Secretary of Commerce Howard Lutnick recently announced on CBS News that the Trump administration wants to eliminate income taxes for those making $150,000 a year or less. Were that to happen, only seven percent of U.S. citizens would be left paying income taxes. This would put the entire income tax burden on a tiny minority of people.
This is already the case, to a certain extent. The top one percent of taxpayers currently pay about 40 percent of all income taxes. The income tax code is progressive—tax rates increase as income increases. This new proposal would make the tax code even more progressive, shouldering the tax liability of a small number of affluent citizens.
It should be pointed out that the tax revenue collected from the bottom 93 percent of taxpayers amounts to 24 percent of all income tax revenue, or a little more than $500 billion per year. President Donald Trump has goals to lower taxes and balance the budget. With the budget deficit at a little less than two trillion dollars, balancing the budget while eliminating income taxes for the bottom 93 percent of taxpayers will be virtually impossible unless there are radical changes to Social Security or Medicare, which Trump has (thus far) ruled out. Of course, Trump could plan to raise income tax rates on higher tax brackets—which is not out of the realm of possibility. Trump is a populist, after all.
