Trump steals from California’s poor (tariffs) and gives to the rich (tax cuts) | Opinion
Ever since President Trump announced his plan to levy tariffs on imported goods, I believed California’s low-income residents would be hurt more than the wealthy.
And now a UCLA tax law professor has an analysis that proves that point.
Writing recently in The New York Times, Professor Kimberly Clausing contrasted the tax cuts that Trump wants to keep in place vs. the tariffs he plans to impose soon on Mexico and Canada.
The Tax Cuts and Jobs Act of Trump’s first term provide the greatest benefit to the very wealthy, Clausing said.
An analysis by the nonpartisan Tax Policy Center finds that extending the tax breaks, as Trump now seeks to do, will be a major benefit to the top 1% of income earners. They will reap more than $70,000 as a result of the reductions. The middle class? Not so much. The median-income earners will get $1,000. And lower income earners will enjoy even less.
But those at the lower end of the income scale spend more proportionally on necessities than the rich, Clausing said. That’s why tariffs will be especially harmful to that economic class as a trade war makes prices go up.
“It is a mistake to imagine that the imports subject to tariffs are luxury goods like fine wines and sports cars,” Clausing said. She explains that “the tariffs threatened so far would fall instead on everyday household goods made in China, Canada and Mexico, along with steel and aluminum, which are used in a vast array of things Americans buy.”
Here is the key point about why Trump is pushing tariffs, according to the professor: “If a candidate announced a tax increase on the poor and middle class to fund a tax cut for the rich, voters would soundly reject that proposal. But tariffs wrap this fiscal switch in a veneer of nationalism.”
Poverty rate
Whether Trump’s first-term tax cuts actually get extended is up for grabs. Leaders in the Republican-controlled Congress are trying to make it happen, but the giant federal deficit — $36 trillion as of January — is an opposing force. Tax cuts mean less revenue for the federal government, which means a potentially bigger deficit.
One thing is certain, however: The San Joaquin Valley continues to have some of the lowest-income residents in the nation.
In Fresno County, 17.7% of residents live in poverty, according to the Census Bureau. In Kings and Tulare counties, the poverty rate is 17.5%; in Madera County, 18% are in poverty. Sacramento County, by comparison, has a poverty rate of 11.9%. In 2023, the national poverty rate was 11.1%.
A person is in poverty if he or she earns $15,000 or less annually. For a family of four, the income level is $32,150.
Here come tariffs
According to the Associated Press, Trump plans to tax imports from Mexico at 25% as well as most goods from Canada, with energy products such as Canadian oil and electricity being levied at a lower 10%. The tariffs are to go into effect in March.
AP reported that economists “say the cost of the taxes could largely be borne by consumers, retailers and manufacturers such as auto companies that source globally and rely on raw materials such as steel and aluminum that Trump is already, separately, tariffing at 25%.”
The president on Feb. 4 also imposed 10% tariffs on all goods from China. That rival nation “announced retaliation on about $21.2 billion worth of US exports at rates of 10 percent and 15 percent, to take effect on February 10,” said the Tax Foundation.
On Feb. 13 Trump announced a plan for reciprocal tariffs on any nation that taxes US imports. “It’s fair to all. No other country can complain,” he said. So the tariff war will expand even more.
No golden age
As Clausing indicates, tariffs are a form of taxation, even though Trump would never agree to that reality.
In fact, he has called tariff “the most beautiful word in the dictionary.”
By year’s end it will be clear just how beautiful Trump’s tariffs and tax cuts plans have worked out.
But it seems likely this year will not mark the “golden age of America” for the low-income residents of the San Joaquin Valley, or anywhere else for that matter.
