Americans may soon pay 'no income tax': Trump backs tariffs, says revenue surging under his administration

US President Donald Trump on Tuesday said that Americans might "not even have income tax to pay" in the near future. He noted that federal income tax could be eliminated under his administration because of the revenue from tariffs levied on other countries. 

Speaking at a press gaggle after a cabinet meeting, he said that "at some point in the not too distant future you won't even have income tax to pay," adding that the revenue the government is collecting under his administration is "so great... so enormous."

"Whether you get rid of it or just keep it around for fun or have it really low, much lower than it is now, but you won't be paying income tax," Trump added.

In a bid to bolster his standing amongst Americans ahead of the mid-term, he said: "We're going to be giving back refunds out of the tariffs because we're taking in literally trillions of dollars." He added that the US is also looking to reduce its debt in the future. 

This, however, is not the first time that Trump has floated the idea of abolishing the federal income tax. Previously, he came up with a plan to eliminate income tax for individuals earning less than $150,000 per year, with tariffs proposed as the replacement. 

At the time, he said: "Instead of taxing our citizens to enrich foreign citizens, we should be tariffing and taxing foreign nations to enrich our citizens."

Is this even feasible? Trump's proposal is likely to face hurdles as Republicans struggle with a narrow majority in the Senate. Not just this, economists have flagged the massive discrepancy in revenue collected from income taxes versus tariffs.

At present, the federal income tax accounts for around 54 per cent of the total US government revenue.

According to Treasury Department data, the federal government spent more than $7 trillion in the last fiscal year, while revenue totalled $5.2 trillion, including $2.7 trillion from income taxes.

The Bipartisan Policy Center estimates that the U.S. government has taken in $258.1 billion in tariffs so far this calendar year.

Dean Baker, a progressive economist and co-founder of the Center for Economic and Policy Research (CEPR), argued that tariff revenues alone would be insufficient to make up for the loss of income tax revenue.

In a Nov. 30 CEPR commentary, Baker noted that if the government “relied on new tariff revenue to replace an income tax that pulled in $2,600 billion, almost ten times as much, it would raise the annual deficit by roughly $2,300 billion.”

He further stated, “That would push the size of the deficit to around $4 trillion, roughly 13 per cent of GDP.”

Treasury Secretary Scott Bessent has not matched Trump’s prediction of completely eliminating income taxes, but he has insisted that the president’s tariffs can offer Americans “income tax relief.”

“The president campaigned on no tax on tips, no tax on Social Security, no tax on overtime and restoring interest deductibility for American-made autos,” Bessent said. “Tariff income could be used for tax relief on all those immediately.”

Although questions remain about whether tariffs could realistically replace income tax revenue, Trump maintains that it could be achievable “over the next two, three, four years.”

“Whether you get rid of it or just keep it around for fun or have it really low, much lower than it is now, but you won’t be paying income tax,” Trump said Tuesday.