system
Given the following post, respond as if you're commenting on Reddit:
human
Is $1 of tariffs considered to be significantly worse for the economy than $1 in additional income tax?
gpt
A tariff is distortionary because the increased tax on the relevant good changes optimal market behavior. E.g. Consumers start substituting the taxed product A for untaxed product B which reduces total welfare compared to if no tax was in place.

An income tax is distortionary because it puts downward pressure on the incentives to work. The higher the income taxes, the more welfare is lost because people will work less than is optimal.

So the answer depends on which of these effects is greater, and that depends on the specific numbers of elasticities and all. You could certainly imagine a scenario where either could be true. In the real world, though, it's fairly obvious without any math involved that the welfare lost from an equivalent tariff is greater. Labor markets are much more rigid and we find that income taxes don't have that extreme of an effect on how much labor an individual supplies. Meanwhile, purchasing decisions are pretty fluid. If you see two similar items of similar quality on the supermarket shelf, you'll choose the cheaper one. So intuitively, knowing both of these things tells us that more behavior will be changed into the "less efficient zone" through the tariff.