Skip to content

PoliticsUnited States4 min read

Trump Proposes Eliminating Income Tax with Tariff Revenue

President Trump proposes eliminating federal income tax, replacing it entirely with revenue generated from tariffs. This ambitious plan could reshape the U.S. economic landscape.

Share

Topics

Trump says Americans may soon pay no income tax as White House eyes tariff-driven revenue

President Donald Trump proposed eliminating federal income tax, claiming tariff revenue could fully fund the U.S. government. The White House outlines a tariff-driven model with baseline and elevated country-specific rates, prompting intense debate and scrutiny.

  • Claim: In a Cabinet meeting press gaggle on Dec. 2, 2025, Trump said Americans “won’t even have income tax to pay” soon.
  • Plan outline: The White House proposes a tariff-driven model with a 10% baseline tariff and much higher rates on certain countries.
  • Scale: Federal individual income tax makes up roughly 54% of federal revenue, so replacement would be unprecedented (CPA Practice Advisor).
  • Concerns: Economists and lawmakers warn of legal, economic and political hurdles, and potential price and trade impacts (Fox Business).

Trump’s proposal in his own words

During the meeting, Trump described a near-term future where tariff receipts would be so large that Americans “won’t even have income tax to pay.” He added lawmakers could remove the tax or keep it “around for fun” at much lower levels and suggested the change could occur “over the next two, three, four years.”

“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.” — President Donald Trump

Source: CPA Practice Advisor.

How tariffs would replace income tax

The administration’s public outline centers on raising tariff revenue. The described model includes a 10% baseline tariff on imports with much higher targeted rates for specific countries — one summary lists a 60% tariff on goods from China as part of a tougher stance (BrightTax).

Proponents say tariffs tax foreign producers and importers rather than U.S. workers and could be used to lower direct taxes on households. Trump framed the idea as “instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens.”

Why the change would be sweeping

Federal individual income tax is the single largest revenue source for the government — roughly 54% of total federal revenue. Abolishing it would require tariffs to generate comparable annual receipts or require deep spending changes, marking the most ambitious U.S. tax overhaul in more than a century (CPA Practice Advisor).

Administration signals and limits

Administration officials have been more cautious publicly. Treasury Secretary Scott Bessent described narrower uses for tariff revenue — such as targeted tax relief (removing taxes on tips or Social Security, restoring deductions tied to American-made goods) — rather than endorsing full elimination of income tax (CPA Practice Advisor).

Economic and practical hurdles

Economists and trade experts warn tariffs can raise consumer prices, increase costs for firms that use imported parts, and invite retaliation that harms exporters. Tariff revenue fluctuates with import volumes — high rates often reduce imports, which can limit collections over time (Fox Business).

Legally and politically, abolishing federal income tax requires major tax-code changes and new legislation. Passing such sweeping reforms faces significant hurdles in Congress and among stakeholders.

Implications for the Inland Empire, California

Consumers and businesses: The Inland Empire — largely Riverside and San Bernardino counties — depends on warehousing, trucking and distribution tied to imports through LA and Long Beach ports. Higher tariffs could raise local retail prices and squeeze thin-margin businesses (BrightTax).

Supply chain and logistics: Tariffs that reduce import volumes could weaken demand for warehouse space and trucking, affecting jobs in logistics and freight handling; but tariff-driven refunds or lower income taxes could boost consumer spending if price increases do not offset gains (CPA Practice Advisor).

Manufacturing and exports: Firms that export or rely on cross-border supply chains with Mexico could face higher input costs or retaliatory tariffs, threatening manufacturers and agricultural shippers (Fox Business).

Household and state impacts: Residents might see higher take-home pay if federal income tax falls, but California’s state income tax remains; lawmakers could respond in ways that affect state revenue or deductions. Higher retail prices from tariffs may offset income gains (CPA Practice Advisor).

Sources and further reading

Share

Topics

Tracy Simmons

Tracy Simmons is a senior national politics reporter for Times Media Service, based in Washington, D.C. Simmons covers national politics, including the people, policies and institutions shaping the federal government, with a focus on government accountability and public policy. Simmons holds a master's degree in journalism and grew up in College Park, Maryland.

Write to Tracy