During a private meeting with Republican lawmakers on Capitol Hill in June, former President Donald Trump reportedly floated the idea of replacing the federal income tax with tariffs, sparking a flurry of worried headlines from the corporate press and economic “experts.” While the idea has thus far failed to gain much traction, the concept of eliminating income tax is nonetheless perhaps the single most popular policy Trump and a potential Republican Congress could pursue – and it’s far more realistic than the political establishment would have the American people believe.
Unsurprisingly, year after year the vast majority of Americans report being unhappy with the amount of income tax they pay. Ahead of Tax Day this year, just 27 percent of taxpayers surveyed by AP-NORC said their federal income taxes were “fair,” while 60 percent said they believed their tax burden was too high. Those figures are more or less in line with historical trends measured by Gallup.
Additionally, just 18 percent of Americans think their tax dollars are being spent the right way, while more than half say the government isn’t using their money effectively.
But the Washington political class would have Americans believe that all of this doesn’t matter – that income tax is just an unfortunate but necessary part of living in a society. The implication is that the country can’t function without collecting income tax to pay for things like infrastructure and the military.
However, this narrative, which has ultimately led to a massive expansion of government power, does not account for the simple history of the income tax or basic facts about how the U.S. government actually makes money.
The Revenue Act of 1861, signed into law by President Lincoln in 1862, established the first income tax in the United States to help fund the Civil War. That law was repealed in 1872, and it wasn’t until the ratification of the 16th Amendment in 1913 that the country would have an income tax again.
For every other period in American history, the country functioned without a federal income tax – mostly by levying tariffs, exactly as Trump proposed.
During Fiscal Year 2023, the federal government collected $2.2 trillion in income taxes – half of the $4.4 trillion in total government revenue. That means that, even if income tax were eliminated and replaced with nothing, the federal government would still have at least another $2.2 trillion to fund itself.
The problem is that the government is now spending in excess of $6.3 trillion per year, an amount that is in effect forcing Americans to pay even more tax in the form of inflation. No matter how many tax dollars the federal government collects, it always insists that it needs more.
Multiple states, which the Founding Fathers envisioned as “laboratories of democracy,” have already proven that abolishing income tax can work. It is no coincidence that North Dakota, Alaska, Florida, Washington, Texas, and Wyoming – six of the seven states with no state income tax – were all in the top 10 for real GDP growth in 2023.
It’s also worth considering just how oppressive and corrupt the country’s current tax regime has become. The first Revenue Act of 1861 levied a three percent tax on incomes between $600 and $10,000 and a five percent tax on incomes of more than $10,000 – about $347,000 in today’s dollars.
Following ratification of the 16th Amendment, the first tax levied by Congress was one percent on net personal income of more than $3,000 (about $92,000 in 2024 dollars) with an additional tax of six percent on income over $500,000 (about $15 million in 2024 dollars).
Today, the federal tax rate starts at a whopping 10 percent on income of $0-11,600 for single filers. That figure jumps to 22 percent for income between $47,150 and $100,525, 32 percent for income between $191,950 and $243,725, and finally a top marginal rate of 37 percent for any income over $609,350.
Meanwhile, Democrats have used tax policy to stoke class divisions, constantly promising to “make the rich pay their fair share.” Of course, in reality, the wealthy do pay their fair share – and then some.
In 2021, the most recent year for which full data is available, the top one percent of earners, despite accounting for just 26 percent of all income, paid 46 percent of all income tax collected by the federal government. That’s more than the bottom 95 percent of income earners combined. The simple truth is that the U.S. already has one of the most progressive tax systems anywhere in the world.
The withholding system also means the vast majority of Americans don’t even truly realize how much tax they are paying because the government reaches its hand into their paycheck before they even see it. While the corporate media and political establishment condition taxpayers to be grateful for a refund check from Uncle Sam, what Americans should consider is that this is their money which was taken from them by the government, parked in the Treasury all year, and then returned to them – without interest.
How much more, we should be asking, could those dollars have made in the stock market or other investments?
And of course, there is the nightmare of the inefficient and ineffective auditing system and the constant specter of an IRS that Democrat administrations have repeatedly weaponized against conservatives.
In short, Americans are taxed at a rate and in a manner that would make their forefathers’ heads spin and would have the Founding Fathers rolling over in their graves.
This oppressive and corrupt system has enabled and empowered an oppressive and corrupt government. As Americans have paid more and more in income tax, the federal bureaucracy has bloated to a previously unimaginable degree, bringing with it a flood of regulations that have hampered economic growth and trampled individual liberties.
Abolishing the income tax (and, ideally, passing a balanced budget Constitutional Amendment) would in one fell swoop set in motion a host of other victories for Trump’s America First agenda.
Activist-minded bureaucrats and Deep State saboteurs would suddenly find themselves without a treasure chest of taxpayer dollars with which to fund their partisan schemes.
More aggressive tariffs would bolster American industry and end the United States’ reliance on foreign imports.
Americans would keep significantly more of their income, empowering them to do things like start businesses, get married, purchase a home, and ultimately revitalize the American Dream.
The federal government would see its power dramatically reduced, returning more power to states and localities where it rightfully belongs.
Best of all, Trump or another future Republican administration would not even have to convince the public on the wisdom of such a policy – most Americans already despise the income tax and, for that matter, the IRS.
The political establishment, including many Republicans, would undoubtedly dig in and strongly oppose any real effort to eliminate the income tax, recognizing that it would mean the end of their unwarranted influence over American life. But if Trump has proven one thing throughout his political career, it’s that he just might have the vision and willpower to make it happen.
Shane Harris is a writer and political consultant from Southwest Ohio. You can follow him on X @shaneharris513.
