By Nick Moyle
nj.com
(TNS)
President Donald Trump believes that the federal income tax will be abolished in the near future and replaced entirely by tariffs.
Trump made the bold claim about an income tax-free America during Tuesday’s Cabinet meeting, after touting the impact of his trade policies and potential “dividend” stimulus checks.
“We’re going to be giving back refunds out of the tariffs because we’re taking in literally trillions of dollars,” Trump said.
“Additionally, we’re gonna be able to reduce debt,” the president continued. “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.”
Trump has previously speculated about completely eliminating federal income taxes, which currently account for 54% of total government revenue.
“Over the next couple of years, I think we’ll substantially be cutting and maybe cutting out completely, but we’ll be cutting income tax,” Trump told U.S. military service members on a Nov. 27 video call, per Reuters.
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Economists have raised issues with Trump’s proposal given the massive discrepancy in revenue collected from income taxes compared to tariffs.
The federal government spent over $7 trillion in the last fiscal year, according to Treasury Department data. It collected $5.2 trillion in revenue, with $2.7 trillion generated from income taxes.
The Bipartisan Policy Center estimates that the U.S. government has collected $258.1 billion in tariffs during this calendar year.
Progressive economist Dean Baker, co-founder of the Center for Economic and Policy Research (CEPR), said that tariffs alone would not be enough to replace the revenue lost by eliminating income tax.
In a Nov. 30 commentary for CEPR, Baker wrote that if the government “relied on new tariff revenue to replace an income tax that pulled in $2,600 billion, almost ten times as much, it would raise the annual deficit by roughly $2,300 billion.”
He added, “That would push the size of the deficit to around $4 trillion, roughly 13 percent of GDP.”
Treasury Secretary Scott Bessent has not gone as far as Trump in predicting the total eradication of income taxes, but he has claimed the president’s tariffs can give Americans “income tax relief.”
“The president campaigned on no tax on tips, no tax on Social Security, no tax on overtime and the restoring interest deductibility for American-made autos,” Bessent said. “Tariff income could be used for tax relief on all those immediately.”
Despite concerns over the feasibility of replacing income tax with tariffs, Trump still believes it could happen “over the next two, three, four years.”
“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,” Trump said Tuesday.
Photo caption: President Donald Trump speaks to the media during the last Cabinet meeting of 2025 at the White House on Dec. 2.
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©2025 Advance Local Media LLC. Visit nj.com. Distributed by Tribune Content Agency LLC.
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Mike December 3 2025 at 7:14 am
not one single comment that Trump was going to add a consumption tax of 14% on new products only. No tax of Food, Drugs & medical. Could it work Tennessee & Texas only run on consumption taxes, so don't tell me it will not work now I can tell you that in Blue states noting will work Just like the Beetles song tax it all spending is a real issue with one side of the isle