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He says, it will be payed for by the tariffs – but the numbers don’t add up.
A Thanksgiving address from Mar-a-Lago revived one of President Donald Trump’s most sweeping fiscal promises, hinting that Washington could one day dispense with income tax altogether.
According to Newsweek, the president linked the idea to rising tariff revenues and what he described as record investment pledges tied to his trade agenda, without detailing how such a shift would replace the government’s primary source of funding.
In remarks delivered to reporters, Trump framed the prospect as achievable “over the next couple of years,” arguing that tariff flows and corporate commitments were expanding faster than expected.
“Over the next couple of years, I think we’ll substantially be cutting and maybe cutting out completely, but we’ll be cutting income tax,” he said according to Reuters.
Rising ambitions
Economists interviewed by outlets including Newsweek and Bloomberg have repeatedly warned that past Republican dreams of replacing income tax cannot be matched by tariff proceeds.
Michael Graetz, professor of Tax Law at Columbia Law School, told Newsweek:
“Tariff revenue will fall far short. And substituting tariffs, or even a national sales tax or value added tax, for the income tax would shift the tax burden away from the top to people with less”
Treasury data cited in the coverage shows individual income tax produced nearly $2.7 trillion last fiscal year, compared with $195 billion from customs duties.
Earlier in his campaign, Trump invoked the tariff-heavy economic model of the late 19th century, telling supporters the U.S. “didn’t have an income tax” during that era.
Revenue realities
Trump has pointed to investment announcements abroad and at home, claiming nations have pledged around $21 trillion in investments since he returned to office.
But Bloomberg has estimated that the claim is actually short trillion, pointing to official lists from the White House listing only investment pledges worth $9.6 trillion.
According to Axios citing Treasury data, the U.S. collected about $195 billion in tariff revenue in fiscal 2025, and is on track to collect a little more than $400 billion in fiscal 2026.
In comparison, the tax revenue from individual income tax in 2025 was $2.66 trillion, Axios reports.
Legal pressure
The administration’s tariff authority is now before the Supreme Court, after lower courts held Trump overstepped powers under the 1977 International Emergency Economic Powers Act.
A ruling is expected by year’s end.
Trump has warned that an adverse outcome would be “devastating” and could undermine the investment flows he says rely on existing tariffs.
Sources Newsweek, Reuters, Bloomberg, Axios, U.S. Treasury
