'Time to return to system that made us richer,' Trump hints at removing income tax for US citizens

US President Donald Trump proposed to abolish the income tax for American citizens, stressing that it would boost disposable income for individuals and families.

Trump described the move as a return to the old American practices, which helped drive national prosperity and a step that made America richer.

"It’s time for the United States to return to the system that made us richer and more powerful than ever before…," he said on Monday.

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The US president further said that he would introduce across-the-board import tariffs to replace income tax.

"Instead of taxing our citizens to enrich foreign nations, we should be taxing foreign nations to enrich our citizens. It will be massive amounts of money pouring into our treasury coming from foreign sources," Trump added.

He noted that the US was the wealthiest from 1870 to 1913 when a tariff-based economic system was in place. Trump said that import tariffs will help offset the revenue shortfall from income tax reductions that are being proposed by him.

What does the proposal include?

The proposal made by Trump includes replacing income tax, which is a key contributor to federal revenue, with tariffs on imported goods.

Trump also announced to create the External Revenue Service, a new body under his administration, which will be responsible for managing tariffs and related revenues.

The plan has attracted both support and criticism. The economists have warned of potential inflationary pressures and sustained high interest rates due to increased import costs.

Moreover, the Congress has also opposed it, with lawmakers raising concerns about potential deficits and logistical hurdles in implementing the overhaul.

However, Trump emphasised his commitment to prioritising American families and workers. "We will immediately begin overhauling our trade system to protect American interests,” he said.

(With inputs from agencies)