President Donald Trump revealed his plan to replace individual income taxes with the revenue from tariffs on foreign goods, vowing that Americans “won’t have income tax to pay” in the “not too distant future.”
Throughout his 2024 presidential campaign, Donald Trump repeatedly pledged to eliminate federal income taxes – a bold and controversial promise that stirred both enthusiasm and skepticism.
“It’s time for the United States to return to the system that made us richer and more powerful than ever before,” the POTUS earlier pledged, per Fox Business. “Instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens.”
‘Why not?’
In a conversation with podcaster Joe Rogan during the campaign, Trump was asked if he was serious about eliminating personal income taxes. “Yeah, sure, why not?” he replied, reiterating that the federal government could be funded through tariffs instead of wages, according to ABC News.
“We will not allow the enemy to come in and take our jobs and take our factories and take our workers and take our families, unless they pay a big price – and the big price is tariffs,” Trump added.
This wasn’t the first time Trump has targeted income taxes. Earlier in his second administration, he proposed eliminating federal income taxes for individuals earning under $150,000 and suggested removing taxes on tips, car loan payments, and Social Security benefits.
‘The money we’re taking in is so great’
Now, as president, he’s pushing that campaign vow further into the national spotlight, framing it as a centerpiece of his economic agenda despite mounting doubts about its feasibility.
At the recent Cabinet meeting, Trump said Americans may “not even have income tax to pay” if his proposal moves forward. “Whether you get rid of it or just keep it around for fun or have it really low, much lower than it is now, but you won’t be paying income tax,” he said, according to Fox.
Emphasizing his belief that income tax could soon be obsolete, Trump detailed his grand plans: “And I believe that at some point in the not too distant future, you won’t even have income tax to pay. Because the money we’re taking in is so great, it’s so enormous, that you’re not going to have income tax to pay” he said, according to ABC News.
‘Not feasible’
However, the numbers do not back up the proposal. Data from the U.S. Treasury Department shows that individual income taxes accounted for over 50% of federal revenue in the most recent fiscal year. Tariffs, by contrast, made up just 3.7% of total revenue. In October 2024 alone, income taxes made up 54% of federal revenue, while tariffs accounted for only 7.75%.
Experts overwhelmingly agree that the revenue from tariffs cannot match that of income taxes.
“It’s not possible. It’s not feasible mathematically or economically,” Brandon DeBot, senior attorney adviser and policy director at NYU’s Tax Law Center, told ABC News. “And analysts from a range of different perspectives agree with that conclusion. Even the very substantial tariffs imposed this year, which are at the highest levels in the postwar era, raise nowhere near the revenue that income tax does.”
‘Nonsensical’
Steve Wamhoff, federal policy director at the Institute on Taxation and Economic Policy, also dismissed the proposal and called Trump’s plan “nonsensical.”
“We would be talking about living in a completely different world than the one we live in now,” said Wamhoff told ABC. “There was a time when the government’s finances were provided through tariffs. But I believe people were getting around with a horse and buggy back then and not cars. I mean, that was a completely different time.”
Tariff uncertainty
Tariffs also come with other risks. At high levels, they can trigger retaliation from other countries, reduce imports, and even depress total revenue. Economists also warn of their regressive nature, disproportionately impacting low-income Americans who spend more of their earnings on goods.
There is also legal uncertainty surrounding Trump’s tariff powers. The U.S. Supreme Court is currently reviewing cases that challenge the president’s authority to impose tariffs, with businesses like Costco filing lawsuits seeking refunds on duties paid. Still, even if the court curtails his authority, Trump could lean on older legal frameworks – including laws dating back to the Great Depression – to continue taxing imports.
What do you think about Trump eliminating income taxes? Do you think it will happen or is this just another one of his big, bold promises that will never come into play? Please let us know your thoughts with us and then share this story so we can hear from others!
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