On March 12, 2025, U.S. Commerce Secretary Howard Lutnick revealed President Donald Trump’s ambitious goal to eliminate income taxes for individuals earning less than $150,000 annually, a plan that would affect roughly 93% of Americans based on 2022 income data. Trump first hinted at this idea in January at the 2025 Republican Issues Conference in Miami, where he argued for a return to a tariff-based revenue system, claiming it historically made the U.S. “richer and more powerful.” Lutnick, speaking to CBS News, emphasized that the lost revenue would be offset by imposing tariffs on foreign nations and cracking down on overseas tax evasion, such as by targeting U.S. companies that register ships under foreign flags like Liberia or hold intellectual property in low-tax regimes like Ireland. This proposal aligns with Trump’s broader tax strategy, which includes eliminating taxes on tips, overtime, and Social Security benefits, aiming to appeal to working-class voters while shifting the fiscal burden onto international entities.

The plan, however, has sparked a polarized reaction. Supporters, particularly on social media platforms like X, have celebrated the potential relief for the working class, with some users noting it could stimulate the economy by leaving more money in the pockets of everyday Americans. Critics, however, question its feasibility and fairness, pointing out that the individual income tax accounts for nearly half of the federal government’s $5 trillion annual revenue, and replacing it with tariffs could lead to economic distortions. Tax policy experts, such as those from the Tax Foundation, have warned that Trump’s proposed tariffs—potentially as high as 60% on Chinese goods and 20% on all imports—could offset much of the economic benefits of the tax cuts by raising consumer prices and inviting foreign retaliation. Additionally, some have raised constitutional concerns, arguing that creating a sharp tax distinction between those earning below and above $150,000 might violate equal protection principles, potentially leading to legal challenges.
 

Skeptics also highlight the broader implications for the federal budget and national debt, which is already projected to hit 118% of GDP by 2035 under current law. The Committee for a Responsible Federal Budget estimates that Trump’s tax priorities, including this proposal, could reduce revenue by $5.0 trillion to $11.2 trillion over a decade, potentially driving debt to 149% of GDP if not offset. While Lutnick insists that “other people”—foreign entities and tax evaders—should fund the government, the reality of generating sufficient revenue through tariffs alone remains uncertain, especially given historical evidence that tariffs often burden American consumers more than foreign exporters. Trump’s vision, while popular among his base, risks exacerbating fiscal imbalances unless paired with significant spending cuts, a move that could face fierce resistance in a divided Congress as the March 14, 2025, government funding deadline looms.