The president is looking for an endgame.
Can President Donald Trump resurrect the 1890s? On the campaign trail, the real estate billionaire mogul floated the idea several times, conveying to the press and voters that if his plans worked out, there could be “a way” to scrap what former President Calvin Coolidge called “legalized robbery.” Trump averred that the United States was at its wealthiest in the late 19th century when the federal government relied on tariffs, not the income tax, for revenues. For a leader aiming to make America wealthy again, placing a bullseye on the 16th Amendment could be a worthy goal.
Axing the Income Tax
Commerce Secretary Howard Lutnick, one of the administration’s top salesmen for the Trump agenda, told CBS News last month that the president wants to abolish income taxes for those earning $150,000 or less per year. However, in a separate Fox News interview, he placed a caveat on this proposal: when the budget is balanced. Considering the $2 trillion federal deficit, Lutnick may have been correct when he added that “it’s aspirational.”
This would represent a seismic shift in tax burden because only approximately 7% of US citizens would be paying income taxes. At the same time, since the bottom 93% of taxpayers account for fewer than one-quarter of all income tax revenues – back-of-the-napkin math suggests about $500 billion per year – this could be a doable public policy pursuit.
The US government generated $4.92 trillion in revenues in the last fiscal year, with individual income taxes accounting for a little more than half. In the first six months of fiscal year 2025, total tax collection has exceeded $2 trillion, with individual income taxes representing about 60%, according to the Treasury Department’s recent Monthly Treasury Statement.
Is the White House even embarking upon this scheme? Many signs indicate the president and his team are laying the groundwork to scrap the century-old revenue generator.
In addition to remarks about swapping the income tax with tariffs, recent policy developments suggest that the Trump administration could be trying to starve the beast. US officials have outlined plans to reduce IRS personnel by around 20%. Trump’s pick to helm the tax-collecting agency, former Rep. Billy Long (R-MO), has previously submitted legislation to eliminate the IRS. Even at the state level, various Republican governors and lawmakers have expressed support for shrinking or waving goodbye to the income tax.
All the president’s men have other tax pursuits they are trying to implement, from extending the 2017 Tax Cuts and Jobs Act to removing taxes on tips, overtime pay, and Social Security benefits. In other words, anti-16th Amendment folks might need to wait a while.
Spending Problem
It has become a trope, but it is hard to disagree that the United States does not suffer from a lack of revenues but rather a spending problem. The federal government will spend more than $7 trillion this year, eventually exceeding $10 trillion in the next decade, with most of Uncle Sam’s outlays concentrated on the mandatory side (Social Security, Medicare, and Medicaid), according to the nonpartisan Congressional Budget Office, also known as the CBO. Interest charges will still account for a large share of annual expenditures, especially if the ten-year Treasury yield remains elevated as it has been this year.
Trump and his Cabinet have been optimistic that they can eliminate fraud, waste, and abuse and lower federal spending. So far, their efforts have not appeared in the financial data. Will their work produce savings by fiscal year 2026? Many, including Elon Musk, are hoping so.
Other officials, such as trade advisor Peter Navarro, believe tariff revenues can support the government. While the White House has stopped short of releasing official projections for money from higher import duties, Navarro thinks the United States can generate about $600 billion to $700 billion annually from the levies, assuming international trade flows do not change. This was most likely a liberal estimate. But if his prognostications are accurate, it would be enough to cover roughly two-thirds of debt-servicing payments.
Going Out With a Bang
If this is truly Trump’s final stint at 1600 Pennsylvania Avenue, the president could go out with a bang by putting the kibosh on the federal income tax. An initiative that returns roughly $500 billion to working-class households would be hard to oppose, even for progressive lawmakers, since this would perhaps be the most progressive tax law in modern history. It is a lofty objective, and the public would be better served by not getting their hopes up. However, the desire to no longer fork over a share of one’s hard-earned income could be another facet of resuscitating the American Dream.
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