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Prior to the 16th Amendment, which was ratified in 1913, the United States did not have a permanent income tax levied on citizens.
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US President Donald Trump’s plan to replace income taxes with tariffs could save the average American at least $134,809 over their lifetimes, according to research from accounting automation company Dancing Numbers.
According to the company, the cost savings could extend to as much as $325,561 per person if other wage-based income taxes at the state level are removed.
The firm added that residents of New Jersey, New York, Connecticut, Illinois and Massachusetts would benefit the most from tax relief. Punit Jindal, founder of Dancing Numbers, also told Cointelegraph:
“In all likelihood, Trump’s plan will be preceded by a 20% ‘DOGE Dividend’ tax refund of cost savings from the Department Of Government Efficiency. This measure would serve as minor tax cut relief, providing immediate tax savings before a complete federal tax repeal is implemented.”
Tax cuts typically stimulate asset prices as investors pour their cost savings into the markets. Any cuts could also help offset any potential rise in the price of goods brought on by reciprocal trade tariffs and a trade war.
Top five US states that would benefit from Trump tax cuts. Source: Dancing Numbers
Related: Bitcoin stumbles as Trump announces 25% steel and aluminum tariffs
Trump and commerce secretary take aim at IRS
President Trump proposed the idea of eliminating the federal income tax in October 2024 and replacing the income tax revenue with the proceeds from taxes on imported goods.
During an appearance on the Joe Rogan Experience, Trump cited the wealth created by tariffs during the 19th century, when the United States federal government was funded almost exclusively through tariffs and permanent income taxes did not exist.
President Donald Trump discussing reciprocal trade tariffs during a meeting with Indian Prime Minister Narendra Modi. Source: The White House
In January 2025, Howard Lutnick, who was confirmed as commerce secretary in February 2025, echoed the idea of replacing the Internal Revenue Service — the agency that collects US income taxes — with an “external revenue service.”
“At the start of the 20th century, America was the richest country on Earth, and we defended our workers from unfair trade policies with tariffs,” Lutnick said.
“Now, imagine politicians, who can’t even balance their own checkbook, taking our money, and what do they do every year? They just take more,” the recently confirmed commerce secretary continued.
Magazine: Harris’ unrealized gains tax could ‘tank markets’: Nansen’s Alex Svanevik, X Hall of Flame
This article first appeared at Cointelegraph.com News
