In a surprising move, former President Donald Trump suggested eliminating the U.S. income tax system and replacing it with significantly higher tariffs on imported goods.
This proposal, mentioned during a pep talk with House Republicans, would dramatically alter the nation’s tax structure.
Trump has previously floated the idea of a 10% tariff increase on imports, but his latest comments suggest even steeper trade duties. Economists warn such tariffs could raise consumer prices as companies would pass on the increased costs.
This proposal comes as inflation and consumer prices are major concerns ahead of the 2024 election. As confirmed by the sources Yahoo
Rep. Thomas Massie (R-Ky.) highlighted the idea on social media, noting it was the most intriguing policy proposal from the GOP meeting.
According to sources, Trump discussed an “all tariff policy,” which would require significant tariff hikes to match current income tax revenues.
Currently, tariffs generate a fraction of the $4.4 trillion in annual government revenue, with income taxes contributing $2.2 trillion. To match this, tariffs would need to be drastically increased.
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Nobel Prize-winning economist Paul Krugman estimated an average tariff rate of 133% would be necessary.
The Biden campaign quickly criticized the proposal, emphasizing its regressive nature.
Spokesperson James Singer argued that while the progressive income tax protects lower-income families, tariffs would raise prices across the board, benefiting wealthy donors at the expense of working-class Americans.
Trump’s suggestion harks back to pre-1913 America, where tariffs were a primary revenue source.
He reportedly praised President William McKinley, known for the McKinley Tariff Act of 1890. However, that law led to significant political backlash and a massive loss for Republicans in the subsequent election.