Republican presidential candidate Donald Trump has proposed the idea of ​​a “pure tariff policy.” Trump knows a thing or two about this, having been an avid proponent of tariffs during his first term as president. While this proposal to replace the federal income tax may seem like it would reduce the tax burden, experts say that’s not necessarily the case.

Also read: Trump wants to abolish income tax – how would that affect you when you retire?

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“The tariffs are ultimately paid by consumers, not manufacturers,” says Michael Montgomery, a lecturer in the Department of Health and Human Services at the University of Michigan-Dearborn. “They are essentially a secret sales tax on non-American products.”

Read on to learn what impact abolishing the income tax would have on America’s lower middle class.

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Higher salaries

“Members of the lower middle class would benefit from the immediate relief provided by eliminating the income tax,” said Daniel Anderson, a certified financial planner. “More money in your pocket means you can meet immediate financial needs, such as paying off debt, covering essential expenses or saving for a rainy day.”

Federal income tax is between 10% and 37% of your income, depending on how much you earn. If you’re lower middle class, you earn between $30,001 and $58,020. If there’s no income tax, the good news is that your paycheck will be 10% to 22% higher.

“The net pay would increase significantly without income tax deductions,” said Dr. Jim Ronan, a lecturer in the political science department at Villanova University.

This could make a difference in financial portfolios. Ronan said it would give lower middle class people the opportunity to invest some of the extra income they would have left over.

“The lower middle class, early in their careers, would have more income to draw on and perhaps invest in long-term retirement and savings accounts,” he said. “This would help address the rising share of younger workers who are unable to save money for later in life.”

More expensive goods

If our economy became dependent on tariffs, inflation would be a problem.

“Trump’s plan to raise tariffs to offset revenue losses would cause a price shock, as prices for goods and services would likely rise significantly and rapidly,” Ronan said.

The lower middle class would be hit particularly hard by rising prices. Montgomery said that abolishing the income tax and switching to a tariff-only approach would mean that the lower middle class would ultimately spend a larger portion of their salary as consumers.

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He explained: “Tariffs are regressive because less wealthy citizens have to spend a larger share of their total income than wealthier citizens to buy what they need.”

Anderson said lower-middle-class consumers could also see tax increases.

“To offset lower income tax revenues, location-based taxes such as sales or property taxes would likely increase.”

Purchasing everything would probably become more expensive.

Burden on social programs

Not only goods would be affected by the income tax cut. Anderson emphasized that social programs would also suffer – which would have a direct impact on the lower middle class.

“The loss of income tax revenue puts a strain on social safety net programs designed specifically for poor and low-income households,” Anderson said. “Programs like Medicaid, food assistance, and housing assistance are all designed and adequately funded by federal income tax revenue. Reduced funding would result in cuts to eligibility requirements, benefit reductions, or longer wait times for benefits – all of which undermine the stability and well-being of lower-middle-class families.”

Greater income inequality

Because the lower middle class will most likely be forced to spend a higher percentage of their salary on goods and social programs, the gap between the upper and lower middle classes will widen, warns Chuck Warren, host of the “Political Podcast.”

“Although this policy would provide immediate financial relief, it could also increase economic inequality,” Warren said. “The wealthier parts of society could benefit disproportionately, which could lead to a wider gap between members of the upper middle class and those of the lower class.”

In summary, Warren said that without the income tax, while lower middle class wages might decline, they would also face other problems.

“While abolishing income tax may provide immediate financial relief to both the upper and lower middle classes, it could lead to several problems in the long term, such as inflation, a decline in public services or greater economic inequality.”

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