In a statement that could reshape the American economic landscape, US President Donald Trump has indicated a potential near-total elimination of the federal income tax, a move he claims would be funded by revenue generated from tariffs.
The Proposal: Trading Income Tax for Tariffs
The bold declaration was made by the President on November 27, 2025. According to a report from Reuters, Trump explicitly stated, “We may be cutting income tax almost completely because of tariff proceeds.”
This radical suggestion positions tariff income as a direct substitute for the massive revenue stream currently provided by income taxes, a cornerstone of the US government's funding for decades.
Context of the Tariff Dividend
This latest announcement did not occur in a vacuum. It comes just days after President Trump first floated the idea of a ‘tariff dividend’ for American citizens.
While specific details on how this dividend would be distributed remain unclear, the underlying principle suggests that money collected from taxes on imports could be funneled back to the public, either through direct payments or, as now proposed, by removing the burden of income tax entirely.
Potential Global and Economic Implications
The proposal, if pursued, would represent one of the most significant fiscal policy overhauls in modern US history. Economists and policymakers are likely to scrutinize the plan intensely, debating its feasibility and potential consequences.
The key questions now are:
- Can tariff revenue realistically replace income tax?
- What would be the impact on US international trade relations?
- How would this affect the global economy and markets?
As the world watches, this proposition sets the stage for a major economic debate. Further developments are awaited as the Trump administration potentially fleshes out this unprecedented idea.
