One news chyron scrolling across the screen caught my attention leading up to the Thanksgiving holiday. It shined forth like a neon light amidst all the rather mundane Black Friday advertisements and the pro and collegiate football games of the day.
This one almost screamed out to capture my attention: “President Trump Wants to Replace the Individual Income Tax with money from increasing tariffs!”
Any conservative who has been involved with government or politics for any length of time would have been positively stunned to hear such a pronouncement at any time since the income tax was added as the 16th constitutional amendment in 1913. Cutting marginal tax rates on a progressive income scale was one major effort during both the Kennedy and Reagan administrations. Reducing capital gains tax rates took truly herculean efforts as well.
To hear any U.S. president was proposing the elimination of personal income taxes was so unreal, I had to scroll through tons of news articles online just to see if it was true and not some AI-generated joke.
Somehow, our new country survived from its beginning under our first Constitution, the Articles of Confederation, until 1913 with revenues accruing almost totally from imposing tariffs on foreign goods entering the U.S.
How was that possible, many should ask? For one thing, it would have been almost suicidal for any politician early in our history to propose taxing the new American taxpayer with high rates on anything they owned or made while earning a living after having fought a war to get away from capricious kings and politicians in England who wanted to do exactly the same thing to support the British Empire.
On top of that, the young American republic was very lean at the federal level and left most of the governance to the state and local elected officials. There were no entitlements to fund, and the military was still in transition from basically a voluntary militia to a professional navy and a small standing army ready to defend America if any foreign power such as Britain, France or Spain decided to invade.
Tariffs on expensive foreign goods were enough to cover such a relatively small federal budget expense, especially when compared to the size and scope of the federal government today.
Current estimates put the amount of new tariff income at $257 billion in 2025. To put that into perspective, individual income tax collection amounts to close to $2 trillion annually today. New tariffs would have to bring in roughly 10 times the current amount to replace the amount that would be lost by eliminating income taxes, as great as that sounds to the 60% of Americans who pay income taxes.
All of which would still be technically, and maybe even mathematically, feasible had Congress and past presidents worked together to balance budgets and not rung the bell over the past two decades to add tens of trillions to the national debt, which now stands at $36 trillion. Replacing the income tax with tariffs would have been far easier without having to pay close to $1 trillion per year in interest on our existing national debt. That interest expense annually is three times the expected amount of new tariff revenue alone.
Responsible adults have been warning of the dangers of expanding federal government spending and national debt for the past half-century. We have now painted ourselves into the proverbial corner when it comes to having the flexibility to do things such as replace the income tax system with a consumption tax of some sort, which is what a tariff winds up being. Instead of being fiscally prudent with the taxpayer dollar, we have allowed Congress and the White House to push the spend-now pedal through the floor like Thelma and Louise did before they flew into the canyon in 1991.
As attractive as the idea of eliminating personal income taxes may seem to people, don’t start planning that summer vacation in Tahiti just yet. For one thing, eliminating the income tax will most definitely require action by Congress, first in the House Ways and Means Committee and then in the Senate Finance Committee. Neither of which would be an easy task with a contentious midterm election coming up in 2026. With control of both the House and Senate up for grabs, attempting to accomplish such a task would make past arduous tax reform efforts look like child’s play by comparison, and worse yet, politically foolish.
