Former President Donald Trump has floated a new tax plan, proposing to abolish the personal income tax and replace it with increased tariffs on imported goods. This move comes as Trump seeks to reclaim his old job, and it’s a tactic that could boost his populist credentials and put President Joe Biden on the defensive.
Trump’s history with tax policy is marked by his 2017 signing of a massive tax cut for individuals and corporations. However, tariffs have been a key component of his policies since his first presidential campaign in 2016. He launched a trade war with China, imposing tariffs on several imported goods.
Abolishing the income tax and replacing it with tariffs would require a significant increase in tariff revenue, from $80 billion to $2.2 trillion. However, the politics of this proposal are a slam dunk. The government would shift its taxation policy from taxing income to taxing consumption, with only foreign imports being affected.
This strategy would serve two purposes. Firstly, it would incentivize companies to manufacture goods in the United States, boosting the job market. Secondly, removing the income tax would eliminate the part of the tax code that voters feel most strongly about.
This proposal is a shrewd political move, as it promises voters a significant increase in their paychecks. Trump could do worse than running on a platform of no income tax and higher tariffs on foreign imports.
