Former President Donald Trump on Thursday proposed a new solution to getting rid of the U.S. income tax: an “all tariff policy," the preemptive Republican nominee told GOP lawmakers, according to CNBC.
In the meeting, Trump's first visit back to Capitol Hill since Jan 6, 2021, Trump attended a Republican "pep talk" in which he reiterated his belief that import taxes could replace those on income, a policy that reduce the tax burden on wealthy Americans while jacking up prices paid by consumers.
Indeed, tariffs are understood to hike consumer prices because companies pass on the cost of the tariffs they pay. Tariffs currently account for $88.3 billion of the $4.4 trillion in revenues the U.S. government reported in fiscal year 2023. Income taxes brought in about $2.2 trillion, the Treasury Department reported.
To bring tariff revenues even close to income tax levels would require a dramatic spike in import taxes, much higher than Trump’s proposed 10%.
Experts said the proposal would leave many Americans worse off.
“Broadly substituting tariffs for income tax is a sure way to hit hard low and middle-income Americans and reward top,” David Kamin, a tax policy expert at New York University School of Law, wrote on X.
Paul Krugman, a New York Times columnist and a Nobel Prize winner in economics, did some quick math and posted on X that a "first-pass estimate" suggests Trump's proposal "would require an *average* tariff rate of 133 percent.”
The Biden administration wasted no time in attacking Trump’s embrace of inflationary tariffs.
“The only people who benefit from this regressive, thoughtless policy are Trump’s billionaire donors, who get a windfall at the expense of working-class Americans,” Biden campaign spokesperson James Singer said.
Follow the Capitol Hill meeting, Trump ignored the critics and took to his website, TruthSocial, and give himself a pat on the back, writing: “Great meeting with Republican Representatives. Lots discussed, all positive, great poll numbers!”
