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

submitted 3 days 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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[–] sj_zero@lotide.fbxl.net 1 points 2 days ago

To be clear, there was once a time that there was no federal income tax and most income came from tariffs and excise taxes. It was just prior to world war 1.

But it's going to need a fundamental change to the way that people look at the federal government. Constitutionally, a lot of what the federal government does makes absolutely no sense. In spite of the general welfare clause, it should be self-evident that federal government was supposed to be about providing for the common defense and dealing with conflicts between states. The idea that it would take a federal program to provide for example food stamps is really bizarre. The EU has a lot of things that people criticize it for, what is a similar amalgamation of states, it doesn't directly fund government programs like that.

Of course, changing what the federal government does does not necessarily mean that those taxes go away entirely. There are states was very low internal tax rates that are only able to be so because they rely on federal government funding, so in the event that they stop getting that revenue source they would have to start taxing their own citizens for the services that they provide.