Trump Says Income Tax Could ‘Disappear’ as Tariffs Surge to $215B; But the Supreme Court May Shut It Down
Tariff collections are surging at a pace not seen in modern U.S. history, hitting $34.2 billion in October and $215.2 billion so far in fiscal 2025.
But the windfall comes at a politically volatile moment: the Supreme Court is now weighing whether President Donald Trump can continue imposing broad tariffs without fresh approval from Congress.
A ruling against the administration could force the White House to justify or even unwind the cornerstone of its economic strategy.
White House Quietly Rolls Back Duties to Ease Price Pressure
Despite the record haul, the administration has begun selectively rolling back certain duties to ease consumer price pressures.
Advisors see it as a strategic recalibration; not a retreat, as economic anxieties simmer and the Federal Reserve warns about tariff-linked inflation risks.
Greer Defends $2,000 Tariff-Funded Payments as Non-Inflationary
U.S. Trade Representative Jamieson Greer continues to champion the proposed one-time $2,000 household payments funded entirely by tariff revenue.
Greer said, “This is not some kind of ongoing new welfare program or something that would exacerbate inflation. I don’t think it would change the overall macroeconomic picture.”
According to Greer, the program would not fuel inflation. The administration casts the payout as targeted relief for families strained by high prices, not a new entitlement.
Trump’s Thanksgiving Pitch: “Cutting Out” the Income Tax
In a Thanksgiving address from Mar-a-Lago, President Trump renewed his most ambitious; and controversial promise yet: eliminating federal income tax.
Trump argued that soaring tariff revenues, corporate reshoring, and foreign investment pledges could allow the U.S. to “substantially” cut, or even abolish entirely, one of the government’s primary revenue streams.
President Trump, during Thursday’s address, said: “We’re taking in, think of it, hundreds of billions. Next year, it’ll be a trillion dollars or more, but we’re taking in all this money while protecting our country. And we’re respected again. They actually respect us. And they made the deals. I mean, they respect us, but they pay us. As an example, Japan $650 billion, South Korea $350 billion, European Union $950 billion. And they are building plants now in the United States because they don’t want to pay tariffs.”
Experts Say Income-Tax Repeal Would Create a Massive Fiscal Hole
Economists widely dispute the math.
Income tax generated nearly $2.7 trillion last year; more than 50 percent of all federal revenue. By comparison, tariffs totaled $215 billion till date; and with more trade agreements signed the tariff numbers could be lower for next year.
The 19th-Century Model: A Misleading Comparison
Trump has repeatedly invoked the pre-income-tax era of the late 1800s, when tariffs dominated federal financing.
But modern federal obligations; from Social Security to Medicare to national defense; bear no resemblance to 19th-century budgets.
Even Commerce Secretary Howard Lutnick has acknowledged that the administration’s near-term goal focuses on eliminating income tax only for those earning under $150,000.
Record Tariff Intake Still Dwarfed by Income-Tax Needs
The numbers tell the story. October brought a record $34 billion in net tariff revenue; but the government still ran a $284 billion monthly deficit.
Even with a 250 percent surge in customs duties over the previous year, the gap between tariff revenue and income-tax collections remains enormous.
Trump Points to Billions in Foreign “Payments”
The president insists the country is being “paid,” citing purported contributions from Japan, South Korea, and the European Union, and pointing to new domestic plant construction aimed at avoiding tariffs.
But economists note that these figures often represent investment estimates, not actual transfers to the U.S. Treasury.
Investment Pledges Face Serious Credibility Questions
Trump argues that foreign nations and multinational corporations have pledged around $21 trillion in new investment tied to his trade strategy.
But Bloomberg Economics estimates the actual figure is closer to $1.5 trillion annually; and even then, most of it does not deliver direct cash to the federal government.
Economists warned that many countries may be over-promising to relieve negotiating pressure, just as China did with unfulfilled purchase commitments in Trump’s first term.
Economists Split: Optimism vs. Hard Reality
Supporters like former Trump economic adviser Stephen Moore insist that even if investment pledges are vastly overstated, the resulting inflows remain “a lot of money.” But others argue the proposal would shift the tax burden downward.
Columbia University tax scholar Michael Graetz warned that replacing income tax with tariffs or consumption taxes would raise costs on lower- and middle-income Americans; while arriving at a politically disastrous moment of high federal debt and soaring interest costs.
Supreme Court Weighs the Future of Trump’s Trade Power
The Supreme Court is now reviewing whether Trump exceeded executive authority under the 1977 International Emergency Economic Powers Act when imposing sweeping tariffs.
A negative ruling could invalidate large portions of his trade architecture. The administration argues it has alternative legal pathways to preserve the tariffs, but insiders acknowledge an adverse decision would be “devastating” to both policy and the investment narrative built around it.
What’s at Stake: The Heart of Trump’s Economic Blueprint
Tariffs have become the linchpin of Trump’s second-term economic agenda; funding household payments, reshoring factories, and, in his telling, enabling the historic repeal of income tax.
If the Supreme Court rules against the administration, the entire chain of policy assumptions could collapse, raising questions about revenue, investment credibility, and the broader fiscal strategy.
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The 30% Rule is Dead: New Data Shows Buying a Home is ‘Mathematically Impossible’ in 47 Major Cities
The American Dream has hit a mathematical wall. For decades, the “30% rule” has been the standard of personal finance: never spend more than 30% of your gross income on housing. But a startling new report released proves that this advice is now obsolete for the vast majority of Americans. According to the latest data, 47 of the 50 largest U.S. metropolitan areas now require residents to spend significantly more than 30% of their income to afford a median-priced home. With mortgage rates hovering around 6.82% and home prices remaining stubborn, the gap between wages and real estate values has widened into a canyon. Here is a deep dive into the numbers, revealing the few remaining affordable havens and the coastal giants where homeownership has become a statistical impossibility.
The 30% Rule is Dead: New Data Shows Buying a Home is ‘Mathematically Impossible’ in 47 Major Cities
Think $32,000 Is Poverty? New Analysis Says Families Need $140,000 Just to Stay Afloat
Michael Green, portfolio manager and chief strategist at Simplify Asset Management, generated some controversy this week with his analysis trying to explain why the middle class is being squeezed. He warned that a long-ignored flaw at the heart of U.S. economic measurement has quietly broken the country.
Think $32,000 Is Poverty? New Analysis Says Families Need $140,000 Just to Stay Afloat
Household Debt Hits Record $18.6 Trillion as Americans Face Rising Defaults and Soaring Delinquencies
Household debt climbed by another $197 billion in the third quarter of 2025, hitting a record $18.59 trillion, according to the New York Fed’s latest Household Debt and Credit Report. The increase, though moderate, is arriving at a moment when millions of Americans are slipping into delinquency; raising questions about whether the economy is entering a far more vulnerable period than policymakers acknowledge.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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