‘The Big Money Show’ discusses President Donald Trump’s ‘aggressive’ economic agenda.
Pitching a monumental and potentially controversial proposal to his Republican allies, President Donald Trump is seemingly floating the idea of scrapping federal income taxes altogether.
“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 during his conference address in Doral, Florida, on Monday.
“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.”
The first federal income tax was passed on Feb. 25, 1913, as part of the 16th Amendment. This gave Congress constitutional authority to levy taxes on corporate and individual income, according to the Internal Revenue Service (IRS).
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U.S. Treasury data indicates that $4.92 trillion was collected in federal income taxes for the 2023 filing year. But as Trump plans to create a new “External Revenue Service” that would be tasked with collecting revenue from tariffs, economists and market experts seem mixed, with some pushing back and noting that U.S. importers bear the brunt of the cost of tariffs rather than firms overseas.
President Donald Trump on Monday pitched the idea of eliminating federal income tax during his address at a GOP conference in Doral, Florida. (Getty Images)
“Tariffs are not external revenue; they are taxes on U.S. importers that shrink both the U.S. economy and U.S. incomes. Higher tariffs will create a drag on the U.S. economy and will threaten to offset the benefits of tax cuts elsewhere. They should not be relied upon as a major source of tax revenue,” Tax Foundation Vice President Erica York previously told FOX Business.
“Markets like certainty. So if you tell me, ‘10% tariff,’ if I’m a company like GM, I can handle that,” Taylor Riggs, “The Big Money Show” co-host, pointed out on Tuesday. “If you tell me that every month it’s going up by 2.5%, I have a hard time planning around that, because how do I figure out: do I buy the goods now? What if the tariffs go up? Is it a negotiating tool?”
“This whole idea about eliminating the income tax, or redefining it and coming in with a 10% tariff tax and giving an income tax break to Americans, encourages them to work more, in my opinion, encourages them to spend more, in my opinion,” Slatestone Wealth chief market strategist Kenny Polcari also chimed in.
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“So then you end up having a stronger and better economy,” Polcari continued. “I think the market likes it.”
During his successful campaign to return to the White House, Trump touted plans to impose an across-the-board tariff of 10% or 20% — as well as a larger tariff of 60% on goods imported from China.
He also threatened to impose a 25% tariff on goods from Canada and Mexico, which are both parties to the U.S.-Mexico-Canada Agreement (USMCA) — a free trade agreement Trump negotiated during his first term as a successor to the North American Free Trade Agreement (NAFTA).
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Walser Wealth Management President Rebecca Walser and Culture+Group CEO and co-founder Lili Gil Valletta discuss which world leaders will cave to President Donald Trump’s tariff threats on ‘Making Money.’
More recently, Trump also teased moving nearly 90,000 IRS agents hired under the Biden administration to the border to patrol the area.
Democrats in 2022 approved $80 billion in funding for the IRS, including hiring roughly 87,000 new agents across a 10-year period as part of the Inflation Reduction Act. President Joe Biden signed the legislation into law that year.
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FOX Business’ Eric Revell and Fox News’ Emma Colton contributed to this report.
