21 Jul 2024 11:05 am
Former president Donald Trump recently suggested that he is considering instituting a policy of tariffs that would lead to the elimination of the federal income tax.
The Impact of Substituting Tariffs for Income Taxes
The concept of replacing income taxes with the revenue from tariffs also has short- and long-term impacts. In the short term, the ‘all-tariff’ plan would act as a consumption tax — a sales tax on steroids, if you will. Because the cost of a tariff is passed on to the consumer, and consumer prices will go up, consumers are paying more for everything they buy.