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Evan Hastings
ENC 1102
Professor Wolcott
18 November 2015
Literature Review
Research conducted on effects of taxes in the United States covers mostly the
citizens and communities within. Aside from the people and organizations of the United
States, there appears to be a research gap on the effects of taxes on international trade.
More commonly known as tariffs, taxes have effects on a global scale and there is not
quite sufficient evidence to back up exact effects. This conversation discusses the effects
taxes and tariffs have involving the United States and their citizens.
Effects of taxes on United States citizens: The implications taxes have on
individuals in the United States are seen everywhere. Whether that be in shopping or even
quality of life. Online shopping for example is not taxed unlike in store shopping. There
is legislation facing online shopping that would require an online sales tax for where the
business is located. This legislation would cause businesses to move to states with low
online sales tax and could harm online shopping (McDonald).
Location tax based incentives can effect both citizens as well as communities.
Location tax based incentives are used by local and state governments to lure businesses
to areas lacking in economic growth. This can have a positive effect on communities by
increasing land value but can negatively impact workers who may not even want to live
there (Reynolds).

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The health of Americans is also an issue addressed by taxes. Cigarettes are taxed
under the term sin taxes, which are taxes upon products or services that are considered
socially undesirable. The point of sin taxes are to discourage such behavior and also bring
in tax revenue (Perkins).
Effects of tariffs on United States trade: The United States imported $2.4
trillion in goods in the year 2014 alone (DeSilver). Every product that enters the United
States must be tariffed before it can find its place on the shelves of stores or in the homes
of Americans. However, there are instances where goods do not need to be tariffed due to
free trade agreements. For example, the North American Free Trade Agreement (NAFTA)
allows free trade between Canada, the United States, and Mexico on most imports and
exports. One example product that remains tariffed by NAFTA is Canadian slaughter
cattle. In 1999, the U.S. Department of Commerces Import Administration proposed a
ruling that would instruct the U.S. Customs Service to require cash deposits and/or bonds
totaling 4.73% of the value of imported Canadian slaughter cattle. The proposal was not
passed, however if it did pass, it would have affected import quantities of Canadian
slaughter cattle as well as U.S. and Canadian slaughter and feeder cattle prices (Brester
52). The effects of the tariff would also negatively impact Canadian cattle prices.
In the automobile industry, vehicles imported from overseas such as Japan are
tariffed and thus has an impact on car dealers in the United States. On June 28 1995, a
tariff on Japanese import vehicles was established and prompted Japan to reduce car
production. It would take 40 to 60 days for production to return to levels before the tariff.
As a result, the delay will put dealers under pressure to trim their staffs, letting sales and
support people go for the short term (Henderson A2).

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Project Proposal: It is known that tariffs affect price and quantity, we do not
know however, the implications a tariff would have on consumers. We talk more about
effects on whole governments/economies and not on individual people. In order to learn
the effects tariffs have on consumers we must conduct research on products that are
tariffed and sold to consumers. Usually, a tariffed item will cost more for consumers to
compensate for the tariff price. One can assume that when comparing two very similar
products, one tariffed and one not, the consumer will choose the cheaper option which
would be the product that has not been tariffed. This is only an assumption and if true, we
still do not know the exact percentage of consumer choices. This can only be done
through research of products that receive a new tariff and examine the change in demand
of the product after the tariff.
Researchers and professors of economics should be encouraged to look into the
effects tariffs have on a smaller scale. Researchers first need to begin by observing
products with and without tariffs. Researchers then need to observe consumer behavior
when it comes to products with and without tariffs. Lastly, researchers need to observe a
product that has no tariff and later receives one and also observe consumer behavior. This
will give students of business and economics a clearer view of research.

Works Cited
Brester, Gary W., John M. Marsh, and Vincent H. Smith. "The Impacts on U.S.

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and Canadian Slaughter and Feeder Cattle Prices of a U.S. Import Tariff on
Canadian Slaughter Cattle." Canadian Journal of Agricultural Economics 50.1
(2002): 51-67. Academic Search Premier [EBSCO]. Web. 5 Nov. 2015.
Desilver, Drew. "With Trade on Congress Agenda, Just What Does the U.S.
Henderson, Angelo B., and Gabriella Stern. "Dealers Brace for Layoffs, Sparse Lots as
Tariffs Loom." Wall Street Journal 225.112 (1995): A2. Academic Search
Premier [EBSCO]. Web. 5 Nov. 2015.
Import and Export?" Pew Research Center RSS. N.p., 18 May 2015. Web. 04 Nov. 2015.
McDonald, Dustin. "Online Sales Tax Legislation." Government Finance Review 1 Apr.
2015: 50-52. Academic Search Premier [EBSCO]. Web. 27 Oct. 2015.
Perkins, Rachelle Holmes. "Salience and Sin: Designing Taxes in the New Sin Era."
Brigham Young University Law Review 2014.1 (2014): 143-84. Academic
Search Premier [EBSCO]. Web. 25 Oct. 2015.
Reynolds, Lockwood C., and Shawn Rohlin. "Do Location-Based Tax
Incentives Improve Quality Of Life And Quality Of Business
Environment?" Journal of Regional Science 54.1 (2014): 1-32. Academic Search
Premier [EBSCO]. Web. 13 Oct. 2015.

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