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In a video post, Reuters reports Trump says he may cut income tax ‘completely’ because of tariff income

Video Transcript

[We collected from the] “European Union $950 billion [in tariffs]. And they are building plants now in the United States because they don’t want to pay tariffs. So this is one of the biggest things economically that’s never happened [and never will]. Nobody’s ever seen anything like it. And over the next couple of years, I think we’ll substantially be cutting and maybe cutting out completely income tax. Could be almost completely cutting it because the money we’re taking in is going to be so large.”

Income Tax Revenue

In fiscal year (FY) 2024, the U.S. federal government collected approximately $4.92 trillion in revenue, with the largest sources being individual income taxes ($2.4 trillion) and payroll taxes ($1.7 trillion). The government has collected $5.23 trillion so far in FY 2025. These figures show that taxes are the primary source of federal income, with individual and payroll taxes accounting for the vast majority of revenue.

US Total Imports

For the 2024 full year, the US imported $3.27 trillion in goods. The US has a surplus in services and there are no tariffs on services anyway.

To replace income tax with tariffs, Trump would have to charge (and collect) $2.4 trillion in tariffs on $3.27 on imports.

That implies a tariff rate of 73.4 percent on all imports, without a decline in imports.

This is obvious economic idiocy, spouted by an obvious economic idiot.

At at an average 73.4 percent rate, tariff collection would plunge because imports would plunge. In practice we would likely have an economic depression.

And in case you missed it, the EU will be ” building plants now in the United States because they don’t want to pay tariffs.”

So, if the EU and others build plants in the US because they don’t want to pay tariffs, how the hell are we going to collect tariffs?

Is Trump Really That Stupid?

Since Trump has repeated this nonsensical message many times, it’s at least possible, if not probable that Trump really is as stupid as he sounds.

It’s also possible Trump is laying the blame for when the Supreme Court rejects his reciprocal tariff stupidity.

I suspect it is some of both.

Meanwhile, In the Real World

November 27, 2025: Deere to Take a Big Tariff Tax Hit of $1.2 Billion in Fiscal 2026

Deere flags a bigger hit from tariffs in 2026 than 2025.

September 6, 2025: Trump’s Aluminum Tariffs Seriously Backfire Already

Tariffs did not and will not bring production back to the US.

March 13, 2025: The Amazing “Success” of Trump’s 2018 Aluminum Tariffs in One Picture

I hope you can take a bit of headline sarcasm because the true story follows.

What Are the Odds the Supreme Court Rules Against Trump on Tariffs?

November 16, 2025: What Are the Odds the Supreme Court Rules Against Trump on Tariffs?

The Supreme Court decision is not random. I discuss a framework.

I believe Trump should lose 9-0 but he won’t. However, I do think he loses 6-3 or possibly 7-2.

See the above article for my rationale.

An Affordability Tie-In

Grok there are no tradeoffs because we won't collect $2.4 trillion. Imports would crash and we would head for a depression.

But assume we magically did. Tariffs are very regressive. The poor and middle class spend every penny. The wealthy don't.

Think about affordability!

— Mike "Mish" Shedlock (@MishGEA) November 28, 2025

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