President Donald Trump has long supported tariffs over taxation to fill the public coffers.
Now, the numbers are starting to flow in.
According to Dancing Numbers, taxpayers would benefit financially from the tariff-based system.
If Trump’s tariffs replaced income taxes, “an average American could save $134,809 in federal taxes, with potential savings reaching up to $327,106 if all wage-based income taxes were eliminated, effectively eliminating their entire income tax burden,” the study reported.
The study says that the average U.S. taxpayer pays the latter amount of $325,561 throughout his or her lifetime in income taxes. Other taxes bring that number up to $497,804, representing 26.7 percent of $1.87 million in lifetime earnings.
5 States Where Taxpayers Benefit Most from Tariffs
Four Northeast states and one Midwest state would see the biggest benefit of a tariff over a tax levy system, according to Dancing Numbers. New Jersey tops that list with a lifetime total tax of $755,493, or 38.5 percent of the average Garden State citizen’s lifetime income.Connecticut (34.5 percent), Massachusetts (32.86 percent), New York (35.9 percent), and Illinois (33.87 percent) make up the rest of the top five states that benefit the most from a tariff-based policy.
High state taxes are a big reason why taxpayers in high-tax locales like New York and California (30.9 percent) are pulling up stakes and moving to tax-friendly states like Florida (with an average 27.1 percent lifetime tax income rate) and Texas (26 percent). That trend would likely accelerate the Dancing Numbers study noted.
Tax Experts Aren’t Convinced
Income tax specialists say it’s hard to peg any outcomes with a tariff-driven government income policy.“It’s challenging to predict how Congress might write new tax code legislation; however, at the most fundamental level, the concept is centered on the idea of collecting new higher federal tax revenue from tariffs on imported goods coming into the US,” Thomas J. Cryan, attorney and author of the book Disrupting Taxes told NTD by email.
According to Cryan, the United States currently collects tariffs on imported goods coming into the country at a low average rate of 2.4 percent, for a total revenue of $77 billion, which is about 1.6 percent of total federal revenue.
“The new proposal is to raise tariffs tax rates and tariff revenues significantly, and in turn, eliminate Federal Taxes on individuals' income and corporations' profits,” he added.
The study doesn’t address the repercussions of higher tariffs and their impact on household goods prices for the average individual and family, according to Cryan.
“Those prices would increase dramatically,” he noted. “The costs to the average family might increase beyond the savings of not paying income taxes."
Cryan also said taxes are most equitable when the tax base is the broadest possible, and the tax rate is the lowest, where everyone pays proportionally. “Tariffs are a narrow tax base at a high tax rate; by math and science, they are inequitable,” he added.
He’s not alone. Other tax experts say that tariffs must work almost perfectly to compensate for the loss of tax income.
“The study appears to be overly simplistic in the amount of tax savings by state and assumes that Trump’s tariffs will bring in and even surpass the amount of federal income taxes that are currently taken in,” Paul Miller, founder at CPA at Miller & Company, an accounting firm in New York, told NTD by email. “In reality, this is a complex situation with many variables. The potential for Americans’ tax savings can only be tangible and realistic if the tariffs are resilient and effective enough to bring in consistently more tax revenue than before.”