Trump says US may "completely" cut income tax due to tariff revenue

[Oldcarpy2]

End your tariffs first, Limey.

OK.  Deny Ignorance, people.

Us old Brit sailors had limes to avoid being scurvy knaves like your poor scabby sailors.

 

[CriticalStinker]

I don’t see how this could happen when we are still increasing the debt.

Like everyone, I’d love to have lower taxes, or no income taxes. That would be phenomenal. But if it just means inflation, and the government spending more on interest payments… it’s just a loan to myself and the younger people that will have to be reconciled at some point that would hurt much harder than now.

Interest payments are already going to be the largest federal expenditure here soon. That only gets exponentially larger.

Dont see how we could do this now in a way that is beneficial.

[DBCowboy]

Why don't we say, no income taxes for anyone who makes under 250K

[CriticalStinker]

Why don't we say, no income taxes for anyone who makes under 250K

Because we would still pay through inflation and interest payments ballooning for the government. The tariffs aren't eating away at the debt as it is, we'd have to make them way more to even maintain the current situation with no income tax.

[DBCowboy]

Because we would still pay through inflation and interest payments ballooning for the government. The tariffs aren't eating away at the debt as it is, we'd have to make them way more to even maintain the current situation with no income tax.

We won't cut the debt until we cut spending regardless of tariffs or taxes.

[Maxmars]

I understand that it's not exactly a secret... but the model itself consigns the American citizen to perpetually growing debt... and perpetually more powerful "banking" influence... with absolutely no end in sight.


Ask anyone who claims this is all good : "Assuming we accrue no more... when will the debt be paid off?"

Mathematically... the answer is effectively "never."

[CriticalStinker]

We won't cut the debt until we cut spending regardless of tariffs or taxes.

I 100% agree with you.

But cutting revenue before that makes it worse.

[DBCowboy]

I 100% agree with you.

But cutting revenue before that makes it worse.

We've become too dependent on government subsidies.

It's almost socialism now.

Make it hurt, make people independent.

[putnam6]

The Federal Reserve Bank of San Francisco has its opinion as well.


FRBSF Economic Letter 20 25-29 
November 24, 2025

Research from the Federal Reserve Bank of San Francisco

The Economic Effects of Tariffs

Naomi Halbersleben, Òscar Jordà, and Fernanda Nechio 



https://www.frbsf.org/wp-content/uploads/el2025-29.pdf


https://www.frbsf.org/research-and-insig...Conclusion

Tariff rates declined steadily for 60 years…until nowRecent U.S. trade policy has sharply reversed a worldwide historical decline in tariffs. Figure 1 reports average world and U.S. tariff rates since the 1960s. The average world tariff rate corresponds to an average percentage of duties over all imports across 35 advanced and emerging economies, using updated data from Feenstra and Taylor (2014). U.S. tariffs correspond to average effective rates up to 2024. The blue dashed line corresponds to the estimated average U.S. tariff rate for 2025 as calculated by the Budget Lab at Yale (data as of October 30, 2025). Both world and U.S. tariff rates show a pronounced downward trend up to 2024, when the magnitude of the sharp reversal of this trend in U.S. tariff rates becomes evident.

The effect of tariffs on the economy varies over timeUsing a statistical method known as local projections (Jordà 2005), we examine the evolution over time of the unemployment rate, CPI inflation, and tariff rates themselves following a 1% change in the average tariff rate in our sample. The idea is simple. Using unemployment as an example, we construct two projections on the future path of the unemployment rate. In one scenario, we include information on changes in tariffs. In the other scenario, we exclude it. Differences between the two projections are a measure of the influence of a change in tariffs, net of the set of variables that we include in these predictive models. We do similar calculations for tariffs and inflation.
Figure 2 displays the evolution of the unemployment rate after an increase of 1% in the tariff rate. The contemporaneous impact of tariffs on the unemployment rate is relatively muted, with an increase in the first year of about 10 basis points (one-tenth of a percentage point) per 1 percentage point change in tariffs. That is, a 10% increase in tariffs would be expected to raise the unemployment rate by 1 percentage point. The unemployment rate then settles back down by year two and declines slightly over the next two years.
Figure 2
Response of unemployment rate to 1% increase in tariffs
 Figure 3 shows that the decline of inflation at the time of a tariff change is 10 basis points for a 1% increase in tariffs, which would imply 1 percentage point decline for a 10% increase in tariffs. By year one, the reduction in inflation dissipates, then inflation surges about 10 basis points per 1% increase in tariffs over the next two years, an effect that slowly starts to wane by year four.
Figure 3
Response of inflation to 1% increase in tariffs
 The initial increase in the unemployment rate together with the drop in inflation both suggest that tariffs act like a brake on the demand side of the economy. Firms may withhold investment spending until there is more clarity on future trade policy, since tariff policies will prompt them to reconsider how they arrange their supply chains. Consumers may respond cautiously to the new environment by slowing down their demand for products and services. Over time, the economy adjusts: The unemployment rate returns to its original level or even declines slightly, whereas inflation picks up and peaks three years after the initial change in tariffs, relative to the scenario where tariffs remain unchanged.
Our estimates should be interpreted with caution. The tariffs recently enacted are unprecedented in magnitude and scope, and they are surrounded by a great deal of uncertainty. The sample used in our analysis is based on historical evidence that does not contain such large tariff changes. Thus, extrapolating our results to the current environment is somewhat fraught.
However, our findings are consistent with those in Hobijn and Nechio (2025), who rely on an accounting framework based on input–output tables. They show that the estimated effects of tariffs on equipment investment prices can be somewhat larger than their impact on consumer price inflation. Higher equipment costs raise production costs, and over time these higher costs are passed on to final goods prices. This may explain why higher consumer price inflation takes longer to show up in overall statistics.
ConclusionWhat do the results in this Letter mean for evaluating trade policy? Ultimately, our results show that the effects of tariffs on the economy do not go in a single direction. On impact and early on they depress labor markets and inflation. Over time these effects reverse course. In other words, it seems that demand factors prevail in the short run but supply factors dominate in the long run. It is important to understand the timing of the different effects of trade policy on the economy to craft the appropriate monetary policy response, more so since monetary policy tends to act on the economy with some delay.

[CriticalStinker]

We've become too dependent on government subsidies.

It's almost socialism now.

Make it hurt, make people independent.

Again, I’m with you. Let’s just do that before we slash revenue.