funding the government. In his 1791 "Report on Manufactures," Hamilton wrote, “Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures,” arguing that tariffs could encourage domestic production and protect the nation’s economic future (Hamilton, 1791).

• Thomas Jefferson, often at odds with Hamilton on economic policy, still saw the value of tariffs for raising revenue without direct intrusion. In a 1787 letter to Edward Carrington, Jefferson cautioned, “The natural progress of things is for liberty to yield, and government to gain ground,” suggesting a preference for funding methods that minimized government overreach into citizens’ lives (Jefferson, 1787). In the same letter, he also lamented that the Congress had more powers of taxation than only tariffs… “Would it not have been better to assign to Congress exclusively the article of imposts for federal purposes, and to have left direct taxation exclusively to the States? I should suppose the former fund sufficient for all probably events, aided by the land office" (Jefferson, 1787).

Congress progressively increased tariffs to fund the fledgling government with the Tariff of 1789, the Tariff of 1790, and the Tariff of 1792. By 1800, tariffs were bringing in 97% of federal revenue, a clear sign of how much they relied on them (History of taxation in the United States), and by 1805, Thomas Jefferson noted in his 2^nd Inaugural Address that, "The suppression of unnecessary offices, of useless establishments and expenses [basically, the DOGE of their time] enabled us to discontinue internal taxes” (Jefferson, 1805). Thus, as of 1805, all revenues were raised by tariffs alone.

Why did the founders like tariffs so much? For one, they were practical. You could collect them at the ports with just a few customs officers, without needing a big bureaucracy to go around knocking on doors. The founders also championed Ronald Reagan’s aforementioned wisdom that when you tax something, you get less of it. By taxing imported goods, they reduced reliance on foreign products, which naturally led to more domestic production—more jobs, more innovation, more economic strength right here at home. But it wasn’t just about economics; it was about freedom. Tariffs didn’t require the government to dig into your personal life. They were collected at the border, leaving your privacy intact. William Pitt the Elder, a British statesman whose ideas influenced American thought and who was the namesake of Pittsburgh, spoke in a 1763 speech to Parliament, saying, “The poorest man may, in his cottage, bid defiance to all the forces of the Crown. It may be frail, its roof may shake; the wind may blow through it; the storm may enter; the rain may enter; but the King of England may not enter; all his force dare not cross the threshold of the ruined tenement” (Pitt, 1763). This principle of privacy and independence even from the King was cherished by the founders, who saw tariffs as a way to fund government without violating that sacred space. If we allow the tax man to enter by force of law—demanding detailed financial records for income, assets, and spending—we undermine the very essence of our independence.

For nearly a century, tariffs remained the backbone of federal revenue, funding everything from roads to the military. But things took a troubling turn in the late 1800s and early 1900s (known as the Progressive Era), as socialists and progressives pushed for a very different approach. Karl Marx, in The Communist Manifesto (1848), called for “a heavy progressive or graduated income tax” to dismantle the capitalist system he despised, aiming to redistribute wealth from the rich to the poor (Marx & Engels, 1848). This idea took hold in the U.S. with the Sixteenth Amendment in 1913, which made progressive income taxes a permanent fixture. Over time, other redistributive taxes followed—capital gains taxes on investment profits, inheritance taxes on estates, wealth taxes on net worth, and corporate taxes on business profits. More recently, economists like Thomas Piketty have championed these taxes (albeit on a global level) to fight economic inequality. In Capital in the Twenty-First Century (2014), Piketty argued, “The past devours the future,” claiming that global wealth taxes are needed to prevent the rich from getting richer, and the poor getting poorer (Piketty, 2014).

This shift was a big mistake. These taxes don’t just take money from the rich—they discourage the very things we want more of: hard work, saving, investment, and economic growth. When you tax income, you reduce the incentive to work harder or take on extra hours. When you tax wealth or inheritance, you discourage people from saving for the future or passing on what they’ve built to their children. When you tax corporate profits, you push businesses to leave, taking jobs with them. These taxes are not only economically harmful—they’re coercive, forcing the government to pry into your private life to figure out what you owe, and they distort the natural workings of a free market by reducing the behaviors that drive prosperity. John Stuart Mill, a classical economist, warned in Principles of Political Economy (1848) that “to tax the larger incomes at a higher percentage than the smaller, is to lay a tax on industry and economy,” highlighting how such taxes can harm the incentives that fuel growth (Mill, 1848). When we let the government play Robin Hood, taking from the rich to give to the poor, we end up with less freedom and less prosperity for all—a point Milton Friedman often made. In Capitalism and Freedom (1962), Friedman wrote that “a society that puts equality before freedom will get neither,” but one that prioritizes freedom will achieve both (Friedman, 1962).

The Standards: What Makes a Funding System Optimal?

To figure out the best way to fund government, we need clear standards that tell us what works and what doesn’t. In our chart below, we’ve ranked funding sources by 10 criteria: Progressiveness, Voluntariness, Elasticity, Adequacy of Government Revenue, Efficient Collection & Compliance, Transparency to the Taxpayer, Stimulation of Domestic Economic Activity, Promotion of Saving/Investment, Minimization of Economic Distortions, and Preservation of Taxpayer Privacy. Let’s break these down in detail, with plenty of explanation and historical wisdom. Throughout, we’ll keep in mind the simple idea: when you tax something, you get less of it.

• Progressive: This measures whether the funding burden falls more on the rich than the poor, on a scale from 0 (not progressive at all) to 10 (highly progressive). Progressivity is often touted as a way to make taxes fair, ensuring the wealthy pay more because they can afford it. This can be a social good, but progressivity isn’t always a virtue—it can discourage the very behaviors we want to encourage. When you tax higher incomes more, you reduce the incentive for people to work harder, start businesses, or take risks, because they keep less of what they earn. But most people could consider it more harmful to burden with taxes those who can least afford it on the greatest percentage of their income, so progressivity will be considered a benefit so long as it’s not excessive. Adam Smith, the father of modern economics, wrote in The Wealth of Nations (1776) that “the subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state,” implying that taxes should be proportional to the means of the payer (Smith, 1776).

• Voluntary: Here’s where freedom really comes into play, scored from 0 (no choice at all) to 10 (completely voluntary). A voluntary funding mechanism lets you decide whether to pay it by choosing whether to engage in the taxed activity—like buying a taxed good. The more voluntary it is, the less the government is forcing you to do something against your will. When you tax something, you discourage it—so a voluntary tax focuses on things we’d rather discourage, like buying imported goods, while leaving you free to do more of what we value, like supporting local businesses. A voluntary system respects your liberty to decide—say, whether to buy an imported shirt or one made locally—making this criterion a cornerstone of a free market approach. James Madison, in a 1792 essay Property, emphasized individual choice, stating, “That is not a just government, nor is property secure under it, where the property which a man has in his personal safety and personal liberty, is violated by arbitrary seizures of one class of citizens for the service of the rest,” highlighting the importance of voluntary contributions over forced taxation (Madison, 1792).

