Trump's 'all-price policy' of zero income tax would hurt American consumers and businesses

(NewsNation) Eliminating income taxes and moving to an “all-price policy” would leave about a $2.1 trillion gap in government revenue, causing daily costs to skyrocket, according to Caleb Silver , editor-in-chief of Investopedia.

Former President Donald Trump proposed an all-tariff policy that would eliminate the income tax during a private meeting with Republican lawmakers in Washington, DC, on Thursday.

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The Biden administration has maintained and even increased some Trump-era tariffs, but a Tax Foundation blog says their overall impact on inflation is “relatively small.” An “all-price” system would radically change the situation.

Cost of an “all price” policy

“President Donald Trump's idea of ​​imposing tariffs to abolish the income tax could raise taxes on a typical American family by $5,000, according to an economist with the Center for American Progress Action Fund ” Newsweek reported.

Although no income tax would make salaries much more attractive, Silver said the financial burden on taxed businesses would simply shift to everyday goods through higher prices, leading to higher prices. astronomical cost of living in the United States.

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Robert Reich, former U.S. Secretary of Labor under Bill Clinton and current professor at UC Berkeley, estimated an additional cost of $1,500 per year.

“Trump has proposed tariffs of 10% on all imported goods and tariffs of 60% or more on Chinese imports. No matter what he says, customs duties are not paid by the other country. They are paid by you,” Reich explained on LinkedIn.

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These customs duties on imported products would have to be massive to maintain current revenues. Silver said the U.S. government collected about $2.3 trillion in income taxes last year and only $80 billion in customs taxes.

This massive gap exposes consumers to price gouging and higher taxes.

Who would the “all customs duties” policy have the most impact on?

David Kamin, a law professor at New York University, noted the disproportionate effect that an “all tariffs” policy would have on the average American.

“Here’s the thing: The income tax has its flaws. But ultimately, it raises about $2.5 trillion a year incrementally. Largely replacing income taxes with tariffs is a sure way to hit low- and middle-income Americans hard and reward the wealthiest,” Kamin shared on X, formerly known as Twitter.

The same day he proposed his “any tariffs” solution, Trump told a group of business leaders that he wanted to cut the corporate tax rate by one percentage point to 20%, according to three sources anonymous people quoted in the New York Times.

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Brendan Duke, former senior policy advisor at the White House National Economic Council in the Biden administration, told Newsweek: “Donald Trump has released several economic plans, but they all have one goal: to finance tax cuts for billionaires and corporations by raising taxes. taxes on American families.

Ultimately, Silver predicts that consumers will simply “walk away” if prices rise too much. The “all-price” solution, he said, is not one at all.

“It sounds intriguing, but it doesn't really solve the problem,” Silver said.

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