On Tuesday’s broadcast of the Fox Business Network’s “Bottom Line,” Sen. Ron Johnson (R-WI) stated that using tariffs as leverage to get countries to cooperate on the border is sensible, “I’m not sure how” you use them to replace the income tax and a 10% tariff wouldn’t be enough to do that.
Co-host Dagen McDowell said, [relevant remarks begin around 2:55] “Peter Navarro…was talking about tariffs to structurally shift the American economy from one over-reliant on income taxes and the Internal Revenue Service to one reliant on tariff revenue and the External Revenue Service. That’s something that’s going to fall on the House and the Senate when you cobble together a tax reform bill…where, some of it — much discussion about this — some of it could be a flat tariff across the board to raise revenue from foreign companies and importers.”
Johnson responded, “We import something like 4 to 5 trillion dollars, I think it’s closer to 4 trillion. A 10% tariff on $4 trillion is $400 billion. Our income tax raises a whole lot more than that. So, I’m not sure how you replace one with the other. I certainly want to simplify and rationalize our tax code, those types of — which is by and large a consumption tax, is a simple system, but, again, the numbers have to add up here.”
He continued, “So, I’m for a three-step reconciliation process. Let’s give President Trump the funds he needs to secure the border. I would do a second step by just extending current tax policies so we take a massive automatic tax increase off the table for 2026. And then let’s take our time and get our tax system simplified, rationalized, and whatever we do, make it permanent. We didn’t do that the last time. That was a big mistake, which is why we’re facing this massive tax increase that’s going to go into effect automatically if we don’t act.”
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