During his appearance on The Joe Rogan Experience, Donald Trump floated the idea of abolishing the income tax. This would go hand-in-hand with his plan to raise tariffs, especially on China. Glenn, who has historically been against heavy tariffs, may have been won over by Trump’s explanation. But he wanted to speak with an economics expert to see if the math really added up. Heritage Foundation Visiting Fellow Peter St. Onge joins the program to break down how tariffs work, whether Trump’s plan would boost the economy, and what he must do if he wants to raise enough support to repeal the 16th Amendment.

Transcript

Below is a rush transcript that may contain errors

GLENN: Oh, yeah.

Oh, yeah. Hmm. Now, we've got a guy, I think he's -- I think -- I think his last name says everything.

Peter St. Onge, which I believe is French!
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STU: What is happening?

GLENN: Sexy, sexy tax and tariff talk from the Heritage Foundation. A visiting fellow. We have Peter St. Onge.

How are you, Peter?

PETER: I'm great. I appreciate that. It is sexy.

GLENN: Yeah. I know. Everybody says it. Everybody says it. So without getting it too steamy in here.

Let's go over the tariffs.

Because I've always been against tariffs. However, I might be wrong.

PETER: Right.

GLENN: Donald Trump is making a good case, when he's talking about getting rid of the income tax. Because tariff -- tariffs will raise the prices of things. Especially, if he does it the way he's talking about doing it.

But if he is getting rid of, or lowering the income tax to, you know, 10 percent, it's such a boon for the economy. That we could make up that deficit, and become a very powerful nation again.

Tell many I'm wrong.

PETER: I think that's absolutely correct.

Yeah. I feel like you're absolutely right.

You know, the vast majority of economists, Glenn, they go after tariffs. And I think they're looking at the trees for the forest here, because if you replace a tariff, which is basically a sales tax. But it's one that focus on his imported goods.

If you replace that with either reducing or in our dream scenario, abolishing the entire income tax. It's absolute rocket fuel for the economy. The reason is because --

GLENN: He just said abolish the income tax. Pay attention, Sara. He just said abolish income tax. Oh, yeah.
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All right. Go ahead.

PETER: Right.

The background music. So, yeah. And he actually started floated abolishing it with Joe Rogan a couple weeks ago. No tax on tips. Then no tax on overtime. No tax on first responders. No tax on Social Security. And it was kind of like he was really flirting with just breaking up with the income tax altogether.

And when he was on there with Rogan, that's exactly what he did. He said, you know, maybe we should go back to the 1800s, when, you know, it was before we had an income tax. Before we had a Fed.

And back then, the federal government had to live off tariffs. And that was the greatest period, not only of economic growth, but of cultural achievement.

It's astounding, what we -- everything Elon Musk does, was invented in the 1880s. Computers.
Rockets.

What's his -- Hyperloop. Every single thing. And it was really the golden age of humanity.

And the key there, we did not have an income tax. We did not have a regulatory state.

We did not have a Fed. So if Trump can take us back there. And all we have to do is an 8 percent sales tax on Chinese socks.

That is the deal of the century.

GLENN: Okay. Let's go over this.

Who pays the tariffs?

American companies or the foreign company?

PETER: Interestingly, during you Trump's first term. He put tariffs on China. And China actually paid up 80 percent of those. So it would issue subsidies to Chinese exporters so they could maintain market share and keep their prices low. So the Chinese government paid the tariffs.

GLENN: Hmm.

I like that.

PETER: So if he does that again, he's talking about hitting China with something like 60 percent tariffs.

And between a ten and 20 percent tariff for everyone else. Now, given Trump's style, he is not going to come and use it across the board. He is going to come and use that as a club.

Right?

So the Europeans, specifically. They act like a fortress. They are brutal to outsiders.

If you want to export something to Europe, they will put you over a barrel. You remember, a couple years ago, the first thing the European Union did was sat them down. And said, nice economy you've got here. Would be a shame if something happened to it. We're going to need a payment from you every single year.

It is literally the Mafia. They do that to Norway. It's all these countries have to fork over billions of dollars to get access to the European market. Now, imagine if we did that. Imagine if we called up Mexico or Canada. And said, hey, listen. We've got this beautiful economy. You guys are settling into it. Hey, why don't you write me a check for 50 billion to keep access? That's exactly what the Europeans do.

So the first thing Trump is probably going to do, given what he did last time. Is he'll call up Europe, and he will do the exact same thing.

You know, I have a 20 percent tariff burning a hole in my pocket. I need you to do some things for me.

But, anyway, even if he does end up applying those to all foreigners, the Europeans are not going to cover the exporters because they're in a deep fiscal hole.

They don't have the money. They're already bankrupt. They're not going to do what China did.