• Elastic: This measures flexibility, from 0 (no adjustment) to 10 (highly adjustable). Can you lower your tax bill when times are tough—say, if you lose your job or face a big medical bill? A funding mechanism that adjusts to your financial situation is a lot fairer than one that doesn’t budge, no matter how hard things get. Elasticity ensures that the burden doesn’t crush you when you’re already down, reflecting a principle of fairness that respects your circumstances. An elastic tax lets you reduce your burden by cutting back on taxed activities, like buying luxury goods, or automatically is reduced in difficult times such as an income tax when you lose your job. Thomas Jefferson wrote to James Madison in 1784 that, “Taxes should be proportioned to what may be annually spared by the individual,” tying taxation to the taxpayer’s means (Jefferson, 1784). David Ricardo, a classical economist, emphasized in On the Principles of Political Economy and Taxation (1817) that “the best tax is that which is least felt,” meaning a tax should minimize economic disruptions on a macro or micro level, including taxes on necessities overly burdening lower-income individuals (Ricardo, 1817). This criterion helps us see how well a funding system supports you in tough times, encouraging what we value, like financial resilience.

• Adequate Government Revenue: This is the big practical question, scored from 0 (no revenue) to 10 (primary and consistent source). Does the mechanism bring in enough money to fund the government—pay for things like roads, defense, and schools? If it can’t, it’s not much use, no matter how fair it seems. We need a system that keeps the government running without breaking the bank—or your freedom. When you tax something, you discourage it—so we want to tax activities that don’t harm the economy’s core, like excessive consumption, while leaving room for more work and investment. Thomas Jefferson, in his 1801 Inaugural Address, stressed the importance of “a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned,” suggesting that revenue must be adequate for core functions such as criminal justice but not excessive (Jefferson, 1801). George Washington, in his 1794 State of the Union Address, noted the importance of reliable revenue, stating, “The revenue which has been established for the support of the government ought to be so regulated as to meet all its just demands,” highlighting the need for sufficiency (Washington, 1794). This criterion ensures we’re looking at real-world effectiveness—can the system actually pay the bills?

• Efficient Collection & Compliance: We don’t want a funding system that’s a hassle to collect, with armies of bureaucrats, endless paperwork, and ruthless enforcement mechanisms, scored from 0 (highly inefficient) to 10 (highly efficient). Efficiency means low costs for both the government and you—less of your money gets eaten up by red tape. When you tax something, you discourage it—so an inefficient tax, by wasting resources on collection, discourages the taxed activity even more than necessary. A simple system keeps government small and lets you focus on living your life, not filling out forms or hiding from the tax man. Jean-Baptiste Say, a French economist and by some accounts a grandfather of Austrian Economics, wrote in A Treatise on Political Economy (1803) that “the best tax is that which costs the least to collect,” highlighting the value of efficiency in taxation (Say, 1803). Alexander Hamilton, in his 1788 Federalist No. 36, argued for simplicity, stating, “A government ought to contain in itself every power requisite to the full accomplishment of the objects committed to its care… without involving a complicated and expensive machinery,” a principle that applies to tax collection as well (Hamilton, 1788). This criterion ensures we’re not wasting resources on collection, keeping government lean and focused, encouraging more economic activity by reducing the tax burden on what we want more of, like capital investment and production of goods.

• Transparent to the Payer: You should be able to see exactly what you’re paying, scored from 0 (not transparent) to 10 (fully transparent). A funding mechanism that’s hidden in the price of goods—or buried in a complicated tax form—is one you can’t trust. Transparency lets you make informed choices, helping you decide whether to cut back on taxed activities, like buying luxury goods, and do more of what we value, like saving or supporting local businesses. If you don’t know what you’re paying, how can you decide if it’s fair? James Madison, in Federalist No. 62 (1788), argued for clarity in government actions, stating, “It will be of little avail to the people that the laws are made by men of their own choice if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood,” a principle that applies to taxation as well (Madison, 1788). Jean-Baptiste Say similarly concluded that, contrary to the theme of the American Revolution, political representation doesn’t lessen the involuntary nature of taxation or the mischievous beguiling of government agents to collect it (Say, 1803). John Adams, in his 1780 Massachusetts Constitution, emphasized the need for openness, writing, “All power residing originally in the people… it follows that the people have a right to know what their agents are doing,” extending this right to understanding tax burdens (Adams, 1780). Transparency ensures accountability and trust, letting you see where your money goes, and keeping the government representative of the people’s interests.

• Stimulates Domestic Economic Activity: Does the funding mechanism encourage local economic activity, like building businesses, infrastructure, and jobs domestically, scored from 0 (no encouragement) to 10 (strong encouragement)? We want a system that helps our economy grow, not shrink. When you tax something, you discourage it—so taxing imports, for instance, reduces reliance on foreign goods, which naturally leads to more local production, more jobs, and more community growth. A mechanism that nudges folks to buy American or invest in local projects is one that builds a stronger economy right here at home. Conversely, a tax on wealth, capital gains, or corporate profits curtails economic activity. Alexander Hamilton, in his 1791 "Report on Manufactures," emphasized this, noting that “the encouragement of manufactures should be among the first objects of public policy,” showing how tariffs could boost domestic production (Hamilton, 1791). Thomas Jefferson, in a 1816 letter to Benjamin Austin, supported domestic industry, stating, “We must now place the manufacturer by the side of the agriculturist,” recognizing the need to encourage local economic activity (Jefferson, 1816). This criterion helps us see how funding supports economic growth right here at home, encouraging what we want more of, like local jobs and businesses.

• Promotes Saving & Investment: A good funding system should encourage you to save and invest, because that’s what fuels economic stability, self-sufficiency, and growth, scored from 0 (discourages) to 10 (strongly encourages). When you tax something, you discourage it—so taxing saving or investment, like through capital gains or wealth taxes, reduces the incentive to build wealth, which creates a fragile economy and financially insecure citizens. A system that taxes consumption, not savings, keeps the economy humming by encouraging capital formation—more money for new businesses, more jobs, more innovation. Ludwig von Mises wrote in Human Action (1949) that “the only source of profit is the production of goods and services,” which saving and investment make possible (Mises, 1949). Thomas Jefferson, in a 1786 letter to James Madison, stated, “Our citizens have a right to cultivate their own lands, and to enjoy the fruits of their own labor,” a principle that extends to encouraging saving and investment without punitive taxes (Jefferson, 1786). This criterion ensures we’re encouraging more of what we want, including economic growth through investment, rather than discouraging it with taxes.

• Minimizes Economic Distortions: We don’t want funding mechanisms that mess up the market—changing how you work, spend, or save in ways that hurt the economy, scored from 0 (high distortion) to 10 (minimal distortion). When you tax something, you discourage it—so a tax that heavily impacts your choices, like taxing income or investment, reduces the behaviors we want, like working hard or building wealth. A mechanism that lets the market work naturally keeps things running smoothly. Friedrich Hayek, in The Road to Serfdom (1944), warned that “the more the state ‘plans,’ the more difficult planning becomes for the individual,” a reminder that government actions, including taxation, should avoid interfering with market dynamics (Hayek, 1944). David Ricardo, in On the Principles of Political Economy and Taxation (1817), noted that “every tax is ultimately paid by the consumer,” but some taxes distort more than others, impacting how we live and work (Ricardo, 1817). This criterion ensures we’re not creating inefficiencies that drag down the economy, hinder capital accumulation, or disincentivize production.

