Why Replacing Income Taxes With Tariffs Is Neither Wise Nor Practical
by Abdul Hakim-ShabazzAfter a long pause in publishing on Indiana Barrister, it’s worth returning with a column that cuts through recent noise on taxes, tariffs, and the real economic trade-offs facing Hoosiers and all Americans.
In recent public statements and speeches, some national figures have touted the idea of replacing federal income taxes with tariffs on imported goods — suggesting this would lower the burden on everyday taxpayers while simultaneously funding the federal government. At first glance, it sounds almost too good to be true. The reason is simple: it is.
Here’s why:
Tariffs Are Taxes — Just Not the Ones People Think
A tariff is a tax levied on imported goods. That means when a product crosses our border, the importer pays a duty. But there’s one crucial point too many advocates overlook: importers don’t eat the cost. They pass it on to American businesses and consumers through higher prices. Studies have found that U.S. consumers and companies bore the majority of tariff costs in recent years, despite claims to the contrary.
What’s more, reputable national data show that the federal government collected roughly $2.6 trillion in individual income taxes last fiscal year, compared with tariff revenue amounting to only a small fraction of that total. In other words, tariffs currently provide just a sliver of the revenue needed to operate the federal government.
Even proponents of tariff-centric policies admit that to fully replace income tax revenue, tariff rates would have to be implausibly high — high enough that the underlying economic base shrinks as imports fall. At that point, revenues actually decline, creating a sort of “tariff Laffer curve” where more doesn’t mean more.
Tariffs Are Regressive Taxes
Income taxes — at least in principle — scale with ability to pay. Higher earners pay higher tax rates. Tariffs, by contrast, fall as a consumption tax on purchases made by everyone, rich or poor. Multiple economic studies show that tariff burdens are proportionately heavier for lower-income households.
That’s an important distinction: trading the progressivity of the income tax for a system that hits those who spend a greater share of their income the hardest is not a net win for fairness.
Prices Rise, Growth Slows
There’s also persistent evidence that broad tariff increases elevate consumer prices and restrain economic growth. Comprehensive modeling from leading economic research institutions indicates that tariffs enacted in 2025 — even before any hypothetical expansion — could raise the price level and suppress GDP growth.
This manifests in everyday life: clothing becomes more expensive, food costs rise, and households find their purchasing power squeezed.
Even central bankers have tied recent inflation overshoots in part to tariff effects, though some data remain subject to debate.
Tariffs Don’t Automatically Bring Back Jobs
One common argument is that tariffs will “bring manufacturing back to the United States.” But today’s economy is not one of labor-intensive manufacturing like in the mid-20th century. Automation and artificial intelligence play a massive role in production decisions. If a company shifts manufacturing to the U.S., it doesn’t necessarily mean 1950s-style payrolls. Higher productivity often comes with fewer workers per unit produced — and that’s a trend that technology accelerates, tariffs or not.
This mirrors what happened in American agriculture over the past century — tens of millions of farmers now produce vastly more output with a tiny fraction of the workforce. We adapted. We survived. But we didn’t bring all those jobs back thereafter.
A Better Debate Is Possible
There are legitimate policy discussions to be had about strategic reshoring, targeted industrial policy, and how to balance free trade with fair competition. Tariffs can be part of a nuanced toolkit for specific economic sectors. But treating tariffs as a panacea to replace the income tax is economically naive.
Good public policy starts with clear-eyed analysis, not bumper sticker slogans. The stakes are too high — for Hoosier families paying grocery bills, for workers seeking opportunity, and for a federal fiscal system that must balance revenue needs with fairness and growth.
Tariffs can have a role.
But they cannot bear the brunt of what our income tax system currently does.
Let’s be honest about the trade-offs.

