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FACT FOCUS: Trump says tariffs can eventually replace federal income taxes. Experts disagree (apnews.com)

submitted 4 months ago by MicroWave@lemmy.world to c/economics@lemmy.world

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Donald Trump has long praised tariffs as key to increasing wealth in the United States, idealizing Gilded Age policies that preceded the implementation of a modern federal income tax.

Among the potential benefits, Trump claims, is the ability to replace revenue from federal income taxes with money the U.S. is taking in from tariffs — a concept he has touted since his 2024 presidential campaign, most recently at a Cabinet meeting Tuesday.

But tariff revenue doesn’t even come close to where it would need to be if federal income taxes were eliminated, and experts say such a plan isn’t at all feasible.

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[–] nova_ad_vitum@lemmy.ca 6 points 4 months ago* (last edited 4 months ago)

Even if it wasn't regressive (which it is) it still wouldn't work to replace income tax. The tariffs incentivize domestication of production, so people are literally incentivized to circumvent them. That's also (lol) one of the stated goals here - being back manufacturing. But you can't use tariffs to both bring back manufacturing and replace income tax or even a substantial part of it in the short term anyways. It's really just one or the other. Realistically, given the competence with which they're going about it, it'll be neither.