Trump said the proceeds from the tariffs could allow Americans to stop paying income taxes. The math doesn’t add up

This article originally appeared on PolitiFact.

President Donald Trump recently claimed that his tariffs would generate so much money that Americans could soon stop paying federal income taxes. But experts say it’s an exaggerated promise.

“Over the next couple of years, I think we’re going to cut the income tax — and probably cut it almost completely, because the money we get is going to be so significant,” Trump told military service members in a Thanksgiving video.

He repeated the idea at a Cabinet meeting on December 2.

“I think at some point in the not-so-distant future, you won’t even have to pay income tax because the money we get is so great,” Trump said. “It’s such an enormous income tax that you won’t have to pay income tax. Whether you get rid of it or keep it just for fun or make it really low, much lower than it is now, but you won’t pay income tax.”

This is not the first time that Trump has promised Americans a windfall from his tariffs, which represent the most comprehensive tariffs on foreign products the United States has seen in decades. In November, Trump promised Americans $2,000 each in tariff revenue, a pledge based on questionable calculations.

Replacing federal income tax revenues with tariff revenues is more difficult.

The United States has collected about $257 billion in tariff revenues so far this year, of which $167 billion came from the tariffs imposed by Trump in his second term.

Meanwhile, the federal income tax will bring in about $2.4 trillion in 2024, more than 14 times what Trump’s tariffs generated during his second term.

“It is not at all possible that tariffs will be used to eliminate the income tax,” said Steve Ellis, president of Taxpayers for Common Sense, a group that tracks the federal budget.

The White House did not respond to our request for details about how the math works.

The mathematics of trade definitions versus income tax

In 2024, individual income taxes accounted for just under half of the federal government’s revenue. The second largest share, about 35%, came from payroll taxes, which were withheld from workers’ salaries to fund Social Security and Medicare. Corporate income taxes came in third place at about 11%. Tariff revenues were at the bottom of the list.

To replace what the federal income tax currently covers, tariff revenues would need to grow to roughly half of total federal revenues, or about $2.4 trillion.

But Trump’s increased tariffs have not achieved anything close to that amount, and are not expected to exceed $260 billion annually within sight.

If Trump’s tariffs remain in place through 2026, they would generate $191 billion in revenue that year, according to the center-right Tax Foundation. If the tariffs remain in place until 2034, the United States will receive $256 billion that year, although a pending Supreme Court challenge could jeopardize Trump’s plan.

However, $256 billion annually is a pittance compared to the approximately $2.43 trillion collected in federal income taxes last year.

There are several ways to eliminate federal income tax with the help of tariff revenue, but none of them are acceptable.

• Borrow more money. The current level of federal revenues is already $1.8 trillion short of covering the government’s expenses. Eliminating income taxes without replacing them with tariff revenues, dollar for dollar, would widen this gap significantly, adding to the debt burden of future generations.
• Reducing the federal government. In the 19th century, tariffs financed most government actions, Ellis said. But government was much smaller then, and Americans today show no desire to give up the benefits they have become accustomed to, from Social Security to Medicare to a powerful military.
• Increase tariffs enough to equal income tax revenues. That means setting tariff rates “incredibly high — more than 60%,” said Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank. He said that tariffs of this size would “radically distort production and purchasing patterns and reduce the amount of imports. As a result, tariff rates must rise further.”

He watches: Trump floats tariff ‘dividends’ for Americans, but experts question the calculations

Can a tax be imposed on consumption?

The idea of ​​shifting from a tax system that is largely income-based to one that is more consumption-based has been debated for decades. Many European countries impose VAT, which is essentially a sales tax divided into several parts at different stages, from the creation of the product to its final sale.

This idea faces challenges in the United States, where many states already tax retail sales, so imposing a new federal tax at the highest levels would impose an additional burden, especially for low-income households who have to spend larger proportions of their income than wealthier households (and who often pay relatively less in federal income tax under the current system).

The sales tax “should be about 40%, and there’s going to be a lot of evasion at that rate,” said Dean Baker, co-founder of the liberal Center for Economic and Policy Research.