Former President Donald Trump stood by his idea of eliminating income taxes and replacing them with tariffs in an interview on Friday. Joe Roganhost of one of the most listened to podcasts in the world.
“Did you just float the idea of eliminating the income tax and replacing it with tariffs?” Rogan asked the Republican presidential candidate during the three-hour interview. “Are we serious?”
“Yeah, sure, but why not?” Trump responded.
The former president added: “We will not allow our enemies to come in and take away our jobs, take away our factories, take away our workers, take away our families, unless they pay a huge price. And the biggest price is tariff.
A centerpiece of Trump’s economic pitch to voters has been broad tax reform, including proposals to weaken the income tax system and replace it with tough tariffs.
He proposed eliminating income taxes on tips, overtime and Social Security benefits and extending the 2017 tax cuts, which are set to expire in 2025. and veterans.
Eliminating tips, overtime and Social Security taxes alone would cost about $2 trillion over 10 years, according to a nonpartisan think tank tax foundation. That cost will only increase as Trump adds other tax-exempt proposals.
Trump sees his aggressive tariff policy vision as a way to offset those costs.
He proposed to impose a comprehensive tariff of 20% on all imported products from all countries, with particularly high tariffs on Chinese imports.
but tax expert and economic analyst I don’t think Trump’s tariffs will be enough to offset the trillions of dollars in losses from eliminating the income tax.
“It’s impossible to raise tariffs high enough to cover anything close to that amount (income tax revenue) because imports fall as tariff rates go up,” said Garrett Watson, senior policy analyst at the Tax Foundation. .
Watson added that Trump’s tariffs could generate an estimated $3.8 trillion in revenue over 10 years, while personal income taxes would bring in $33 trillion over the same period.
Overall, Trump’s overall tax plan, including tariffs, would expand the deficit by $3 trillion over ten years.
“The math doesn’t add up,” Watson said.
In addition, Trump’s tariffs will be paid by U.S. importers, which will increase producer costs and may lead to higher consumer prices, just as inflation has begun to cool.
In effect, these tariffs could replace the income tax with a new sales tax, shifting the tax burden more toward low-income individuals.
Vice President Kamala Harris has made economists’ analysis of Trump’s tariffs a campaign issue.
“This is going to be a sales tax on the American people,” the Democratic candidate said in a September interview with MSNBC’s Stephanie Rule.
“A 20 percent tariff on all imported products that he described would essentially be a 20 percent sales tax on basic necessities for the average American worker, the average American family.”
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