First, he proposed no tax on tips, then no overtime tax on hourly workers, and now, the man who connects more with lower, middle, and upper incomes than any President in recent history, is talking about giving every American the biggest one. tax break they have never experienced-NO tax-at least not federal tax.
Earlier this week, President Trump stopped by a Bronx barbershop with Fox News personality Lawrence Jones. There, he talks about inflation and taxes with his all-male clientele, a barber, a barbershop owner, and his father.
A male barber asked President Trump, “Do you believe that at some point and time, when the country has recovered, and we have enough revenue, and we pay off our debt, do you think we can find a way to eliminate federal taxes? ?”
Trump said, “There’s a way! There’s a way!” he repeated, explaining, “You know, in the old days, when we were a smart, intelligent country – in the 1890s, our country was relatively the richest.” He continued, “It was all tariffs; no income tax.”
“Yes, sir,” replied the barber’s customer.
“Now we have an income tax, and people are dying! They have taxes and they don’t have money to pay taxes. You know, in the old days, 1890 and 1880, we had so much money, they had to set up committees, blue ribbon committees — how to spend our wealth! Trump explained to an audience at an impromptu barbershop town hall.
“We don’t know how to spend it; it’s too much money!” he exclaimed. “Then we go to the income tax system, and the rest is history,” Trump said, adding, “But no, there’s a way–If what I’m planning comes out-” said President Trump, as he paused to praise a barbershop customer, “That’s a good question, by the way,” he said, adding, “You’re a very sophisticated cat!”
The barber’s customer who asked the question answered, telling President Trump, “Everyone could achieve the American dream if it weren’t for the high tax burden. And we tax every step, when we create, and when we spend! Trump interrupted, “And regulations! ” adding, “So, I cut more regulations in four years than any other president!”
Watch:
Everyone should watch the clip of Trump talking about eliminating the federal income tax for some guys in a Bronx, NY barbershop!
See how captivated they are pic.twitter.com/MldDve3W15
– David J Harris Jr (@DavidJHarrisJr) October 22, 2024
Can federal taxes be replaced by rates?
Tax Notes contributing editors Robert Goulder and Joseph J. Thorndike recently examined former President Donald Trump’s tariff proposals.
Here’s a transcript of the discussion on Forbes:
Robert Goulder: Everyone admits that tax reform is difficult. The members of parliament always want to lower people’s taxes. But at the same time, they don’t want to make a hole in the federal budget deficit. It’s big enough. Well, wouldn’t it be nice if there were some utopian revenue source that we could draw from to get a little bit of extra revenue to pay for our expensive tax cuts without consequential political pain?
Some people think they have stumbled upon such a pot of gold, and it has been before us since the early days of our republic. We are talking about rates.
I’m Bob Goulder, contributing editor with Tax Notes. Together with my friend, the historian Joe Thorndike, we will try to understand this new call to use tariff revenues to reduce the income tax burden.
Joe, now, we have to be honest here: This is President Trump’s idea. He is the main supporter of this, and I will not try to hide the fact that I feel a little abnormal. So let me ask you this: Should we take Trump seriously when he suggests using tariffs to pay for income tax cuts?
Joseph J. Thorndike: Well, yes, basically, I think we should. Trump, he revived this idea – against all logic and available evidence – that the tariff, could be the basis of federal finances, as it was in the 19th century. But, you know, that was a long time ago. Different time, different economy. It still hasn’t stopped Trump from saying he wants to use revenue from higher tariffs to pay for cuts in other taxes, like corporate income tax; Maybe other people too. And I think we should take that seriously.
Robert Goulder: Now, correct me if I’m wrong, but isn’t the tariff regressive? So it’s similar to the federal consumption tax, except it focuses on a select set of imported goods. So if you think this is over, will it not be a case that using tariffs to finance income tax cuts really boils down to using regressive tax sources to finance a big red in progressive income tax? Or am I missing something?
Joseph J. Thorndike: Not. I think, Bob, you’re right. Rates are very regressive. Erica York, who is at the Tax Foundation, which is not a liberal outfit, she pointed out that when Trump was president, he imposed tariffs on about $80 billion. It’s one of the biggest tax increases in decades, and consumers are paying most of it in higher prices at the cash register.
So by extension, another round of tariffs — and Trump wants a bigger one — means more taxes are pushed onto consumers. And if we use the profits of those rates to reduce the corporate income tax, which is usually paid by the owners of capital, then, yes, we have replaced a progressive tax with a regressive one, for the most part.
Robert Goulder: So the strangest proposal here is to abolish the income tax altogether. Abolish. No more income tax as we know it. Remove everything and pay for the hole in the budget with profits from tariffs, as if 1824 instead of 2024. Is it possible, mathematically?
Joseph J. Thorndike: Okay, so here are some inconvenient facts for Donald Trump: The contribution of tariffs to total federal revenue hasn’t exceeded 90 percent since the Civil War, which was a while ago. Tariff contributions also continued to decline since about 1890. And President William McKinley, whom Trump talked about all the time and he loved because McKinley raised tariffs, he could not stop the slide, although he got several laws that tried to do so. . So that said here, the math is really just impossible when it comes to replacing income tax with tariffs.
Watch:
Are you thinking about replacing the federal income tax with a rate? Do you think it works? Will Trump attract more voters with his plan to eliminate the federal income tax?
