Former US President Donald Trump has proposed abolishing federal income tax if he is elected in the upcoming presidential election. This proposal represents a significant departure from his previous tax cut plans and could have far-reaching implications for the US economy.
Trump, who is the presumptive Republican presidential nominee, outlined his plan in a meeting with Republican lawmakers, according to Yahoo Finance. He suggested that the lost revenue from eliminating the income tax could be replaced by increasing tariffs on imported goods.
In a separate meeting with business leaders, Trump indicated that he would also reduce corporate tax from the current rate of 21%. This move is seen as an attempt to gain support from the business community, which has become increasingly critical of Trump since the January 6, 2021 Capitol riot.
However, experts have raised concerns about the feasibility and potential consequences of Trump’s proposal. Economist Caleb Silver of Investopedia estimates that abolishing the federal income tax would create a shortfall of $2.1 trillion in government revenues, which could lead to increased costs for average American families.
Nobel Prize-winning economist Paul Krugman argues that the average tariff rate under Trump’s proposed system would be at least 133%, as businesses would pass on the increased costs to consumers. This could lead to a significant increase in the cost of living for ordinary Americans.
Despite these concerns, Trump’s proposal has been met with mixed reactions. Some economists believe that it is a viable plan that could stimulate economic growth, while others warn that it could have negative consequences for the US economy. As the presidential election approaches, the debate over Trump’s tax plan is likely to intensify.
