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Russian (RU) Jing Pan
Sun, May 4, 2025, 12:11 PM 4 min read
President Donald Trump says tariffs could deliver a financial windfall for everyday Americans — by wiping out their income taxes.
“When tariffs cut in, many people’s income taxes will be substantially reduced, maybe even completely eliminated,” Trump declared in a Truth Social post on April 27. “Focus will be on people making less than $200,000 a year.”
That’s a bold promise, especially considering that only 14.4% of U.S. households earned more than $200,000 annually in 2023, according to Census Bureau data. In other words, if Trump’s vision holds true, the vast majority of Americans would pay no income tax at all.
But don’t celebrate just yet. While Trump is optimistic, experts say the math simply doesn’t add up.
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Economists Erica York and Huaqun Li of the Tax Foundation were blunt, explaining in a response on April 28 that “the individual income tax raises more than 27 times as much revenue as tariffs currently do,” and “even eliminating income taxes for a subset of taxpayers, such as those earning $200,000 or less, would require significantly higher replacement revenues than tariffs could generate.”
They estimate that the tariffs Trump has imposed and scheduled as of April 2025 would generate nearly $167 billion in new federal tax revenue in 2025 — covering less than 25% of the cost of eliminating income taxes for people earning below $200,000.
While Trump’s proposal faces serious doubts, policy changes aren’t the only route to lowering tax bills. Here are two powerful assets that everyday investors can use to their advantage.
Scott Galloway, professor of marketing at New York University’s Stern School of Business, once said that if you’re trying to build wealth, you have “an obligation to pay as little tax as possible.”
His advice? Keep it simple: “You buy stocks, you never sell them, you borrow against them.”
Galloway broke it down with an example: “You own $100 in Amazon stock. You need money to buy something. Instead of selling the stock, and let’s say it’s gone up 50% ... You would have to realize a capital gain and pay long-term capital gains [tax] on that $50 gain. No, just borrow against it and let the stock continue to grow.”
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