Study shows Trump's tariffs could save Americans $134,809

Former President Donald Trump's proposal to replace income taxes with tariffs could generate significant revenue and potentially eliminate the IRS, according to recent reports.

A study by Dancing Numbers estimated that the average American could save at least $134,809 over their lifetime under this plan.

Commerce Secretary Howard Lutnick stated that Trump's goal is to "abolish the IRS and make outsiders pay," suggesting the U.S. could generate $700 billion annually through reciprocal tariffs.

Lutnick claimed that matching other countries' tariff levels would "wipe out our deficit, bring interest rates crashing down, and send the economy soaring."

Trump has announced plans to establish an "External Revenue Service" to collect funds from tariffs, potentially replacing the IRS.

He argued that the U.S. has been "taxing ourselves" unnecessarily, referencing the pre-1913 era when tariffs primarily funded the government.

However, experts have questioned the feasibility of this system in today's economy.

The U.S. currently collects approximately $3 trillion annually from income taxes.

For tariffs to completely replace income tax revenues, they would need to be at least 100% on all imported products, according to Torsten Slok, chief economist at Apollo Management.

"Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax," wrote economists Kimberly Clausing and Maurice Obstfeld.

Critics argue that such a move would disproportionately affect low- and middle-income households.

Higher tariffs are expected to raise prices on consumer goods, shifting the tax burden, as consumer spending accounts for a larger share of their overall budget.

The Peterson Institute for International Economics (PIIE) estimated that Trump's tariff proposals would cost the typical U.S. household over $2,600 a year.

"Tariffs are at best a flat tax and more likely a regressive one," said Marc Goldwein, a senior policy director.

Economists at the Tax Foundation have also suggested that Trump's tariff plan could shrink long-term economic output.