No more income tax? Trump's plan to replace it with tariffs sparks debate

United States President Donald Trump said that this time there is a "real chance" that income tax could be potentially replaced if he raises enough money from the retaliatory tariffs. He also indicated how the US benefited greatly financially from tariffs during the 1800s.The drastic tariffs, announced by Trump on April 2, shook the financial markets into a panic and raised recession alarms, forcing the US president to promptly impose a partial 90-day pause on the tariffs on imports and hike his already sharp tariffs against China to as high as 145 per cent.

Trump explains the importance of tariffs

There is a possibility that the money is so huge that it could substitute" income tax, Donald Trump said in an interview with Fox Noticias. "You know, back in the old days, around 1870 to 1913, the tariffs were the sole means of money. And that's when our country was comparatively the wealthiest. We were the wealthiest."

Fresh drive to eliminate the income tax

Trump, however, conceded that any modification to income tax would need Congressional approval. There has also been a fresh drive to eliminate the income tax and is described as the most brazen illustration of the cutting-of-taxes trend that the nation pursued through the Covid-19 pandemic. It has now been nearly 45 years since a US state removed the income tax on salaries or wages, but two states - Kentucky and Mississippi - are on their way to eliminate it.
 

Which Governments Levy Income Tax?

The 16th Amendment to the U.S. Constitution authorizes Congress to impose taxes on income. It was ratified by the states in 1913. Most states have since instituted their own income taxes. Eight states have no personal income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas and Wyoming. A ninth state, Washington, has no personal income tax on wages and salaries but does tax some capital gains income above $270,000.