But a lot of those tariffs, especially the ones from China, are probably going to keep getting paid by China. Because exports to America are what they live on. If they lose that, it's game over.

GLENN: And we should not be empowering them, quite honestly.

Now, here's why. Here's why I have possibly turned around.

I'm willing to listen to tariff talk, because in my -- in my cute little head, I keep thinking that all of the -- when you have an extra 20 or $30,000, that you're pulling in, every year. Whatever it is, you are paying in income tax. And everything -- everything goes down that's made here in America.

If you're not paying that income tax. You have a lot of extra buying power, which means, most of Americans, will spend that.

And will grow our economy, which will put more taxes. Well, we don't have taxes. So that wouldn't work.

How does it work, when you don't have taxes? Go ahead.

PETER: Yeah. So just kind of running into the numbers. The first thing that happens, if you get rid of income tax altogether. So I estimate you get about a 20 percent jump in incomes in the US.

So it would be something like $15,000 for typical families. That's what you get off the bat. The typical family currently has about 18,000 in income tax, and then you knock off about 3,000 for the tariffs.

There's a variety of estimates on that. But that seems to be the cluster. So you get a 15,000 raise, because the economy is growing faster. You get an 18,000 raise because you don't have to send your income tax to the government. People don't realize how much they're paying to the government.

Right? A lot of it is tips. But, anyway, you've got -- what do they call it?

Withholding. So, anyway, that's 33. I call three for the tariffs. 30,000 dollar raise per year, 2500 a month. Now, currently, the median American take home is about 58,000.

Okay. Which is about 76, minus the income tax. So you go from taking home 58, to taking home 88. Right? That is a massive difference.

And that sort of sets the stage.
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GLENN: Hold. Hold on. You go from 58 to 88. Oh, yeah.
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Ding-dong. Pizza deliveryman. Anyway.

STU: Why is that the part you like so much in his movies? It's interesting what he is excited about.

GLENN: All right. Go ahead.

All right.

PETER: No. I love it. And it's true. You know, if you're making 88. You can go to Vegas. And things happen in Vegas.

GLENN: Yeah. Right. Right. Creating jobs.

PETER: Right. Yeah, well, and so that's the fun part, right? Is you mentioned earlier, that if you're not paying income tax, then production in the US is cheaper.

So instead of the Chinese socks coming in -- you know, they used to come in at $6, now they're at $9. Fine. But China is paying for that, so they're probably still coming in at six.

But, meanwhile, American factories can make socks for less, because they are not paying the income tax.

There's a very good chance that we will see a lot of that manufacturing, even if the Chinese government pays for the tariffs.

GLENN: And that means, also because the economy -- we're building factories. We're doing things ourselves, because we can.

Everybody's pay goes up. Because we need more workers. Right?

PETER: Exactly. Exactly. And then there's actually mass deportations, then the socks will actually go American.

So you've got two possibilities, right?

One of them is that China covers the tariffs. In which case, it's a free lunch for us.

China is, what?

Putting us about 500 billion -- well, their share would be -- let's say 300 billion. So that would be fantastic. Thank you very much.

Or China does not cover the tariffs, in which case China is priced out of the market. America pays no income tax, so they're cheaper. By the way, every headquarter on earth would try to move to the United States. If you're paying no income tax on the single biggest economy on earth, everybody will be trying to move here. Including the Chinese companies. The worst-case scenario, the Chinese don't cover it.

They get outcompeted. And it all comes back to America. And if it's only Americans living here, then Americans will be swimming in jobs.

GLENN: I mean, this is just -- this is big.

How -- how much --

PETER: Oh, yeah.

GLENN: He has only floated this on the Rogan show. How real do you think this is? Because I know he loves tariffs. I know he loves tariffs.

PETER: He loves tariffs. And he hates the income tax. So it's beautiful. It's like a -- it's just like the perfect Newton president.

STU: Peter, isn't the complication here, that he can essentially do what he wants with tariffs. But he can't do what he wants with the income tax. And that becomes the heavy lift here?

PETER: Right. So he would need Congress to play ball on the income tax. And Congress is very tight, as we're all discussing at the moment. There's a ton of RINOs over there.

So that's going need to the pressure and the passion that people showed during the campaign, that millions of Americans showed. We have to put that on the RINOs.

GLENN: Yeah. I think that if he did, you know, a tour even. And was just all about income tax. You just have to say to people. You go from 58 to 88 in take home pay. I think a lot of people will be like, you know what, I love that.

STU: I agree. But you're not going to get -- obviously, in theory, you could put it into a reconciliation bill. Right?

At least a massive reduction.

You couldn't -- not a constitutional amendment, unfortunately.

That's what I would prefer.

Repealing the 16th.

GLENN: Yeah. Me too.

But you could capture American's imagination with this.

STU: Yeah. I think that's pretty -- that would be pretty great.