• Preserves Taxpayer Privacy: Finally, a funding mechanism shouldn’t require the government to snoop into your life, scored from 0 (no privacy) to 10 (full privacy). Privacy is a cornerstone of freedom, and we should protect it. When you tax something, you discourage it—so a tax that invades your privacy discourages trust in the system, which reduces economic activity as people pull back to protect themselves. The more the government knows about you, the more it can control you. John Adams, in a 1775 letter to his wife Abigail, wrote, “Liberty once lost is lost forever,” underscoring the importance of vigilance and active participation in protecting one's freedoms, including against invasive taxation (Adams, 1775). In Thomas Jefferson’s 2^nd Inaugural Address, he noted that before abolishing internal taxes, even at this early stage of the republic, “These [taxes] covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary vexation which, once entered, is scarcely to be restrained from reaching successively every article of produce and property” (Jefferson, 1805). This criterion ensures your personal affairs stay personal, protecting your freedom from government intrusion, encouraging what we want more of, like trust and economic participation.

These criteria aren’t just a random list—they’re the building blocks of a funding system that respects your freedom, strives for fairness, encourages efficiency, and promotes prosperity while meeting the government’s needs. They balance practical concerns, like raising enough money, with principles that keep government in check, like ensuring you have a choice, can see what’s happening with your money, and aren’t forced to hand over your private details. Together, they give us a roadmap to a better way of funding government, one that puts liberty first and encourages the economic activities we want more of, like work, saving, and local growth, while discouraging what we’d rather see less of, like overconsumption or dependence on foreign goods.

Why Tariffs and Sales Taxes Are the Best Way to Fund Government

Now, let’s look at the top of our chart. Tariffs and Sales Tax lead the pack, with scores of 85 and 83. These numbers tell us something important—they’re the best options we’ve got for funding government in a free society, balancing the need for revenue with the need to keep government out of your way, and focusing on taxing what we’d rather discourage—excessive reliance on imports and overconsumption—while incentivizing what we value, including domestic manufacturing, innovation, financial resilience.

Start with Tariffs, scoring 85 points by our criteria. Also called “imposts”, they’re as Voluntary as it gets, with a perfect 10. If you don’t want to pay the tariff, you can buy American-made goods instead—say, a shirt made in South Carolina instead of one imported from China. By taxing imports, tariffs discourage reliance on foreign goods, which naturally leads to more local production—more jobs, more community growth, more self-reliance. They’re also Elastic, scoring another 10, meaning you can cut back on imports when money’s tight. Imagine you’re saving for a big purchase like a new car; you can skip buying that imported gadget and avoid the tariff altogether. Tariffs encourage Domestic Economic Activity, with a score of 9, by making local production more competitive. A 10% tariff on imported electronics, for example, might prompt a company to build a factory here in the U.S., creating jobs for you and your neighbors. They promote Saving/Investment, also scoring 9, by discouraging spending on imports, leaving more money for lending to new homebuyers. Efficiency is high at 9, since tariffs are collected at the border with minimal fuss—just a few customs officers, not a sprawling bureaucracy like the IRS, which spent $13.5 billion on administration in 2023 (IRS, 2023). Transparency is a solid 6, thanks to clear tariff schedules published by the U.S. International Trade Commission, though the tax is often embedded in the price you pay at the store (U.S. International Trade Commission, 2023). Taxpayer Privacy is a perfect 10, as tariffs don’t require the government to dig into your personal life—you don’t have to file a form or share your income details, encouraging trust in government. Adequate Government Revenue is a moderate 5, reflecting tariffs’ historical role—back in 1805, they funded 100% of the federal budget—but today they’re less dominant, contributing about 1.5% of revenue, or $80 billion out of $4.4 trillion in 2023 (History of tariffs in the United States) with an unknown upper limit. Minimizes Economic Distortions scores a 5, as tariffs can raise prices but also correct trade imbalances, a point Hamilton understood well when he advocated for them to protect American industry, aligning with the idea of taxing imports to encourage domestic production.

Sales Tax, with a score of 83, is right behind. Like tariffs, it scores 10 in Voluntary and Elastic—you can avoid it by not buying taxed goods, and you can cut back when times are tough. Under virtually all Sales Tax schemes, basic necessities are exempted, so you can live a common lifestyle without paying any taxes. Say you’re at the store buying a $100 pair of shoes, and the sales tax adds $10. You can decide not to buy those shoes, or you can wait until you’re in a better spot financially—maybe after your next paycheck, encouraging saving. By taxing consumption, sales taxes reduce unnecessary spending, which naturally leads to more saving and investment—key drivers of economic growth. It’s highly Transparent, scoring 9, because you see the tax right on your receipt at the checkout—no mystery there, aligning with the idea of taxing what we’d rather discourage (overconsumption) to get more of what we want (saving). Adequate Government Revenue is also a 9, as sales taxes fund 30-40% of state budgets across the U.S., bringing in billions each year to pay for schools, roads, and public safety (Tax Foundation, 2023). Efficiency is 9, with collection at the point of sale requiring minimal overhead—just a cashier ringing up your purchase, not a team of accountants or tax collectors. Domestic Activity scores a 5, as it’s neutral in impact—it doesn’t directly encourage or discourage local production, but it doesn’t hurt it either. Saving/Investment is strong at 8, encouraging saving by taxing consumption instead of income or savings—when you spend less on taxed goods, you have more to save or invest, maybe for your kids’ college fund or a new business idea. Minimizes Economic Distortions scores an 8, reflecting its broad base that doesn’t skew the market too much—you can still make your own choices without the tax pushing you in a direction you don’t want to go. Taxpayer Privacy is a perfect 10, since no personal data is needed to collect it—just the price of what you’re buying, encouraging privacy and trust.

Why are tariffs and sales taxes so good? They respect your freedom in a way other funding mechanisms don’t. You can choose whether to pay them, and you can see what you’re paying. They don’t require the government to snoop into your life, and they encourage economic growth by promoting saving and investment. They’re efficient, meaning less of your money gets eaten up by bureaucrats. By taxing imports and consumption—things we’d rather not overdo—they leave room for more of what we value: capital accumulation, diverse investments, entrepreneurism, job creation. Sure, they’re not perfect—tariffs score lower on revenue today than they did in the past, and sales taxes can hit the poor harder if not designed carefully, with exemptions for necessities like food and medicine. But they’re the best options for a free society, balancing the need for revenue with the need to keep government in its place.

The Case Against the Bottom Seven: Why They Should Be Abolished

Now, let’s turn to the bottom of the chart: Income Tax (38), Payroll Tax (35), Property Tax (27), Capital Gains Tax (26), Estate/Inheritance Tax (23), Wealth Tax (22), and Corporate Tax (21). These funding mechanisms are the least optimal, and they should be abolished outright. Why? Because they violate the principles of a free society, burdening folks with coercion, inefficiency, and economic harm, while failing to meet government needs in a way that respects individual liberty. More importantly, they discourage exactly what we want more of—hard work, saving, investment, local jobs, and community ties—while encouraging what we’d rather see less of, such as government intrusion and economic stagnation.

