‘The math just doesn’t add up,’ Experts debunk Trump’s plan to replace income tax with tariffs

President Trump’s recent idea to get rid of income taxes and make up for the lost money by adding more tariffs has received a lot of criticism from economists. While the plan sounds good because it promises no income taxes for Americans, it has major math and economic problems that cannot be solved. The biggest issue is the huge amount of money that income taxes bring in, and that tariffs alone cannot replace that amount.

The federal government makes about three trillion every year from income taxes. To make up for losing that money, tariffs would have to bring in the same amount. As reported by CNN, Since the United States buys about three trillion in goods from other countries each year, a 100% tax on every imported item would, in theory, be needed.

This simple calculation does not account for real-world economic problems. The average tariff rate is 22.8%, so the rate would have to more than quadruple to match income tax revenue. This would be much higher than the tariff rates in any other wealthy country, and experts worry it could cause a major worldwide economic downturn.

Tariffs aren’t enough to replace income taxes

Even if a 100% tariff rate could somehow work, it would still be unrealistic. Prices would go up because of the high tariffs, and people would buy fewer imported goods. We have already seen this happen with existing tariffs. Economists predict that the tariffs already in place will only bring in $170 billion per year, which is far less than the trillions needed.

Trump says, “We’re going to make a lot of money, and we’re going to cut taxes for the people of this country. It’ll take a little while before we do that, but we’re going to be cutting taxes, and it’s possible we’ll do a complete tax cut, because I think the tariffs will be enough to cut all of the income tax.”

Erica York, vice president of federal tax policy at the Tax Foundation, said, “The math just doesn’t add up. Not even close.”

If people buy fewer imported goods because of higher prices, the tariff rate would have to go up even more. It could possibly rise as high as 200% to make up for the drop in imports. This makes the plan even harder to pull off.

Another problem is that replacing income taxes with tariffs would hurt lower- and middle-income families more than wealthy ones. Income taxes are designed so that people who earn more pay a higher percentage, but tariffs work the opposite way. Since lower- and middle-income families spend more of their money on imported goods, they would feel the price increases much more than rich households.

Besides the economic problems, the plan would also face major political challenges. Getting rid of the federal income tax would require Congress to remove it. Taxes are technically enforced by Congress, not really by a set rule of law. Currently, no such bill is being discussed, nor is there widespread support for the idea. The proposal also does not consider how it would affect American businesses.

One of the stated reasons for the tariffs is to boost U.S. manufacturing. But if that actually happens and fewer goods are imported, the money from tariffs would drop, making the whole plan fall apart. Trump has admitted that the plan has limits, saying that ending income taxes is a long-term goal and that tariff money would also be needed for other things, like paying down debt.