Friday, January 27, 2017

Banging My Head Against a Wall

A Don Boudreaux letter to the Washington Post:

The Trump administration now says that the border wall will be paid for by a 20 percent tax on Mexican imports (“White House press secretary says border wall will be funded by 20 percent import tax on Mexican goods,” Jan. 26).
Because only people, not imports, pay taxes on imports – and because the people who pay the bulk of the taxes on imports are the people who buy the imports – and because the people who will buy the Mexican imports that the Trump administration will tax are Americans – the Trump administration’s plan will result in the bulk of the bill for the border wall being paid by Americans.
It’s true, of course, that this tariff will also harm Mexican producers by reducing their market share; many might go out of business as a result.  But make no mistake: if this scheme does manage to raise the billions of dollars necessary to pay for this wall, those dollars will overwhelmingly be extracted from the purses and pockets of Americans.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030 
The above originally appeared at Cafe Hayek

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