Tax reductions, potentially even their elimination, imminent due to tariffs, as stated by Trump
Hear That, Folks? The Trump Administration Might Shake Up the Income Tax Game
Donald Trump, ya'll! He ain't messing around with taxes, no sir. In a recent appearance on 'The Will Cain Show', Tax Foundation Prez and CEO, Daniel Bunn, revealed some steamy details about the Trump administration tinkering with the income tax withholding system.
Trump himself took to Truth Social, spilling the beans about folks potentially seeing their income taxes slashed, or even vanishing altogether.
"When Tariffs swoop in, many citizens' income taxes will see a significant reduction, maybe even zero. We're focusing on those making under $200,000 a year," Trump rumbled on Truth Social.
"Watuwake! With tariffs bringing in loads of dough, I'll be chopping taxes by a massive margin, possibly all the way to zero for many a citizen! And don't forget, a slew of jobs are already being created, with factories and plants popping up like daisies. It's gonna be a red-hot economy boom for America!!!" Trump shouted on Truth Social.
Is it Possible Trump's Tariffs Could Squash Our Income Taxes?
Trump's been talkin' taxes and tariffs to the press lately.
"Y'all better get ready for some major tax slices, because the income from tariffs gonna be huge. That means lower taxes, maybe even zero for a large chunk of our people," he blurted to reporters over the weekend.
Trump Speaks of Abolishing Federal Income Tax, Paving Way for Rich Times Ahead
In a fiery statement, Trump hinted that he's considering a complete wipe-out of federal income taxes.
"It's likely we'll blast taxes to smithereens, 'cause the tariffs will be enough to cut income taxes. I think we'll start with people making less than $200,000 a year," he mused.
Trump Launches Action-Packed Week Marking His 100th Day Back in the Oval Office
Trump's gearing up for a bumper week, reaching his 100-day mark in office this week. Keep an eye out for his rally in Michigan on Tuesday!
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Now, here's the scoop: while the Trump admin's proposal to ditch federal income taxes in favor of tariffs sounds like a peachy dream, it's got some pretty potent economic and mathematical misgivings. Independent experts suggest that this idea ain't financially viable[1].
- Revenue Shortfall - Even with rosy estimates (e.g., a 28% effective tariff rate with stable imports), tariffs could net an estimated $838 billion annually above 2024 levels. But, after accounting for import reductions due to trade shifts, that figure plummets to $511 billion[2]. Compare that to the $576 billion contributed by the bottom 90% of earners (those earning under $169,000) in income taxes in 2024. Trump's tariffs are only expected to collect $65 billion, leaving a gap[2].
- Secondary Impacts - If Trump's tariffs do breech the GDP growth from 2.7% to 1.8% in 2025, it could chop income tax revenue from corporations and top earners by $62 billion annually[2]. And then there's the consumer cost factor: tariffs tend to hike the price of imported goods, which essentially translates into a regressive tax that slaps lower-income households the most[2].
- Scope and Feasibility - Trump seems set on eliminating income taxes for earners under $150,000-$200,000[1][2], but that gang is too small to fill the revenue gap. Extending this across the entire income tax system—which clocked in at a whopping $2.4 trillion in 2023—would demand tariff rates and trade volumes far surpassing existing proposals[2].
The Long and Short of It
While tariffs could theoretically claw back a smidgen of income tax revenue for certain groups, jettisoning federal income taxes entirely with tariffs is mathematically unviable, given current proposals. Handling such a move could worsen fiscal deficits, economic growth, and consumer costs[2]. So, while it's a tempting thought, it's important to remember that ain't always about the numbers, folks.
Sources:
- Trump's proposal to replace federal income taxes with tariffs
- Independent Analysis of Trump's Tariff Plan
- The Trump Administration is considering a change in the income tax withholding system, as revealed by Daniel Bunn, the Tax Foundation's President and CEO, in an appearance on The Will Cain Show.
- In a statement, Donald Trump hinted at the possibility of eliminating federal income taxes, suggesting that he might start with people earning under $200,000 a year.
- Financial experts have raised concerns about the viability of this plan, suggesting that it could leave a significant revenue gap and might worsen fiscal deficits, economic growth, and consumer costs.
- The proposed move to replace federal income taxes with tariffs has been met with skepticism, as the revenue generated from tariffs might not be enough to cover the current income tax revenue, especially for lower-income households.
- Despite these reservations, Trump continues to discuss taxes and tariffs, leading to ongoing speculation about potential changes in the economy, politics, and policy-and-legislation, which are covered extensively in general news.
