Trump Unveils Plan to Slash Federal Income Taxes Through Tariff Revenues

United States President Donald Trump has announced that federal income taxes will be "substantially reduced," and in some cases, potentially eliminated, as his new tariff policies take effect. The move, he says, would particularly benefit Americans earning less than $200,000 per year.

In a Truth Social post on April 27, President Trump emphasized that the government would shift from traditional income taxation to funding operations primarily through import tariffs. He coined the term "External Revenue Service," signaling a transformation away from the IRS's current role.

The President had previously hinted at this idea during an appearance on the Joe Rogan Experience podcast in October 2024, though at the time, he offered limited specifics. Trump likened his vision to the Gilded Age of the 19th century, when America thrived without a permanent federal income tax and relied heavily on tariffs for government revenue.

Recent research by accounting automation firm Dancing Numbers suggests Trump's proposal could save the average American approximately $134,809 in lifetime taxes. If additional wage-based taxes were also eliminated, the figure could rise to $325,561 per person.

Earlier this month, Trump signed an executive order enforcing broad-based tariffs — a 10% baseline on all imports, with adjustable rates depending on other countries' trade policies toward U.S. goods. Despite some policy reversals and adjustments since then, the administration remains committed to the overall shift toward tariff-funded governance.

Financial analysts, however, warn that the unpredictable tariff policies have already sparked heightened volatility in U.S. stock markets, increased bond yields, and fueled concerns over the long-term effects on capital markets.

Nonetheless, the potential elimination of federal income taxes is seen as a potential boost for various asset classes, including cryptocurrencies, by increasing Americans' disposable income and fueling investment activity — although the broader economic effects remain uncertain.