Trump Proposes Eliminating Federal Income Tax, Returning to Tariff-Based Revenue
Tariffs to Replace Income Taxes
Speaking at a GOP conference in Doral, Florida, Trump explained his vision: "Instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens."
He highlighted that the first federal income tax came into existence in 1913 through the 16th Amendment, a move he claimed reversed America's prosperity.
In 2023 alone, federal income taxes generated $4.92 trillion in revenue. Trump's alternative involves creating a new agency, the "External Revenue Service," to oversee revenue collection from tariffs on imported goods.
Experts Divided Over Economic Impact
The proposal has sparked mixed reactions from economists and market analysts. Erica York, Vice President of the Tax Foundation, warned that tariffs are essentially taxes on U.S. importers, potentially shrinking the domestic economy rather than benefiting it.
York emphasized that tariffs should not be the main revenue source for the U.S. government, as they may offset the economic advantages of other tax reductions.
However, Kenny Polcari, Chief Market Strategist at Slatestone Wealth, argued that removing the income tax could incentivize Americans to increase their spending and productivity.
Taylor Riggs from "The Big Money Show" pointed out the need for stable tariff rates, noting that unpredictable tariffs can disrupt business planning and economic stability.
Trump’s proposal is likely to dominate fiscal policy debates ahead of upcoming elections.
