Will Donald Trump eliminate taxes for Americans earning less than $200,000 per year? Is it possible, and what would the consequences be? Read more at
US president Donald Trump has once again thrown a bold idea, a potential plan to eliminate income taxes for Americans earning under $200,000 per year, as per a report. He wrote on his social media platform Truth Social, that the revenue from tariffs on imports would allow him to pursue legislation where “people’s Income Taxes will be substantially reduced, maybe even completely eliminated,” quoted The Motley Fool.
The Big Question: Can Tariffs Replace Income Tax Revenue?
Trump’s plan is premised on one assumption: that tariffs might raise enough money to make up for the loss of revenue if income taxes for the majority of Americans were removed. Vice president of federal tax policy at the Tax Foundation, Erica York said, “The math just doesn’t add up,” as quoted by The Motley Fool.
The Motley Fool also explained that tax cuts could cause more difficulties because they reduce revenue for the government, which could exacerbate the deficit.
Income taxes now generate nearly $3 trillion yearly, nearly half of the federal government’s total intake. In comparison, whereas the U.S. imports roughly $3 trillion in goods yearly, the present tariff rate is only 22.8%, far too low to cover the deficit, as per Fitch.