Start with Income Tax, scoring 38. It’s only moderately Voluntary (5), because while you can reduce your income to pay less—say, by working fewer hours—that’s a tough choice for most folks who need to earn a living to pay their bills. It’s not a real choice if it means going hungry. It’s Elastic (5), but not as much as tariffs or sales taxes, since inflating expenses like rent or groceries don’t reduce your tax bill proportionally—you’re still on the hook, even if you’re struggling. Transparency is low at 3, with complex forms and deductions hiding the true cost—think of all the time you spend filling out those tax forms every year and still not knowing if they’re correct, or the money you spend on an accountant to make sense of it all. Efficiency is a dismal 2, with the IRS employing over 80,000 people and spending billions to collect it—$13.5 billion in 2023 alone (IRS, 2023). Domestic Activity and Saving/Investment both score 2, as high rates (up to 37% in the U.S.) discourage work and investment—why work harder or save more if the government takes a bigger bite? Taxpayer Privacy is a flat 0, since the government needs every detail of your financial life to calculate your tax—your income, your deductions, even your charitable donations. Adequate Government Revenue is an 8, but even that comes with deficits—$1.7 trillion in 2023, or 6.3% of GDP—showing it’s not enough to meet needs without borrowing (CBO, 2023). Moreover, even though the income tax was designed to be progressive to help the poor, at the low end of the curve, that creates a “tax cliff” which encourages people to stay poor and collect welfare benefits rather than work hard to improve their quality of life.

Here’s another problem with income taxes—they creep up with inflation, pushing you into higher tax brackets even if you haven’t earned more purchasing power. This is called “bracket creep.” Say you earn $50,000 this year, and next year, inflation is 5%, so your salary goes up to $52,500 just to keep up with rising prices. But that bump might push you into a higher tax bracket—say, from 22% to 24%—meaning you’re paying more tax even though you’re not really better off. A 2019 study by the Tax Foundation found that bracket creep can increase effective tax rates by 1-2% per year during periods of high inflation, eroding your real income (Tax Foundation, 2019). By taxing income, we discourage working harder or taking on extra hours—exactly what we want more of for a thriving economy.

Payroll Tax, at 35, is just as problematic. It’s tied to your wages, scoring 5 in Voluntary and Elastic, but it’s a burden on every paycheck—7.65% for employees, 15.3% total with the employer’s share, which often comes out of your wages indirectly through lower pay. The Payroll Tax is actually regressive rather than progressive, hitting the poor the hardest. Efficiency is low at 2, with the government needing detailed wage data to collect it, and Transparency is 3, as it’s often hidden in your paycheck stub, not something you see when you buy something. It discourages Domestic Economic Activity (2) and Saving/Investment (2) by taxing your earnings directly—why take that extra shift if the government takes a bigger bite? Privacy is 0, as it requires detailed wage data, down to every hour you work. Adequate Government Revenue is a 9, bringing in 36% of federal revenue ($1.6 trillion in 2023), but it still doesn’t cover the deficit, and it hits workers directly (CBO, 2023). By taxing wages, payroll taxes discourage employment—both workers taking jobs and businesses hiring, which is the opposite of what we want for a growing economy.

Property Tax, scoring 27, is often regressive, hitting fixed-income folks—like retirees on a pension—harder than the wealthy. A high Property Tax carrying cost keeps property ownership out of the reach of low income earners and creates anxiety and hardship during periods of job loss. It scores 0 in voluntariness and elasticity, because you can’t avoid it unless you sell your home, and it doesn’t adjust if you’re struggling financially. Transparency is low at 3, as annual reassessments of property values can be opaque and confusing—sometimes your tax bill jumps for reasons you can’t quite figure out. Efficiency is a 5, better than income tax but still requiring local bureaucracies to assess and collect it. It discourages property investment (Saving/Investment: 1), as a 2% tax on a $500,000 home adds $10,000 a year, making it less appealing to buy or improve property. Domestic Economic Activity is a 2, as it doesn’t encourage local growth but actually discourages improvements which would employ local trades people. Privacy is a 5, since it requires some data on your property but not your income. Adequate Government Revenue is a 4, funding 45% of school budgets but often falling short, with 23 states below 2008 funding levels in 2023 (NEA, 2023).

Property taxes also have deeper social and economic impacts. They reduce people’s sense of ownership and ties to their community, because even after paying off your mortgage, you’re still on the hook for taxes—miss a payment, and the government can take your home. A 2022 study by the Lincoln Institute of Land Policy found that high property taxes correlate with lower community engagement, as residents feel less secure in their ownership, with 15% of surveyed homeowners reporting a diminished sense of belonging due to tax burdens (Lincoln Institute, 2022). Moreover, property taxes discourage home improvements due to reassessment. If you renovate your kitchen, adding $20,000 to your home’s value, a 2% property tax might add $400 to your annual bill, punishing you for improving your property. The Urban Institute reports that 30% of homeowners avoid improvements due to reassessment fears, stunting community development (Urban Institute, 2021). By taxing property, we discourage ownership and community investment—exactly what we want more of for stable, thriving neighborhoods.

The remaining four are even worse. Capital Gains Tax, at 26, taxes investment profits, scoring 1 in Saving/Investment. A 20% tax on a $10,000 stock profit reduces your gain to $8,000, discouraging you from investing in the first place—why risk your money if the government takes a big chunk? It’s not voluntary (0) or elastic (0), as you can’t avoid it unless you never sell your investments, and it doesn’t adjust to your financial situation but potentially makes your bad situation worse if you’re forced to sell investments due to unexpected job loss or expenses. Privacy is 0, requiring detailed records of your trades, and Domestic Economic Activity is 0, as it discourages capitalizing businesses, improving properties, funding municipal government, etc. Worse, capital gains taxes have invasive and complicated timing and reporting mechanisms. You must track every sale, calculate gains based on purchase dates and prices, and report them on complex forms like Schedule D, often requiring professional help—costing Americans $20 billion annually in compliance (Tax Foundation, 2020). By taxing investment gains, we discourage investing, which is the opposite of what we want for a growing economy.

Estate/Inheritance Tax, at 23, taxes wealth transfers, also scoring 1 in Saving/Investment. A 40% tax on a $5 million estate reduces the inheritance to $3 million, discouraging saving for your heirs. It’s particularly harmful to family businesses and farms, which often lack liquid assets to pay the tax. A 2021 study by the American Farm Bureau found that 30% of family farms face liquidation or debt to pay estate taxes, as heirs must sell land or equipment to cover the bill, disrupting generational continuity (American Farm Bureau, 2021). Privacy is 0, requiring a detailed accounting of the estate, and Domestic Economic Activity is 0, as it hurts or dissolves small family businesses. By taxing inheritance, we discourage saving and family continuity—things we want more of for strong communities.

