Sunday, August 10, 2025

Trump Wants To Abolish Income Tax, Shifts Federal Revenue Source From Tariffs Instead

US President Donald Trump has called on Congress to abolish federal income tax and have the country instead generate its income from more tariffs on foreign goods and services. Speaking at the 2025 Republican Issues Conference in Florida, Trump framed his plan as a return to the economic system that made America “richer and more powerful than ever before.”

“Instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens,” Trump declared.

Before the 16th Amendment established the federal income tax in 1913, the U.S. government primarily relied on tariffs to fund its operations. According to Trump, this system created a surplus so large that in 1887, a “great tariff commission” was formed to figure out how to spend the excess revenue.

“It was so enormous that they had no idea what to do with all of the money that we had,” Trump said, citing former President Theodore Roosevelt’s use of tariff-generated funds for national parks and infrastructure projects.

Feasibility of Abolishing Income Tax

Trump, who reportedly paid no net federal income taxes in 11 of 18 years of the past two decades and paid only $750 annually in income tax during the first two years of his first term, has long been campaigning to abolish the income tax law.

If such move becomes successful, it can be expected that there would be a boost in domestic economic growth as there would be more money in Americans’ pockets.

Higher tariffs on foreign goods would also encourage companies to bring jobs back to the US to avoid tariffs on imported materials.

However, the US is not in 1913 anymore. In a globalized world where most goods and services rely on international trade, an argument could be made that raising tariffs could function as a hidden tax on consumers as domestic prices increase.

A century ago, the US was an industrial economy, relying on physical goods. Now, the economy is 70% service-based which can’t be tariffed. Also, federal spending in 1913 was around 2.5% of the GDP; now, it’s 23.5% of GDP.

The US generates roughly $2.5 trillion in annual federal income tax revenue. In contrast, US tariff revenue reached approximately $80 billion in 2023.


Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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