Janet Yellen, the U.S. Secretary of the Treasury, criticized former President Donald Trump’s proposal to abolish income tax and replace it with tariffs on imported goods, stating it would significantly exacerbate the hardship of Americans.
In an interview with ABC, Yellen discussed Trump’s tax cut idea, stating, “A tariff well over 100% would be necessary,” adding, “It would make life unbearable for American workers and harm American businesses.”
Previously, Trump had revealed his plan to abolish the income tax and offset it with increased tariffs on other countries during a breakfast meeting with Republican House members.
Bloomberg pointed out the impracticality of this idea, noting that “while tariffs only account for about 2% of the federal government’s income, personal income tax accounts for 50%.” The Wall Street Journal (WSJ) also noted that to fully replace income tax with tariffs, a tax rate of over 70% would be necessary, assuming no reduction in revenue due to the increase in tariffs. This is in line with Yellen’s statement that a tariff of over 100% would be needed.
Regarding inflation in the U.S., Yellen acknowledged, “It’s true that prices have risen significantly over the past three years, but the rate of increase is now slowing down to a more normal level.” However, she emphasized, “There is a great deal of concern about the costs that are making life very difficult for Americans,” adding, “This is something the Biden administration wants to resolve.”
When asked about a poll in which Americans indicated they trust former Trump more than Biden on economic issues, Yellen responded, “The COVID-19 pandemic was a very challenging time. Americans are still feeling its impact.”
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