Posted on 04/03/2025 2:08:28 PM PDT by Lazamataz
President Donald Trump has stated multiple times that he wants to eliminate income taxes and replace them with tariffs. Such a decision would be one of the most significant changes to the tax code in decades, and it could help Americans save a lot of money.
The government still needs to collect funds, so the tax code could shift to a combination of tariffs and sales tax. However, even if the IRS isn’t eliminated, Trump has floated the idea of no one paying taxes if they earn less than $150,000 per year.
According to the TaxAct tax bracket calculator, a single person would have an effective tax rate of 16.83% on a $150,000 salary in 2025. This doesn’t include the FICA tax, which funds Social Security and Medicare.
Someone who earns $150,000 per year would pay about $25,500 in federal income taxes. That’s how much you would save if Trump eliminated income taxes.
The only way you’ll get ahead on the proposal is if you don’t have to pay more than that $25,500 on any extra sales tax or tariffs. People who don’t buy as many goods and services are more likely to save money with this model if they are earning $150,000 per year.
(snip)
Will Tax Savings Boost Inflation?
The government still needs money for its operations, and it may turn to the money printer for some help. This scenario could boost inflation and reduce the purchasing power of every dollar.
The key to eliminating federal income taxes without creating high inflation might be the Department of Government Efficiency (DOGE). The more excess federal spending this group eliminates, the easier it is to make major tax cuts without increasing inflation.
(Excerpt) Read more at msn.com ...
It would sure solve the problem of tax cheats.
Any talk about prices going up because of Trump's retaliatory tariffs is misleading if it doesn't talk about how much inflation has reduced our purchasing power.
That would eliminate a lot of commercial income tax jobs and products. Kiss intuit, H&R Block, and most CPAs goodbye.
“ The government still needs money for its operations, and it may turn to the money printer for some help. This scenario could boost inflation and reduce the purchasing power of every dollar.”
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The writer thinks that the government would still need to print money to pay for its operations. I think if you start hacking off entire departments, it is likely that we could start running a surplus. The overall debt would remain high. And the second the dems got back into office, the spending would soon be multiples of any surplus.
THAT would be inflationary.
Transitioning from an income tax to a new sales tax is great for people deeply in debt - they will now earn tax free the money they already spent without a new sales tax. Its horrible for those who have saved and will now pay a new sales tax with the money they paid taxes on when they earned it.
What an economic boon that would be the likes we’ve never seen before.
The reason for never seeing its like before is that Americans, individual freedom, and resulting wealth has been kept down for so long by the mostly unconstitutional federal gov’t. The economic boon would be part of a catch-up.
To solidify the income tax elimination, CUT THE 80%+ UNCONSTITUIONAL PORTION OF GOV’T and there would be no deficit problem.
Consumption tax. Simple and more my choice on how much and when I pay it.
I see your point. They could, however, exempt money from a national sales tax, provided you could prove that money was taxed via income tax. There would necessarily be a transition period.
Good as long as it doesn’t shift do horrific value-added tax (VAT) - the worst.
Is there a different figure for those married, with children?
Amen.
Using last years data:
Total income taxes: $2.4 trillion
From those earning greater that $150k: $1.7 trillion.
Deficit: $700 billion.
Imports: $3.4 trillion
I think an exemption might be too computational complicated to do for each person if it is to take into acct unrealized gains, pre and post tax IRAs (401k/403b/roth), illiquid assets, etc.
Ditto.
At one time only landowners who paid taxes could vote.
When people pay no taxes, and enjoy wealth transfers from government, they have no personal stake in the country, yet in today’s world their vote counts as much as the vote of the person who labored, produced and paid taxes.
The person who pays no taxes has a strong economic incentive to vote for politicians who will take more in taxes from the productive.
Perhaps it would be better for all citizens over the age of 18 to pay taxes. If even the poorest pay something, they will be keenly aware when politicians talk about raising taxes.
You mean I wouldn’t have to spend 7 to 1200 a year plus all the time each month compiling the information?
That would be too bad.
Couldn’t they not do a sales tax and use tariffs instead?
Individual federal income tax currently amounts to $2.2T, while imports only amount to $3.1T, so we’d need something near 70% tariffs. Such high tariffs would obviously cause a massive reduction in imports, to the point that tariffs would have to significantly exceed 100%, further reducing imports. Lather, rinse, repeat.
If we made MASSIVE cuts to our spending, we might be able to find a balance. Push all social programs to the states. You want to give out free medical care, welfare, food stamps, housing, etc, then tax your own residents. Eliminating the national debt and cutting other federal spending by 50% should work. States would have to increase taxes, but productive people would flee badly mismanaged states. Some states would fail.
Its a needless excercise speculating on something that is not going to happen - eliminating the income tax (at least not anytime soon or even within a few years. Why? Trump’s claims about what his recent tariff’s will raise in revenue - taxing U.S. importers - is not yet proven. So, without ACTUAL (not speculative) massive tariff revenues we cannot eliminate the income tax and hope to make any headway on lowering the debt.
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