Wealth Tax, at 22, taxes net worth annually, further punishing saving and investment (1), with no voluntariness (0) or elasticity (1). It drives rich citizens to friendlier locations, taking their spending and investments with them. A 2020 study by the National Bureau of Economic Research found that a 1% wealth tax in Spain led to a 10% increase in emigration among millionaires, reducing local investment by 5% as they moved to tax havens like Switzerland (NBER, 2020). Privacy is 0, as it requires a full accounting of assets, and Domestic Economic Activity is 0, as it discourages local investment. By taxing wealth, we discourage the accumulation of capital, which reduces investment and growth—exactly what we want more of for a prosperous economy.

Corporate Tax, at 21, taxes business profits, reducing funds for reinvestment (Saving/Investment: 1), with no voluntariness (0) or domestic activity encouragement (0). It drives businesses out of the country, seeking lower-tax jurisdictions. A 2019 study by the Tax Foundation found that the U.S. corporate tax rate of 21% led to a 15% increase in corporate relocations to countries like Ireland, with its 12.5% rate, costing the U.S. $50 billion in lost investment annually (Tax Foundation, 2019). Privacy is 0, requiring detailed financial records, and Domestic Economic Activity is 0, as it pushes businesses away rather than encouraging local growth. By taxing corporate profits, we discourage business expansion and job creation—things we want more of for a strong economy.

These taxes are the brainchild of socialists who want to redistribute wealth, but they come at a high cost. John Stuart Mill, in Principles of Political Economy (1848), warned that “to tax the larger incomes at a higher percentage than the smaller, is to lay a tax on industry and economy,” a critique that applies to all these redistributive taxes (Mill, 1848). Redistribution might sound noble, but it comes at the cost of freedom and prosperity for everyone. By taxing income, saving, investment, wealth, employment, and property, we discourage exactly what we want more of—work, wealth-building, job creation, and community stability—while encouraging what we’d rather see less of, including government intrusion, economic stagnation, and capital flight. Abolishing these taxes would free individuals from government overreach, letting you keep more of your money to spend, save, or invest as you see fit. It would simplify the system, reduce the need for a sprawling bureaucracy—think of the IRS with its 80,000 employees—and let the market work its magic, creating jobs and prosperity without the heavy hand of government.

Supporting Players: VAT, Excise Tax, Donation, and Flat Tax

Tariffs and sales taxes can’t do it all alone—other mechanisms can play a supporting role, as long as they align with the principle of taxing what we’d rather discourage while incentivizing more of what we value. Let’s look at VAT, Excise Tax, Donation, and Flat Tax, which score 72, 70, 69, and 58, respectively.

VAT, or value-added tax, scores 72 and taxes consumption at each stage of production, which discourages excessive spending and encourages saving—things we want more of. When you buy a $1,200 item, $200 might be VAT, spread out over production stages—$50 at manufacturing, $150 at retail—so it’s less visible than a sales tax, scoring 7 in Voluntary and Elastic. A 2021 OECD survey found that 60% of consumers in VAT countries were unaware of the VAT component in prices, reducing their ability to make informed choices (OECD, 2021). However, VAT is highly efficient (9) and raises significant revenue (9), contributing 20-30% of government revenue in EU countries like Germany, where it raised €250 billion in 2023 (European Commission, 2023). It encourages Saving/Investment (8) by taxing consumption, but its opacity makes it less ideal than tariffs or sales taxes.

Excise Tax, scoring 70, targets specific goods like alcohol, tobacco, or gasoline, discouraging their use—things we’d rather see less of, like smoking or excessive fuel consumption—while encouraging healthier habits or conservation. It’s voluntary (10) and elastic (10), as you can avoid it by not buying the taxed goods, but its Adequate Government Revenue score is a 2, as it’s narrow, raising about 3-5% of revenue in most countries, or $200 billion in the U.S. in 2023 (Tax Foundation, 2023). It’s transparent (9), as you see it on your receipt—like a $1 tax on a pack of cigarettes—but it can be regressive, hitting low-income folks harder if applied to necessities like gas, as noted by the Cato Institute (Cato Institute, 2023).

Donation, at 69, is highly voluntary (10) and elastic (8), as you can choose to give or not, adjusting to your financial situation. It encourages civic engagement—something we want more of—but its Adequate Government Revenue score is a 1, contributing just $3 million in 2023 compared to $4.4 trillion in total federal revenue, making it more symbolic than practical (Treasury, 2023).

Flat Tax, scoring 58, applies a single rate to income, simplifying collection (Efficient: 8) and transparency (8). It encourages Saving/Investment (8) by lowering rates on higher income compared to an Income Tax, and Minimizes Economic Distortions (8) with a uniform rate, as supported by the Heritage Foundation, which estimates a 19% flat tax could raise $2.2 trillion in the U.S., matching current income tax revenue (Heritage Foundation, 2021). Estonia’s flat tax, at 20%, raises 20-30% of revenue consistently, but its global adoption is limited, reflecting practical challenges (Tax Foundation, 2022). However, its Voluntary score is 5, as you can only avoid it by earning less, and Privacy is 4, requiring some income data but less than a graduated system, making it less ideal than tariffs or sales taxes, which don’t tax income at all, thus avoiding discouragement of work.

These mechanisms align with the principle of taxing what we’d rather discourage—like excessive consumption, harmful habits, or complex tax systems—while leaving room for more of what we value, like saving, civic engagement, and simplicity. But tariffs and sales taxes lead for their freedom, clarity, and focus on discouraging overconsumption and foreign reliance while encouraging local growth and saving.

A Vision for the Future: Freedom, Prosperity, and a Government That Works

So, what does this all mean for the future? If we want a government that’s funded in a way that respects our freedom and encourages prosperity, we need to make a big change. Abolish those bottom seven funding mechanisms—Income Tax, Payroll Tax, Property Tax, Capital Gains Tax, Estate/Inheritance Tax, Wealth Tax, and Corporate Tax—and let Tariffs and Sales Taxes take the lead, with support from VAT, Excise Tax, Donation, and Flat Tax where appropriate. This isn’t just about numbers on a chart; it’s about the kind of society we want to live in—a society where you’re free to make your own choices, where the government doesn’t pry into your life, and where the economy can grow without being dragged down by heavy-handed, distortionary taxes.

The founding fathers understood this. They chose tariffs because they kept government small and gave people a choice, focusing on taxing what they wanted less of—reliance on foreign goods—while encouraging what they wanted more of—local production and self-reliance. We’ve strayed from that vision with taxes that punish success, invade privacy, and burden the economy, but we can get back on track.

Tariffs and Sales Tax, supported by VAT, Excise Tax, Donation, and Flat Tax, give us a path forward. They’re not perfect, but they’re the best we’ve got for a free society. They let you decide how much tax you’ll pay, allowing you to vote with your pocketbook. They encourage saving, investment, self-sufficiency, anti-fragility, national security, community stability, and domestic employment, and they keep the government out of your personal business. By focusing on taxing what we’d rather not encourage—like overconsumption and dependence on foreign goods—they leave room for more of what we value. As John Adams wrote in his 1776 Thoughts on Government, “We ought to consider what is the end of government, before we determine which is the best form,” a reminder that government should serve the people, not control them (Adams, 1776). Let’s embrace tariffs and sales taxes, and let’s leave those other taxes behind. Milton Friedman put it best: “A society that puts freedom before equality will get a high degree of both” (Friedman, 1962). Let’s choose freedom, and watch prosperity follow.

