(NewsNation) — Eliminating income taxes and shifting to an “all-tariff policy” would leave a roughly $2.1 trillion gap in government revenue, making daily costs skyrocket in turn, according to Caleb Silver, editor-in-chief of Investopedia.

Former President Donald Trump proposed an all-tariff policy that would eliminate income tax during a private meeting with Republican lawmakers in Washington, D.C., on Thursday.

The Biden administration has upheld and even increased some of the Trump-era tariffs, but a blog from Tax Foundation posits that their overall impact on inflation is “relatively small.” An “all-tariff” system would change that dramatically.

Cost of an ‘all-tariff’ policy

“President Donald Trump’s idea of imposing tariffs in order to abolish income tax could raise taxes for a typical American family by $5,000, according to an economist from the Center for American Progress Action Fund,” Newsweek reported.

While no income tax would make paychecks look a whole lot more appealing, Silver said the taxed companies’ financial burden would simply shift to everyday goods through higher prices, making the United States’ cost of living rise astronomically.

Robert Reich, a former United States secretary of labor under Bill Clinton and current U.C. Berkeley professor, estimated an additional cost of $1,500 per year.

“Trump has proposed a 10% tariff on all imported goods and a 60% or more tariff on Chinese imports.
No matter what he says, tariffs aren’t paid by the other country. They’re paid by you,” Reich shared on LinkedIn.

Those tariffs on imported goods would have to be massive to maintain current revenue. Silver said the U.S. government took in around $2.3 trillion in income taxes last year and only $80 billion in customs taxes.

That massive gap leaves consumers open to price gouging and higher taxes.

Who would ‘all-tariff’ policy impact most?

NYU law professor David Kamin pointed out the disproportionate effect an “all-tariff” policy would have on the average American.

“Here’s the thing: The income tax has its flaws. But, the bottom line is it raises ~$2.5 trillion per year in progressive fashion. Broadly substituting tariffs for income tax is a sure way to hit hard low and middle income Americans and reward top,” Kamin shared on X, formerly known as Twitter.

The same day he proposed his “all-tariff” solution, Trump told a group of chief executives that he wants to cut the corporate tax rate down one percentage point to 20%, according to three anonymous sources quoted in the New York Times.

A former senior policy adviser at the White House National Economic Council in the Biden administration, Brendan Duke, told Newsweek: “Donald Trump has released multiple economic plans, but they all have one bottom line: paying for tax cuts for billionaires and corporations by raising taxes on American families.”

Eventually, Silver predicts that consumers will simply “tap out” if prices rise too much. The “all-tariff” solution, he said, is not one at all.

“It sounds intriguing, but it doesn’t really solve the problem,” Silver said.