United States President Donald Trump has indicated that federal income taxes could be “substantially reduced” — or even eliminated — as the country’s sweeping new tariff policies take full effect.
In a recent post shared on Truth Social, Trump said the proposed tax cuts would primarily benefit individuals earning less than $200,000 annually. He also introduced the concept of an “External Revenue Service,” hinting at a future where the federal government would be funded through tariffs on imported goods rather than income taxes collected by the Internal Revenue Service (IRS).
If implemented, eliminating federal income taxes could significantly boost disposable income, potentially fueling higher investment activity across asset classes, including cryptocurrencies. However, experts caution that the stimulative impact is not guaranteed and would depend on broader economic conditions.
This is not the first time Trump has floated the idea. During an appearance on the Joe Rogan Experience podcast in October 2024, he hinted at replacing income taxes with tariff revenue while still on the campaign trail. However, he offered few specifics at the time.
Trump has often linked the strategy to America’s 19th-century Gilded Age, a period marked by rapid economic growth before a permanent federal income tax was introduced.
Research from accounting automation firm Dancing Numbers indicates that shifting to broader wage-based tax elimination could save the average American around $134,809 over their lifetime, potentially reaching $325,561 if all wage taxes are removed. Recently, on April 2, Trump signed an executive order imposing a 10% baseline tariff on all US trading partners, with additional rates for countries that impose tariffs on American goods. However, the administration’s inconsistent stance on tariffs, including multiple revisions and delayed deadlines, has caused confusion and volatility in the US financial markets. Economists have criticized this protectionist approach, warning of potential harm to capital markets with minimal benefits.
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