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From Tariffs to “Fair Tax”: Exploring Proposals to Eliminate Income Tax

TCC

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No one likes paying income tax. However, it is structured, or however high or low the rate, someone always feels cheated. Much of the resentment stems from the fact that income tax is compulsory, you pay whether you want to or not, and whether or not you agree with how the government spends your money.

This frustration has fueled proposals to replace the system with something more voluntary in appearance. Advocates suggest revenue models that still fund government operations while giving taxpayers the option to “opt out.” Two of the most prominent alternatives are tariffs and the FairTax movement, both seeking to reduce or eliminate compulsory income taxes by shifting the burden to consumption.

President Trump has repeatedly floated the idea of replacing or reducing federal income taxes with tariff revenues. His proposals aim to cut reliance on income taxes, sometimes even suggesting elimination, by funding government operations through import duties. Supporters argue this would free disposable income, reduce paperwork, and centralize tax collection at the point of sale, allowing businesses to redirect resources toward growth and job creation.


Trump has also cast tariffs as tools to protect domestic industries, reduce dependence on foreign goods, and strengthen America’s negotiating position. He ties them to a nostalgic vision of the past, noting that from 1790 to 1860 tariffs supplied about 90 percent of federal revenue. Shortly after taking office, he said: “We were at our richest from 1870 to 1913. That’s when we were a tariff country. And then they went to an income tax concept. It’s fine. It’s OK. But it would have been very much better.”
 
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