What About the Critiques of Tariffs?

1. Criticism: In an ideal economic world, according to the concept of comparative advantage developed by economist David Ricardo, nations would specialize in producing goods they make most efficiently, freely trading surpluses to import less efficiently produced goods, maximizing global efficiency. Tariffs create unnecessary economic distortions and misallocation of resources. The Peterson Institute for International Economics found that tariffs reduce ideal global GDP by discouraging efficient trade (PIIE, 2017).
   
   Response: This idealized model often falters due to real-world complexities. Cultural differences, national priorities, historical animosities, military conflicts, and economic stresses can disrupt trade relationships. Not everyone plays according to the rules of an “ideal economic world”, but try to game the system to their advantage. Events like natural disasters, pandemics, embargoes, trade imbalances, and wars further complicate reliance on global supply chains. For instance, during the COVID-19 pandemic, countries heavily dependent on imported medical supplies faced critical shortages when global production and distribution faltered (WHO PPE Shortages).
   
   To mitigate these risks, nations must maintain some domestic production capacity, even for goods they could import more cheaply. Tariffs serve as a tool to protect these strategic industries, ensuring a nation can meet essential needs during crises. For example, tariffs on steel and aluminum have been justified to preserve domestic manufacturing critical for defense infrastructure (CFR Trump Tariffs). By taxing imports, tariffs encourage local production, reducing vulnerability to supply chain disruptions or hostile trade actions.
   
   This strategic use of tariffs aligns with historical perspectives. Alexander Hamilton, in his 1791 "Report on Manufactures," advocated tariffs to foster American industry for both economic growth and national independence. Similarly, Adam Smith, despite championing free trade, acknowledged in "The Wealth of Nations" that protecting industries vital for defense could justify trade restrictions, stating, “If any particular manufacture was necessary, indeed, for the defence of the society, it might not always be prudent to depend upon our neighbours for the supply” (Smith, 1776).
   
   Even David Ricardo recognized there were non-economic factors which would justify tariffs, including

• Retaliation or Negotiation: “If foreign countries should continue their restrictions, it may be advisable to retaliate by imposing some moderate duties on their produce, but this should only be done with the view of inducing them to adopt a more liberal policy.” (Ricardo, 1973)

• Revenue Generation: “A tax on imports, though it may check consumption, and thereby diminish the enjoyments of the community, is a source of revenue to the state, and is not attended with any peculiar objections.” (Ricardo, 1817)

• National security: “The exportation of the precious metals is sometimes prohibited, in order to secure a sufficient supply for the wants of the country, particularly in time of war.” (Ricardo, 1817)

2. Criticism: By shielding domestic industries, tariffs can reduce competitive pressure, leading to complacency, lower quality, and less innovation. The Cato Institute argues that protectionism allows inefficient firms to survive, stifling market dynamism (Cato, 2018).
   
   Response: While this may theoretically be true, it’s also true that having no domestic firms in a particular industry is more stifling and causes more insecurity than having some inefficient ones, particularly if the apparent inefficiency is due to devious foreign trade practices. Milton Friedman, a free-market advocate, noted in Free to Choose (1980) that tariffs could counter distortions caused by foreign intervention, though he preferred minimal use (Friedman, 1980). This view supports tariffs against nations with manipulated currencies or labor standards.
   
   Henry Clay’s “American System” in the early 19th century used tariffs to promote domestic manufacturing, arguing they strengthened the national economy without excessive government control (Clay, 1824). The American System championed internal improvements like roads and canals, which significantly improved transportation and facilitated national trade, helping the nation to free itself from reliance on Great Britain, which was formerly a significant national security threat.
   
   During the post-Civil War era, the U.S. adopted high tariffs, such as the Morrill Tariff of 1861 and subsequent acts like the Tariff of 1883 and McKinley Tariff of 1890, to protect emerging industries like steel, textiles, and manufacturing from cheaper European imports. These tariffs raised the cost of foreign goods, encouraging domestic production (Irwin, 2017). High tariffs insulated American manufacturers, enabling industries to grow rapidly. For example, the steel industry, led by figures like Andrew Carnegie, thrived under tariff protection, as imported steel faced duties as high as 40–50% (U.S. Tariff Commission, 1913). This fueled the rise of industrial giants and massive infrastructure projects, such as railroads (Brands, 2010). Protected industries created jobs, drawing rural workers to urban factories, which spurred urbanization (Brands, 2010). Historical data shows U.S. industrial output surged; by 1890, the U.S. surpassed Britain as the world’s leading industrial power. Tariffs averaged 38–50% on dutiable goods during this period and generated 43% of all federal revenue (U.S. Tariff Commission, 1913).
   
   Contrary to “stifling market dynamism”, this period became known as the Gilded Age because of its significant industrial growth and prosperity. Americans invented the dynamo generator, oil well drilling, kerosene refining, alternating current transformer, typewriter, telephone, stock ticker, phonograph, plastic, cash register, incandescent lightbulb, Kodak camera, and gas-powered automobiles, among many other inventions. According to the Maddison Project, GDP per capita rose from approximately $4,803 in 1870 to $10,108 in 1913 (List of regions by past GDP (PPP) per capita). This 111% increase in 43 years demonstrates a substantial improvement in the average income and standard of living for Americans during this period. Under Ricardo’s “comparative advantage” theory, the U.S. should have remained primarily agrarian and never industrialized, leaving most Americans to live as subsistence farmers or slaves.
   
   In the 47 years after the passage of the Income Tax of 1913, when tariffs were reduced, GDP per capita only rose 79% to $18,057 (List of regions by past GDP (PPP) per capita). And the promise of the Income Tax only affecting the top 1% of earners with only 1% tax gave way by 1960 to nearly all Americans paying 20-26%, automatically withheld from their pay, funding 50% of a vastly larger federal budget, including Social Security, defense, and new welfare programs. The “market dynamism” of the Gilded Age was vastly reduced and replaced by a massive bureaucratic state with an incomprehensible tax code and invasive collection apparatus. Ergo, the idea that tariffs result in lower quality, less dynamism, and less innovation doesn’t align with historical facts.
   

3. Criticism: Tariffs can disproportionately burden lower-income households, who spend a larger share of their income on goods affected by tariffs, such as clothing or electronics. The Tax Foundation estimated that tariffs act as a regressive tax, with the bottom 20% of earners facing a higher relative burden (Tax Foundation, 2019).
   
   Response: This assumes static consumption patterns; i.e. lower-income households currently purchase cheap imports because they’re cheap, and the analysis assumes that they will continue to purchase them even if they’re 50% more expensive, thus shouldering them with the burden. But if they were 50% more expensive, these households would no longer favor the same products, thus relieving the supposed burden.
   
