alt Hacker News> You indirectly pay for import taxes every time your companies import raw materials needed to finish their goods (added value) and then that final value (cost of import + added value) has its own sales tax.
This isn't really any different than any other kind of taxes. You pay income tax and then pay sales tax using the money that was already taxed as income. The construction company pays sales tax when it buys a backhoe, which increases construction costs and therefore real estate prices, and then you pay property tax on the higher real estate prices, and make the bigger mortgage payment with money that was already taxed as income.
The only way you'd really get something different with tariffs is if the supply chain for some product passes through the local country multiple times, i.e. it gets imported, exported and then imported again. Which probably happens occasionally but isn't the common case.
Meanwhile how many times something is taxed isn't really the relevant thing. It's, how much in total are you paying in taxes? If you pay ~10% three times, that's not really any worse than paying ~33% once. It is, of course, worse than paying 10% once.
> This isn't really any different than any other kind of taxes. You pay income tax and then pay sales tax using the money that was already taxed as income
It definitely does make a huge difference. From sibling comment I got to know US does not even have VAT. It only makes the situation worse as the businesses operating in US cannot offset input credits against their output liability as Sales Tax has no such concept. So you are paying tax-on-tax-on-tax all the way to your raw materials that have been imported APART from paying tariffs. No wonder prices are so jacked up in US and to compensate that, you all have inflated salaries. The US Government is fleecing its citizens dry. Please study how VAT/GST works in EU/India/Australia and compare it with Sales Tax regime in US and you will know why Sales Tax is so bad.
> Meanwhile how many times something is taxed isn't really the relevant thing. It's, how much in total are you paying in taxes? If you pay ~10% three times, that's not really any worse than paying ~33% once. It is, of course, worse than paying 10% once.
You are not paying 10% three times. Assuming raw material was imported at $X + %10 of $X (tariff is 10%), value add was say $10, then the IRS is collecting say sales tax of 10% of the total value: 10 % of (($X + %10 of $X) + $10). Now this is just the simplest chain where raw material -> imported by manufacturer -> sold directly to consumer. But that is not how it is done. You typically buy from a retailer who buys from a dealer who buys from a wholesaler/manufacturer. So that would be 10% every time ON THE FULL VALUE (not just on value added).
To demonstrate a simple raw material -> imported by manufacturer with value added -> sold to dealer/distributor -> sold to retailer -> sold to customer, this is what it would look like:
1. Imported by manufacturer:
$X + %10 of $X
2. Value added ($10) and sold to dealer/distributor:
10 % of (($X + %10 of $X) + $10)
3. Dealer stocking/shipping charges added (say $10 again) and sold to retailer:
10% of (10 % of (($X + %10 of $X) + $10) + $10).
4. Retailer stocking/service charges added (say $10 again) and sold to consumer:
10% of (10% of (10 % of (($X + %10 of $X) + $10) + $10) + $10).
The longer the chain, the more tax-on-tax you are paying (in some cases the total final tax can even go above the actual cost of making the product). This nonsense is solved by VAT/GST where the tax you pay for acquiring raw material or processed inputs comes back to you as input credits, which you can use to offset your output tax liability. There is no compounding of tax in VAT/GST.
EDIT: added an example for more clarity