Progressive, Regressive and Stupid

An extraordinarily simple scheme.

What do billionaires have in common with the working poor?

For their first $11,600 of earnings, both pay 10% in federal income tax. On the next tranche of income — $11,601 to $47,150 — everyone pays 12%. On the next — $47,251 to $100,525 — the tax for everybody is 22%.

So if you earn $100,000, your tax (before dedications) is $1,160 + $4,387 + $11,720 = $17,267. Your tax bracket is 22%, but because the lower tranches have lower rates, your net taxation is 17.3% of income. This holds true through all seven earnings brackets, the last of which is 37% for every dollar over $609,351.

Weirdly, and tragically, in a society where $3 million in annual income is common and $300 million is not especially uncommon, the tax rate never exceeds 37%. The ultra rich are not only not being soaked, but because their lawyers are better than your CPA, and because the bought-and-paid-for Congress protects them, they shelter untold riches offshore and in arcane trusts and shell companies. Soaked? It’s an April drizzle.

Nonetheless, the system is “progressive,” meaning everyone, rich or poor, pays the same rate for every tranche of earnings. The opposite is “regressive” — a levy, like sales tax, that charges a flat rate for everyone irrespective of wealth. It’s regressive because lower-income Americans pay a much higher percentage of their total income on sales taxes than the wealthy do.

The oft-floated “simple, fair” flat federal income tax would be even more horrendously regressive, sucking disproportionately on the teat of those who can barely make ends meet.

All of the foregoing is to explain Trump’s tariffs. He is such a numbskull, he actually seems to believe foreign money will flow across the border in such volume that we’ll be able to get rid of the income tax altogether.

But, as we know, he’s a blithering ignoramus. Tariffs are not in any way an overdue leveling of the playing field with foreigners who have supposedly been ripping us off. That’s a fool’s fantasy or just a lie. We will get not a single new penny from China or Germany or Japan or Canada or Mexico. Not a cent. The tariffs are paid by American importers, who will immediately raise prices on American consumers in order to pass along the added cost.

In other words, a new 10% or 20% or 50% consumption tax is as repulsively regressive as a tax can be. Trump’s stable genius scheme will not only crash the global economy and suck on the teat of ordinary Americans, it will suck away their economic lifeblood — his dopey MAGA base more than most. Billionaires won’t even notice, at least not until the economic earthquake that buries even them in the rubble.

No doubt Trump thinks a blow against progressive taxation is just another heroic assault — like those against DEI, big government, civil rights and abortion — on the ideologically progressive libs. Because among the subjects he cannot fathom is a word that has two meanings.

You know, like “simple.”