Is Trump Eliminating the Income Tax? New Tariff Strategy Might Substitute Taxes — But Is the Math Accurate?

Is Trump abolishing the income tax? President Donald Trump claims that tariffs might make income taxes unnecessary for the majority of Americans. While economists are skeptical, Trump insists his tariff strategy could eliminate income taxes for a significant number of households.

“Once the tariffs are implemented, many individuals’ income taxes will be considerably lowered, perhaps even entirely wiped out,” Trump asserted on Wednesday.

JUST IN: President Trump suggests tariffs could take the place of federal income tax. pic.twitter.com/yrwvuzbJoz

— Watcher.Guru (@WatcherGuru) September 3, 2025

Trump contends his approach will concentrate on Americans and investors earning less than $200,000. Census Bureau statistics indicate that merely 14.4% of U.S. households had incomes exceeding $200,000 in 2023. If Trump’s assertion holds true, the vast majority of Americans would no longer be subject to federal income taxes.

Is Trump Abolishing the Income Tax? Why Economists Argue Tariffs Can’t Substitute Income Taxes

While the idea of eliminating the income tax is appealing, the figures do not price floor it. According to Tax Foundation economists Erica York and Huaqun Li:

“The individual income tax generates over 27 times as much revenue as tariffs do currently,” remarked Li. “Even removing income taxes for a specific group of taxpayers would necessitate significantly higher replacement revenues than what tariffs could provide.”

For crypto investors, many can sidestep income tax by relocating to lower-tax regions, but capital gains remain a concern. You’ll end up paying the tax collector one way or another.

In addition, Trump’s impending tariffs for 2025 are projected to generate $167 billion in revenue, which would cover less than a quarter of the cost of abolishing income taxes for households earning below $200,000.

Recent figures from the IRS indicate that federal income tax revenue reached $2.2 trillion in 2023, while total tariffs brought in less than $100 billion. This discrepancy highlights why experts are doubtful that tariffs can entirely replace the tax system.

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Project 2025 and the Shift Towards a Consumption Tax

Trump’s elimination of the income tax is a component of the Republican-supported Project 2025 initiative. One of the main advocates, along with the recently removed IRS Chief Billy Long, had earlier proposed legislation to abolish the IRS and create a federal sales tax.

The White House also aims to downsize the IRS workforce by 18%, diminishing crypto law monitoring and enforcement.

Although Trump’s initiative encounters skepticism, investors have legitimate methods to lower their taxes. Scott Galloway of NYU and other notable crypto investors recommend borrowing against stock portfolios instead of liquidating: “You possess $100 in Amazon stock… rather than selling, borrow against it and allow the stock to keep appreciating.”

This approach avoids triggering capital gains, while allowing investments to continue to grow.

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Implications of Trump’s Tax Plan for Markets

The notion of tariffs supplanting income taxes would dramatically alter how Washington finances itself.

Federal income may decrease or deficits could increase, leading to crypto possibly gaining new appeal as a safeguard against policy instability.

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