Would replacing the income tax with higher tariffs help ‘struggling Americans’?
Low-income Americans, who pay little or no income tax, wouldn’t gain much in savings if the income tax were eliminated. On the other hand, high tariffs would increase the price of goods, financially burdening those already struggling.
Poorer Americans, who spend a higher portion of their income on goods, would be disproportionately impacted by the switch. Economists have called Trump’s proposal to replace the income tax with steep tariffs regressive: “It would shift the tax burden away from the well off, substantially increasing the tax burden on the poor and middle class,” according to the nonpartisan Peterson Institute for International Economics.
An analysis by the liberal think tank Center for American Progress found that replacing the income tax with tariffs would effectively raise taxes for the bottom 90% of households and reduce the income of the bottom quintile by 25% while increasing the income of the top 1% by 20%.