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Fact check: Will tariffs allow the US to eliminate income tax?
Checked on February 2, 2025
1. Summary of the results
The proposal to replace income tax with tariffs is mathematically and economically unfeasible. Here's why:
- Current income tax revenue is approximately $2.2 trillion, while tariffs only generate about 2% of federal revenue [1] [2]
- Even with extremely high tariffs of 58%, revenue would only reach about $780 billion - far below what's needed [2]
- The tax base for income ($3.1 trillion) is significantly larger than the base for traded goods ($20 trillion), making full replacement impossible [3]
2. Missing context/alternative viewpoints
Several crucial pieces of context are missing from the original question:
- Legal Reality: Trump's executive memo didn't actually eliminate income tax - it merely directed officials to explore creating an "External Revenue Service" [4]
- Any significant changes would require congressional action, not just executive orders [4]
- Economic Impact: Implementation would:
- Create significant job losses
- Increase federal deficits
- Generate recessionary pressures [5]
- Social Impact: The policy would disproportionately harm low and middle-income Americans [6]
3. Potential misinformation/bias in the original statement
The question itself contains implicit assumptions that need addressing:
- Political Context: This narrative stems from Trump's suggestions about an "all tariff policy" [6]
- Expert Consensus: Multiple economic experts have explicitly rejected this idea:
- Kimberly Clausing (UCLA): "Simply put, no. It wouldn't even be close" [3]
- Erica York (Tax Foundation): Calls it "mathematically impossible" [1]
- Daniel Shaviro and Alan Wolff have also definitively rejected the feasibility [3]
Those who might benefit from promoting this narrative include:
- Politicians seeking to appeal to voters who dislike the current tax system
- Media outlets seeking engagement through controversial economic proposals
- Special interest groups advocating for reduced taxation, even if the replacement is unrealistic
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