Dad Saves America ZeroHedge Debate: Should We Abolish Income Tax and Replace It With Tariffs?
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Feb 6, 2025 
In a lively debate, Noah Smith, an economics journalist with a PhD and author of "Noahpinion," and Peter St Onge, an Austrian economist and video creator, explore the radical idea of replacing income tax with tariffs. They dissect the potential economic benefits and the political dynamics of such a shift, including historical contexts and the moral implications of taxation. The conversation also touches on government spending, the complexities of tax structures, and the future of social safety nets, offering a thought-provoking look at America's fiscal landscape.
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Income Tax History
- The income tax, introduced in 1913, was initially meant for a small percentage of the population.
- Rates quickly escalated to 77% during World War I and even 91% in World War II, showcasing the tax's rapid expansion.
Twin Deficit Theory
- Twin deficit theory links government borrowing to trade deficits through interest rates.
- Increased government borrowing raises interest rates, attracting foreign capital and leading to a trade deficit.
Growth and Taxes
- US economic growth was higher during periods of high income taxes (1950-1980) than after taxes decreased (1980-present).
- This challenges the assumption that lower taxes always lead to higher growth.