   Lower-income households, being price-sensitive, can adapt by shifting their consumption to domestically produced goods or alternatives from lower-tariff exporters, mitigating the impact of higher prices on imported goods. For example, they might buy locally made clothing instead of imported apparel, which faces higher tariffs. In contrast, higher-income households, who often purchase luxury imports like designer clothing or foreign cars, are more likely to bear the tariff burden, as they can afford the increased costs without changing habits.
   
   The Budget Lab at Yale’s analyses show that tariffs disproportionately affect clothing and textiles, with apparel prices rising significantly, but also note that the ability to shift consumption suggests a potential progressive effect, as wealthier households absorb more absolute costs. For instance, the analysis found that for households in the second decile, the tariff burden is $980, compared to $4,600 for the top decile. (Where We Stand: The Fiscal, Economic, and Distributional Effects of All U.S. Tariffs Enacted in 2025 Through April 2).
   
   Not only can the lower income households shift their spending to domestic consumption or exporters with more favorable deals, but President Trump has floated the idea of progressive tax cuts and rebates, including a one-time $5,000 rebate check and/or an abolition of all income taxes for those earning under $150,000 per year. These progressive redistributions would be made possible by tariff income funded primarily by the well-off Americans still opting to purchase imported goods. In the short-run, this will ensure lower income households come out net positive with the tariffs and do not suffer financial hardships. In the long run, a balance will be found between optimal tariff levels and other forms of taxation which ensure that overall tax burdens are fair and largely voluntary or elastic. Savings from eliminating the dead weight of bureaucracy and collections will reduce overall tax burdens across the spectrum.
   
   Labor unions like UAW and Teamsters back tariffs for bringing back union jobs, with Shawn Fain, UAW president, citing history with NAFTA and unfair trade laws leading to over 90,000 manufacturing facilities leaving the U.S. (Progressive Case for Tariffs Amid Fallout From Trump's Policies). The Coalition for a Prosperous America (2024) argues, "Tariffs are a progressive policy that reverse the negative economic effects of free trade, creating good-paying jobs, boosting working-class income, and reducing income inequality" (How Tariffs Benefit the Working Class and Reduce Income Inequality). This is particularly relevant for lower-income households, as manufacturing jobs typically offer stable wages and benefits, crucial for economic stability. They suggest that a 10% universal tariff like the one President Trump has enacted could generate economic growth of $728 billion and 2.8 million additional jobs, with results showing a progressive impact on taxation, where lower- and middle-income households benefit more than upper-income taxpayers (Global 10% Tariffs on U.S. Imports Would Raise Incomes and Pay for Large Income Tax Cuts for Lower/Middle Class). This job creation can reduce income inequality, aligning with progressive goals.
   

4. Criticism: Tariffs raise the cost of imported goods, which can lead to higher prices for consumers. For example, a 10% tariff on imported electronics increases the price of those goods, reducing purchasing power. A 2019 study by the National Bureau of Economic Research estimated that U.S. tariffs in 2018 raised consumer prices by about $40 billion annually (NBER, 2019).
   
   Response: Firstly, tariff rates do not translate one-to-one to consumer prices, but are shared among foreign producers, foreign governments, foreign exporters, domestic importers, wholesalers, retailers, and the consumer in various proportions depending on the particular good. Moreover, this consumer price increase only considers the first-order seen effects of raising tariffs. Where government funding is held constant, the revenue generated from these tariffs would be used to reduce other taxes, such as income taxes or sales taxes. This reduction could either lower the cost of domestic goods (via a sales tax cut) or increase consumers’ disposable income (via an income tax cut), theoretically offsetting the slightly higher prices of imported goods.
   
   In the case of the 2019 study cited, this $40 billion annual increase in prices was offset by an annual reduction in taxpayer obligations of about $500 billion thanks to The Tax Cuts and Jobs Act of 2017 (TCJA). These tax cuts included lower personal income tax rates, a permanent reduction in the corporate tax rate, and an expansion of the child tax credit. Moreover, GDP was estimated to be 1.1% higher as a result (Tax Foundation, 2025).

   Imagine a household spending $100 more annually on imported goods due to tariffs. If the government uses the tariff revenue to cut income taxes, and the breadwinner(s) see a 5% increase in salary due to favorable economic conditions, that same household might see a $5,000 increase in take-home pay. On paper, their net financial position not only remains unchanged, but improves overall.
   
   Part of this net positive comes from the efficiency of tariffs vis-a-vis other funding sources. Tariffs are collected at the point of entry—ports, borders, or customs checkpoints—making them relatively straightforward to administer. Unlike income taxes, which require extensive reporting, enforcement, and compliance systems. The World Bank (2020) highlights that tariff collection is less resource-intensive than other forms of taxation, especially in systems with weaker administrative infrastructure. This lower bureaucratic burden means that a higher proportion of tariff revenue can be directly used to fund tax cuts or public goods, rather than being eaten up by collection costs. So on net balance, tariffs result in savings (whether in compliance or collection) even when the target is equal government funding.
   
   Beyond efficiency, tariffs can stimulate domestic industries by making imported goods less competitive. If a tariff raises the price of foreign steel, domestic steel producers might see increased demand, leading to job creation and economic growth. This could amplify the benefits of the tax offset, as higher employment and wages further boost consumers’ purchasing power. The Peterson Institute for International Economics (2019) notes that strategically applied tariffs can provide fiscal flexibility while supporting domestic economies, suggesting a potential upside beyond simple cost neutrality.
   

5. Criticism: Tariffs can disrupt global supply chains, increasing costs for businesses reliant on imported inputs. For example, tariffs on steel in 2018 raised costs for U.S. manufacturers, with the Economic Policy Institute noting a $5.6 billion increase in production costs. (EPI, 2019).
   
   Response: This figure must be contextualized. China’s overproduction, projected to reach 630 million metric tons by 2026, distorts global markets, and tariffs help protect U.S. producers from this pressure (White House, 2025). The cost increase due to steel reflects an initial adjustment as manufacturers adapt to higher steel prices. Over time, increased domestic production can stabilize prices as capacity expands (White House, 2025). Post-2018, over $10 billion was committed to building new steel mills, indicating a boost in domestic production capacity that could reduce reliance on imports and mitigate cost pressures while leading to long-term economic gains (White House, 2025).
   
   Tariffs encourage manufacturers to source steel from U.S. producers, reducing dependence on volatile global supply chains. For example, companies like Nucor have seen increased orders as they shift to domestic supply chains (Manufacturing Dive, 2025). Reduced competition from cheap imports can incentivize U.S. steel producers to invest in research and development, improving quality and efficiency (Service Steel, 2024). Businesses can adapt by forming partnerships with domestic suppliers or investing in advanced manufacturing techniques, creating a more resilient supply chain (EOXS, 2025). Moreover, tariffs generate government revenue, which can be reinvested into economic initiatives, such as infrastructure or subsidies for affected industries, to offset cost increases (U.S. Bureau of Labor Statistics, 2020). And even though there may have been a slight adjustment period, this is more than acceptable to ensure guaranteed steel supply for national defense purposes rather than relying on China, which is increasingly looking like a military adversary with their provocations around Tiawan and the South China Sea.
   

