One thing is certain a little over a week into Donald Trump’s second term: He plans to go big.
On Monday, the president appeared to call for an end to income taxes altogether in favor of tariffs, which is how the federal government was primarily funded throughout much of its history until the early 20th century.
During the campaign, Trump ran on proposals that would take the country away from income as a source of federal revenue, with the then-candidate calling for no tax on tips, no tax on overtime pay, and no tax on Social Security benefits.
Speaking to Republican members of Congress at his Doral resort in Miami, Florida, Trump said, “America is going to be very rich again, and it’s going to happen very quickly.”
“It’s time for the United States to return to the system that made us richer and more powerful than ever before,” he continued.
The president then recounted that from 1870 to 1913 the federal government was funded by tariffs, and “it was the richest period in the history of the United States.”
The Sixteenth Amendment was ratified in 1913 enabling the federal government to impose income taxes. An 1895 Supreme Court ruling had struck down a previous law passed by Congress seeking to do so.
So under the provisions of the amendment, Congress now has the authority, but not the obligation, to impose income taxes.
Trump argued Monday, “Instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens.”
PRESIDENT TRUMP: “It’s time for the United States to return to the system that made us richer and more powerful than ever before… Instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens.” pic.twitter.com/q4svY9JL2Y
— Trump War Room (@TrumpWarRoom) January 27, 2025
So he did not emphatically say that he wants to end income taxes completely, but he strongly suggested that’s where he wants to go.
Tariffs are taxes imposed on goods coming into the country paid by the importer to the federal government.
Trump imposed tariffs on various Chinese products during his first term at a rate reaching as high as 25 percent. Joe Biden then kept them in place after he came into office.
According to the Tax Foundation, as of March 2024, those tariffs raised $233 billion since 2018.
During the campaign, Trump proposed a new 10 to 20 percent tariff on all goods from all countries coming into the U.S. and increasing them even higher on China from its current 25 percent level.
The Tax Foundation calculated if the plan became law it would generate about $330 billion in revenue per year, increasing to $430 billion by 2033.
In fiscal year 2023, the federal government took in approximately $2.2 trillion in individual income tax revenue, so it would not appear that tariffs could completely take the place of the income tax.
Do you support the abolition of the federal income tax?
Yes: 97% (1618 Votes)
No: 3% (57 Votes)
However, it seems feasible that they could fund Trump’s plans for no tax on tips, overtime, and Social Security.
We’ll see what the future holds. These are the battles that will take place on Capitol Hill in the coming months as the Republicans seek to pass tax reform legislation that builds on the successful 2017 Tax Cuts and Jobs Act.
Regardless, the president is to be commended for encouraging lawmakers to think anew about how to fund the federal government.
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