What Would Trump’s Federal Income Tax Cut Mean For Crypto Traders?

Tariffs Instead of Income Taxes

During the Civil War, the federal government imposed an income tax to pay for the war’s expenses, but in Pollock v. Farmer’s Loan & Trust Co. (1895), the Supreme Court later declared federal income taxes unconstitutional.

Then income taxes were quietly pushed away for tariffs, or taxes on foreign goods.

And of course, taxes came back with a vengeance! To bankroll the U.S. entry into World War One, Congress unleashed the 1916 Revenue Act, swiftly followed by the War Revenue Act of 1917. Tax rates skyrocketed, leaping from a modest 15 percent in 1916 to a staggering 67 percent in 1917, and peaking at 77 percent in 1918. War doesn’t come cheap.

Trump’s proposal to abolish federal income tax and replace it with tariffs on imports is inspired by the policies of former President William McKinley. Trump argued to Joe Rogan that such measures in the past generated immense revenue for the U.S., recalling an era where “We were so rich. We had so much money. We didn’t know what to do.”

Detractors, however, warn that tariffs are the Trojan horse of taxes, threatening to inflate prices and trigger heated trade skirmishes. The fallout could be widespread, impacting international diplomacy and jacking up costs for everything from gadgets to raw materials.

Bitcoin: A Tool to Alleviate National Debt?

In another radical proposal, Trump floated the idea of using Bitcoin to manage the national debt. In a conversation with Fox News’ Maria Bartiromo, he hinted at repaying U.S. creditors with Bitcoin, suggesting that it might “Wipe away our $35 trillion” debt.

Here’s the FULL clip of Trump saying we’ll pay off the National Debt with Bitcoin. It gives a little more context.👇

“It’s bigger than any company in the world already…we might as well be the leader.” pic.twitter.com/ZfYdb8rEMD

— Cory Bates (@corybates1895) August 3, 2024

Ditching income tax for a Bitcoin or tariff-based system isn’t a walk in the park. Such a radical change demands a total rewrite of the tax code, likely clashing with industries hooked on imports and stirring up the ire of global trade allies. The economic shockwaves could be immense, rippling through inflation, jobs, and GDP.

Similarly, wrangling Bitcoin to wrestle down national debt opens a Pandora’s box of volatility concerns. Its decentralized edge offers a new frontier, but the wild ride of its value is a risk magnet. Plus, weaving crypto into government finance means rewriting the rulebook and bracing for a clash with the financial establishment.