I do think you would have issues with some of these, as you point out. RINO-type republicans, who would complain about all sorts of things.

Including deficit stuff. Right?

They would say, we're going to lose all this income.

GLENN: All right. Let me take a break, and then let's talk about the deficit, Peter. All right? Peter st. Onge. He -- hmm. I'm not going to hold it against him for being French. I mean, somewhere in his past, somebody had sex with a French person. Okay. Let's -- let's move past that. He's with the Heritage Foundation. A visiting fellow.

STU: This is definitely the weirdest interview he's ever done. And he's regretting every minute of this.

GLENN: He's like, this is the end of my career and my credibility.

GLENN: Okay. I think I've got this number from you, Peter.

But a -- tariffs would bring in about 900 billion.

Almost a trillion dollars.

But our -- we're spending now, I don't even know how much.

$4 trillion a year? Some crazy number like that.

So how do you bridge the gap?

PETER: About six and a half.

GLENN: Six and a half. Okay. Good.

STU: There's a bit of a gap.

GLENN: There's a five and a half trillion dollar gap.

PETER: So income tax itself is taking about two and a half trillion.

And then you've got -- what? You've got payroll. You've got excise. Things like gasoline and cigarettes, things like that.

You've got capital gains. Corporate income tax. Those hopefully would be folded into an income tax repeal.

You put it together. You're looking at 2.4 trillion in lost revenue. And then you've got 900 in tariffs. About 1.5.

Now, the economy grows 20 percent, then you're going to get about 500 billion more from payroll tax and from excise. So you're looking at a net loss of 1 trillion. Now, I personally would prefer to get rid of the payroll tax as well.

STU: Yes!

GLENN: Pernicious.

PETER: It's not as bad as the income tax. Because the income tax is on top of it. It also varies on how much you produce. The payroll tax is a flat tax.

So, you know, in a perfect world, we're not taxing work at all. We're taxing bad things, not good things.

In the grand scheme, you know, in the terms of incentives, get rid of income tax first. Then we can have the next conversation, which would be getting rid of the payroll tax. If you're just going to the income tax, you're talking about 2.4 net of the tariffs. Net of the economic growth. You're talking 1 trillion. So you would be cutting 1 trillion out of a budget of about six and a half.

Now, Elon is -- he's talking about his department of government efficiency.

He's floating 2 trillion.

So I haven't seen the math on those.

I don't know where it's coming from.

I agree whole-heartedly.

I'm certain we could get a lot more than that.

It's cutting out the parts of the military, that is part of our country.

Bring them home. Put them on the border. Divert the Navy that patrol our waters. Stop invading other countries.

That would be a very easy 800 billion, if we look at countries like Japan or UK, which the UK has a functioning military. It has a Coast Guard.

Although, it doesn't use it.

About the whole kit. They spend less than hundred billion.

Of course, you can cut welfare for able-bodied people.

Which the government tries very, very hard to hide how much it spends on welfare. But it's easily over a trillion.

The cost of illegals themselves, which very conservatively is about 150 billion a year. Maybe closer to 350 billion by some estimates. Because, again, they're trying to hide the costs.

Pharmaceuticals. Right?

That's going to be coming into focus with RFK here. But there is a ton of waste and corruption in pharmaceutical payments. Those are something like 20 percent of our economy.

But really, you know, if you sort of zoom out, you're very familiar with the Tenth Amendment.

There are precisely four agencies that are authorized. Right? State, justice, defense, treasury with both offices.

So strictly speaking, if we had a Supreme Court, that actually read the common sense language in the Tenth Amendment, almost the entire thing is gone. You would slash everything. Personally, I would keep Social Security and Medicare because they've already been paid for. That's a complicated issue. I think you have to make sure people are protected, because they already got ripped off on the way in. But aside from that, almost everything they do, from DEI, to just -- to the Federal Reserve, all of that is unconstitutional.

You slash that down, and you are -- gosh, you're probably more than 3 trillion down.

GLENN: So do you think we have a shot at doing that?

Is he putting the team in, around him to do something like this?

PETER: So the closest we have, I follow Polymarket very closely. They've got odds on pretty much everything out there. The sort of tip of the spear on income tax repeal is starting with tax on tips.

Right? That was the one that he most clearly promised.

And so that's kind of a proxy for whether we're going to start hacking away at the income tax. So tax on tips, is currently running 38 percent on Polymarket.

That's the number I'm watching. That's encouraging. Because it means, it's not just talk.

That people with capital, believe it's the real.

But for sure, Congress will play ball.

GLENN: Yeah. Thank you so much, Peter. We'll have you on again. Great explanation of this. Peter St. Onge. He's with the Heritage Foundation. You can follow him @PeterStOnge. Good luck spelling Onge. I mean, just saying.