(NewsNation) — Eliminating income taxes and shifting to an “all-tariff policy” would leave roughly a $2.1 trillion gap in government revenue, making daily costs skyrocket in turn, according to financial experts.
Former President Donald Trump proposed an “all-tariff policy” that would eliminate income tax during a private meeting with Republican lawmakers in Washington, D.C., on Thursday.
While no income tax would make paychecks look a whole lot more appealing, experts believe the taxed companies’ financial burden would simply shift to everyday goods through higher prices, making the United States’ cost of living rise astronomically.
“President Donald Trump’s idea of imposing tariffs in order to abolish income tax could raise taxes for a typical American family by $5,000, according to an economist from the Center for American Progress Action Fund,” Newsweek reported.
Those tariffs on imported goods would have to be massive to maintain current revenue. According to Caleb Silver, editor-in-chief of Investopedia, the U.S. government took in around $2.3 trillion in income taxes last year and only $80 billion in customs taxes.
That massive gap leaves consumers open to price gouging, something Silver believes will first impact lower-income families.
“It hurts everybody the most because wealthy people will just spend less money, which is not great for economic growth and GDP,” he said.
Eventually, Silver predicts that consumers will simply “tap out” if prices rise too much. The all-tariff solution, he said, is not one at all.
“It sounds intriguing, but it doesn’t really solve the problem,” Silver said.