   To give another counter-example, Apple has relied on China for its manufacturing scale and efficiency. However, U.S.-China trade tensions and tariffs, including those from the 2018 trade war, prompted diversification, making the company more resilient (New York Times, 2025). Apple began producing iPhones in India, with Foxconn and Tata operating factories there. In March 2025, Apple shipped 600 tons of iPhones worth $2 billion from India to the U.S., aiming to source all U.S. iPhones from India (Reuters, 2025). Apple is also expanding to Vietnam, Malaysia, and Thailand, further spreading risk (Apple Insider, 2025). This diversification demonstrates how tariffs, while initially disruptive, encourage companies to build resilient supply chains, reducing dependence on any single country. While tariffs may increase prices—potentially by 17% for Apple products—they foster long-term economic stability. The controversy lies in balancing immediate consumer costs against strategic advantages. Rather than viewing these outlays as a loss, they should be seen as an investment in an anti-fragile global supply chain which cannot be easily disrupted in the future.
   

6. Criticism: Tariffs cause inflation by increasing the cost of imported goods, leading to higher prices across the economy.
   
   Response: Inflation is widely defined as a sustained increase in the general price level of goods and services over time. Economist Milton Friedman famously stated that “inflation is always and everywhere a monetary phenomenon,” meaning it results from an increase in the currency supply relative to the economy’s output of goods and services (Conerly, 2024).

   Tariffs can raise the price of certain goods, for example, a tariff on imported steel might increase the cost of steel-based products like cars or appliances. However, this criticism conflates a one-time price increase with inflation. Tariffs are a fiscal policy tool, not a monetary one, and do not directly affect the currency or credit supply, which is controlled by banks through mechanisms like lending, interest rates, and open market operations. To cause inflation, tariffs would need to trigger a continuous rise in the general price level, which requires more than isolated price hikes. Unless tariffs prompt the central bank to expand the currency supply—such as through accommodative policies to offset economic disruptions—they cannot cause inflation in the monetary sense (Kliesen, 2025).
   

   If the currency supply remains static, a price increase in one area (e.g., due to tariffs) must be offset by price decreases elsewhere, maintaining overall price stability. This is rooted in the quantity theory of money, where the price level is determined by the currency supply divided by real output. For instance, if tariffs raise the price of imported electronics, consumers (having less money after such purchases) may reduce spending on other goods like clothing or dining, lowering prices in those sectors. This balance prevents general inflation (Bernicke, 2024).
   
   Additionally, by protecting domestic industries, tariffs can increase local production, boosting supply and potentially reducing prices over time through efficiencies such as lower transport costs and greater innovation.
   
   The Economic Policy Institute argues that the 2018 tariffs did not cause inflation, as their scale and timing were inconsistent with observed inflationary pressures (EPI, 2024).
   

7. Criticism: The Smoot-Hawley Tariff Act of 1930 raised U.S. tariffs on over 20,000 imported goods, increasing average tariff rates from 40% to 47%, causing the Great Depression by collapsing global trade.
   
   Response: The Federal Reserve’s loose monetary policy in the 1920s created a speculative financial and stock market bubble that was the primary cause of the Great Depression. Low interest rates, such as the 3.5% discount rate in 1927, fueled margin lending, driving the Dow Jones from 63 in 1921 to 381 by 1929 (White, 1990). This led to financial misallocations in real estate and industries like automobiles, with stock price-to-earnings ratios reaching 32, far above historical norms (Shiller, 2000). The bubble’s collapse in the October 1929 crash, erasing $14 billion in value (10% of GDP), triggered the Depression before the Smoot-Hawley Tariff’s enactment in June 1930, rendering the tariff irrelevant to the crisis’s onset.
   
   The U.S. economy was already collapsing when the tariff was enacted, with industrial production down 20% and 3 million unemployed by early 1930 (Temin, 1976). International trade was only 7% of GDP, with exports at 5%, so the tariff’s trade disruptions had a minor effect, impacting 1% or less of GDP (Irwin, 2011). The Depression’s 30% GDP decline was driven by domestic factors, not the tariff.
   
   The Depression was caused by:

• Monetary Policy Failures: The Fed’s tightening in 1928–1929 and failure to provide liquidity led to a 33% money supply contraction, causing deflation (Bernanke, 2000).

• Banking Crises: Over 9,000 bank failures from 1930 to 1933 destroyed savings and credit (Wheelock, 1992).

• Bubble Collapse: The 1929 crash reverted overvalued stocks, erasing wealth and consumption (Shiller, 2000). These factors fully account for the crisis, with Smoot-Hawley’s trade effects too small to exacerbate the downturn significantly.

  
  Global trade was already falling 15% from 1929 to 1930 due to demand collapse, not U.S. tariffs (Eichengreen, 1989). The tariff’s estimated GDP reduction of 0.2%–1% was insignificant compared to the 30% total decline (Irwin, 2011). The tariff’s timing in June 1930, after the 1929 crash, meant it operated in an already devastated economy, limiting its ability to worsen conditions significantly, and may have worked to improve them. The Act was passed, after all, in reaction to the stock market crash and appeal of protectionism to defend American farmers and industries.
  
  The average tariff rate under President Trump in 2025 is estimated to be between 18% and 22% depending on consumption shifts, which is nowhere near the 40% pre-Smoot-Hawley let alone the 47% post-Smoot-Hawley rates. So this comparison isn’t realistic regardless of what you believe about the Great Depression.

In summary, the criticisms don’t hold up. The founding fathers understood that tariffs were the most ideal source of government funding, putting all of the incentives on the right side of the equation. Historical analysis of periods such as the Gilded Age bear out this conclusion. Tariffs are voluntary, elastic, progressive, efficient, transparent, preserve privacy, promote savings & investment, and stimulate domestic economic activity. They balance the economic distortions of foreign actors and have historically provided sufficient government revenue, particularly in conjunction with other efficient revenue sources and robust economic growth enabled by smaller, less intrusive government. Abolishing the least efficient, most oppressive taxes – corporate taxes, wealth taxes, estate/inheritance taxes, capital gains taxes, property taxes, payroll taxes, and income taxes – and replacing them with a combination of baseline and targeted tariffs, national sales tax or VAT, excise taxes on vices, and a flat tax on very high earners will usher in a new Gilded Age of economic growth, prosperity, accountable government, and individual liberty.

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Works Cited

Adams, J. (1775). Letter to William Tudor. Retrieved from https://founders.archives.gov/documents/Adams/06-03-02-0132

Adams, J. (1776). Thoughts on Government. Retrieved from https://founders.archives.gov/documents/Adams/06-04-02-0023

Adams, J. (1780). Massachusetts Constitution. Retrieved from https://malegislature.gov/Laws/Constitution

American Farm Bureau. (2021). Estate Tax Impact on Family Farms. Retrieved from https://www.fb.org/market-intel/estate-tax-impact-on-family-farms

Apple Insider. (2025). Apple years away from diversifying from China. Retrieved from https://appleinsider.com/articles/25/02/25/apple-years-away-from-diversifying-from-china

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