Can Tariffs and DOGE Eliminate the Income Tax?

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.

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. 

US Government Debt, 2020-2025

Tariffs are the centerpiece of Trump’s fiscal strategy, harkening back to the pre-1913 era when they funded nearly all federal operations. Lutnick has made claims that reciprocal tariffs could bring in $700 billion annually, a figure he’s repeated on outlets like Fox News. But this is wildly optimistic. 

In 2019, at the height of Trump’s first-term trade war, U.S. Customs Service data show tariffs generated just $79 billion—less than 3% of federal revenue. Even with Trump’s latest salvo—25% tariffs on Canada and Mexico, 20% on China, and threats of broader levies—the Tax Foundation estimates these measures will raise $120 billion in 2025, assuming no significant retaliation. That’s a far cry from what’s needed to make up for the usual income tax haul.

Then there’s DOGE, tasked with cutting $1 trillion from the budget. Musk has promised efficiency, but the numbers are daunting. Trump’s existing tax cut promises—on tips, overtime, Social Security, and now this $150,000 threshold—would add trillions to the debt. DOGE’s $1 trillion in savings, even if achieved, barely dents that. Federal spending is dominated by entitlements like Social Security and Medicare, which Trump has vowed not to touch. Discretionary spending is already stretched thin—defense alone is $850 billion. Where’s the trillion coming from? Mass layoffs at the IRS and other agencies have sparked outrage, but they won’t close the gap.

Lutnick’s rhetoric—“We’re so used to paying taxes we have Stockholm Syndrome”— is compelling. But tariffs aren’t “external revenue,” as Trump claims; they’re taxes on U.S. importers, passed on to consumers. 

Erica York of the Tax Foundation has warned: 

“Imports are a much smaller tax base than taxable income, and there’s no way to squeeze enough revenue from taxing imports to fully replace taxing income. A swap like this would hike taxes on working-class taxpayers and invite harmful retaliation against US exports.”

Trump’s vision isn’t wrong in spirit. The income tax is a burdensome anachronism, and tariffs once sustained a leaner government. But in 2025, with a $36 trillion national debt and a globalized economy, the old playbook fails. Eliminating income taxes for 93% of Americans while keeping the system for the rest doesn’t fix its illegality. 

DOGE will have done a good thing if it reduces waste in the government. But relying on tariffs and DOGE to bridge the fiscal chasm is a fantasy. We need real reform and a return to constitutional limits on government scope. Anything less may be doomed to become political theater.