Trump aims to 'eliminate' tax for middle class Americans but there's one problem

Donald Trump has set out his aims to 'eliminate' income tax for middle class Americans, but there's a problem that would come with the move.

Ever since the 78-year-old Republican was sworn in as the 47th president of the United States at the start of the year (20 January), he's made a number of speeches, signed a flurry of executive orders and has been at the centre of tensions surrounding growing concerns over a global trade war.

Now, Trump has previously floated the idea of eliminating individual income tax - a tax you pay on your earnings - for people who earn less than $150,000 a year and qualified his thoughts on the idea when speaking to podcast host, Joe Rogan, last year.

When Rogan asked Trump whether he was serious about the new plan, Trump said: "Yeah, sure, why not?" before explaining that the US would pay for the lost tax revenue with far-reaching tariffs.

"We will not allow the enemy to come in and take our jobs and take our factories and take our workers and take our families, unless they pay a big price - and the big price is tariffs," he added.

Bear in mind, the individual income tax currently accounts for around half of the $5 trillion in revenue that the federal government brings in each year, with Marc Goldwein, senior vice president and senior policy director at the Committee for a Responsible Federal Budget, telling ABC News: "Even in its smallest form, it would be a pretty substantial change from current policy.

Experts also told the outlet that it would be 'impossible' to make up for the lost revenue with increased tariffs.

Donald Trump previously revealed his plans to eliminate personal income tax (Andrew Harnik / Staff / Getty Images)

They also pointed out that replacing the individual income tax with tariffs would also shift a greater share of the tax burden onto low and and middle-income households as higher tariffs are widely expected to raise prices of consumer goods since foreign producers typically pass the cost of higher taxes onto customers.

Due to this, the costs of higher tariffs would fall evenly across households in the US given that all Americans purchase consumer goods.

Trump's administration last week hit goods from Canada with a brutal new 25 percent tariff - a move later accused by some of triggering a global trade war, after Canada retaliated by adding its own 25 percent tariffs onto $155b in US goods.

And just yesterday on Wednesday (12 March), the president told press he'll be increasing tariffs on goods from Canada from 25 to 30 percent following Canada's retaliation.

Trump claimed the US would pay for the lost tax revenue with far-reaching tariffs (Anna Moneymaker / Staff / Getty Images)

Leaders across Europe, as well as Canada, have said that the new metals taxes are unjustified and have hit back with their own tariffs on a number of US products.

The president has now said he would 'of course' respond to the countermeasures, repeating his warning to later announce 'reciprocal' tariffs next month on countries across the globe.

During Trump's meeting with the Irish prime minister, Micheál Martin, in the Oval Office on Wednesday, (12 March), Trump declared his brutal response: "Whatever they charge us with, we're charging them."

The statement was made when the pair were discussing the EU's counter-measures announced by the 27-member bloc.

Trump stated that if the EU charges 20 percent or 200 percent - it does not matter as they will face the same retaliatory tariff.

"We have been abused for a long time, and we will be abused no longer," he said, claiming that the EU 'treats us very badly'.

The UK, however, which is a key US supplier of metals, held off on any immediate retaliation.

Speaking at Prime Minister’s Questions yesterday, Keir Starmer admitted: "I’m disappointed to see global tariffs in relation to steel and aluminium."

He added of the UK, 'We will take a pragmatic approach', explaining that he is in the midst of 'negotiating an economic deal which covers and will include tariffs if we succeed'.

"But we will keep all options on the table."

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