by Peter Schiff, Schiff Gold:
Freshly-confirmed U.S. Commerce Secretary Howard Lutnick recently appeared on CBS News, declaring that President Trump aims to eliminate income taxes for Americans earning less than $150,000 per year. Lutnick touted Trump’s vision for tariffs to replace the revenue lost from this massive tax cut.
“That’s his goal. That’s what I’m working for.”
It’s a bold statement, one that taps into a very Trumpian populist vein and promises relief for the vast majority of taxpayers—over 90% of Americans fall into the $150,000-or less club.
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But while the proposal might sound appealing, it doesn’t address the root illegitimacy of the income tax itself. Beyond that, the numbers simply don’t add up: tariffs, trade wars, and the Department of Government Efficiency (DOGE) cannot generate enough revenue or slash enough spending to make this dream a reality.
The mandatory income tax itself is a legal overreach, a relic of a Progressive Era power grab that fundamentally contradicts the principles of a free society. Before 1913, the federal government operated without an income tax, funding itself primarily through tariffs and excise taxes. The 16th Amendment, ratified that year, was sold as a way to shift the burden from the middle class to the wealthy elite.
But even though, tariffs provided 90% of federal revenue in the late 1800s, the economy was far smaller—GDP was roughly $350 billion in today’s dollars—and government spending was a fraction of what it is now. Today, federal outlays exceed $6 trillion. To replace even half that with tariffs would require tariff rates far beyond what Trump has proposed. Such levels would choke trade, spike consumer prices, and invite devastating retaliation from allies and adversaries alike.
The income tax violates the spirit of the Constitution by allowing the government to seize a portion of an individual’s labor without clear apportionment or direct consent. It’s a system that, in its essence, treats citizens as subjects rather than sovereigns, and is unlawful.
Trump’s plan to eliminate income taxes for those earning under $150,000 doesn’t address this deeper issue. It leaves the tax intact for the top 7%, perpetuating the illusion of its legality while merely shifting the burden further up the income ladder. If the income tax is wrong in principle, then tinkering with thresholds isn’t reform. True fiscal justice would demand its complete abolition.
The only problem? America is in no position to afford it.
The federal government collects hundreds of billions in individual income taxes in each year, accounting for more than half of total revenue. For those earning less than $150,000, eliminating that chunk would blow a massive hole in the budget, and Lutnick’s solution is to plug it with tariffs while DOGE slashes spending.
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