This week, President Donald Trump pitched the idea of eliminating federal income taxes at the 2025 Republican Issues Conference in Doral, Florida.
“We had no income tax. The income tax came in … 1913. As I said in my speech last week, instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens,” Trump said, per Fox Business.
“It’s time for the United States to return to the system that made us richer and more powerful than ever before,” he added. “You know, the United States in 1870 to 1913, all tariffs. And that was the richest period in the history of the United States, relatively speaking.”
Although America’s first federal income tax was instituted in 1862 to fund Civil War expenses, that temporary provision expired a decade later. In 1913, the states ratified the Sixteenth Amendment, allowing Congress to levy an income tax on corporations and individuals. Until then, most federal revenues had been garnered through tariffs and excise taxes on specific goods.
Trump did not specify in his speech whether he plans to eliminate both corporate and individual federal income taxes. Currently, individual income taxes account for about half of the federal government’s $5 trillion annual revenue. Only about 2% of government revenue comes from tariffs, CNN reported.
Trump has made similar comments in the recent past about replacing taxes with tariffs.
“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump said during his inaugural speech on January 20. “For this purpose, we are establishing the External Revenue Service to collect all tariffs, duties, and revenues.”
In October 2024, while speaking at a New York barbershop campaign stop, then-presidential candidate Trump confirmed his intention to eliminate income tax, adding, “if what I’m planning comes out.”
Shortly thereafter, when podcaster Joe Rogan asked if he planned to eliminate the income tax, Trump responded, “Yeah, sure, why not?”
Trump’s plan has been met with mixed reactions from economic experts.
“In general, this is a deeply impractical plan,” said Kimberly Clausing, an economist and professor of tax law at UCLA, per Newsweek.
When asked whether the revenue generated from tariffs on Canada, Mexico, China, and other countries could compensate for the elimination of income tax, Clausing responded, “Simply put, no. It wouldn’t even be close.”
However, business consultant Gerald Celente expressed his agreement with the plan in a posting on X.
“Trump says he will abolish U.S. income tax and ‘instead of taxing our citizens to enrich foreign nations, we should be tariffing & taxing foreign nations to enrich our citizens.’ I totally agree. Bravo!” Celente wrote.
Financial planner and investment adviser Rick Miller told Yahoo! Finance that eliminating income tax could benefit employers and employees.
“I believe that employers would take advantage of this to enhance benefit packages to reward valuable employees, improve retention and make hiring incentives more available and attractive,” he said.
“Employers would have maximum flexibility and creativity in the entire compensation arena. Job seekers could benefit from creative compensation plans and more freedom to negotiate an attractive job offer on both sides,” Miller added.