Source: Cointelegraph
Original: “Trump: Federal Taxes Will Be 'Significantly Reduced' After Tariffs Are in Place”
U.S. President Trump recently stated that once the tariff system is fully implemented, federal income taxes will be "significantly reduced," and may even be completely eliminated.
In a Truth Social post on April 27, Trump added that this tax reduction plan will primarily target individuals with an annual income of less than $200,000.
Trump also mentioned the concept of the "Foreign Income Agency"—referring to funding the federal government through import tariffs rather than the current U.S. Internal Revenue Service (IRS) taxation model.
Analysts believe that eliminating federal income tax could be a positive factor driving up asset prices, including cryptocurrencies, as the increase in disposable income would partially flow back into productive investments. However, this stimulative effect is not guaranteed.
Trump first proposed the idea of eliminating federal income tax during an appearance on the Joe Rogan show in October 2024, but at that time, he did not provide specific details about the proposal while in the midst of his campaign.
The U.S. President stated that replacing federal income tax with revenue from import tariffs would return the U.S. to the prosperity of the Gilded Age of the 19th century, when the country had not yet established a permanent federal income tax.
Research by accounting automation company Dancing Numbers found that Trump's proposal could save the average American $134,809 in lifetime tax expenditures.
Dancing Numbers added that if other wage-related income taxes were also eliminated, the tax savings for each American could reach up to $325,561.
On April 2, Trump signed an executive order imposing comprehensive tariffs on all U.S. trading partners, including a baseline tariff of 10% on all countries, and implementing different "reciprocal" tariffs on countries that impose import tariffs on U.S. goods.
However, the Trump administration has repeatedly changed its stance on tariff policy, being inconsistent regarding tariff rates and the timeline for full implementation of the tariff system.
The constantly changing rhetoric of the Trump administration on trade policy has exacerbated volatility in the U.S. stock market, led to rising U.S. bond yields, and drawn widespread criticism from financial analysts. They argue that these protectionist trade policies harm capital markets with minimal effect.
Related: U.S. Senator Calls for Impeachment of Trump Over "Meme Coin Dinner" Incident
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