The income tax is a landmark progressive innovation of the last century, and it is under attack from multiple sides. President Donald Trump has explicitly targeted the income tax, repeating his goal to eliminate and “substantially replace” it with tariffs during his last State of the Union. A number of leading Democrats are now adding their own proposals to undercut the income tax, threatening to weaken a crucial aspect of progressive governance.

The income tax embodies the principles that the government should be financed based on ability to pay; that those with more resources should contribute a greater share of what they make reflecting basic fairness and as a way of addressing inequality; and that we must have a broad and robust tax system to finance the government Americans deserve. The individual income tax’s enactment in 1913 required a constitutional amendment to overcome an oppositional Supreme Court and was the achievement of a progressive movement aimed at financing more robust public goods and replacing tariffs that taxed workers more heavily than the wealthy. In recent decades, income tax revenue has been the single largest source of funding for our government and its activities, which include the basic research that has helped drive economic growth and higher living standards, medical care access expansion, the programs that lift millions out of poverty, national security investments, and much more.

Over the century since the income tax’s enactment, progressives have prioritized more fully realizing its promise so it generates the revenue needed to support public goods critical to shared prosperity and to more strongly counter inequality. They have achieved significant gains and fought for further improvements—including more effectively taxing income from wealth and curtailing corporations’ ability to shift profits offshore to reduce their tax bill. At every step, those with the most ability to pay have sought to block or undermine the income tax, including through relentless and intense anti-tax campaigns.

Now, the modern income tax faces possibly its gravest threats yet. President Trump’s rhetoric and policy agenda to replace the income tax with tariffs is impossible: At most, tariffs could replace around one-eighth of the revenue the federal income tax currently collects, which totaled over $3 trillion in 2025 and constitutes about three-fifths of all federal revenue. The move would be deeply regressive. Yet President Trump has taken a large swing at undercutting the income tax. He has enacted laws that slash trillions in revenue over a decade and carve out specific types of income like tips, and tried to sell this regressive move as a populist one.

Unfortunately, some moderates and progressives are joining the anti-tax fray. Many have endorsed versions of President Trump’s “no tax on” tips or overtime proposals, which both lose needed revenue and undermine the basic logic of the system. If tipped workers shouldn’t pay income tax on tips, why should a nurse or teacher on their whole salary? Now, some high-profile Democrats including Senators Chris Van Hollen and Cory Booker have proposed broadening the “no tax on” rhetoric to “no income taxes” at all for tens of millions of middle-income Americans.

While there are large differences between President Trump’s policies and recent Democratic tax-cutting proposals, they reflect a troubling shared impulse: the idea that we should tax only “bad” things and people, and that taxes are therefore a discouragement or punishment. Even if the “bad” things subject to tax include highly concentrated wealth, taxing only “bad” things will not generate the revenue we need for robust public goods and investment—not even close.

To be sure, the brunt of new tax increases should predominantly fall on the wealthy and large businesses, even as additional revenue from them alone is unlikely to sustainably finance the government. There is a strong case for targeted support, whether in the form of tax cuts or other programs, for lower-income families and workers. But the broader middle-class tax cuts in recent Democratic proposals risk doing major damage to the revenue base. As a result, these proposals threaten to fundamentally undermine the progressive project, including the investments and safety net critical to shared prosperity. They may also undermine democracy itself, because, as Brookings scholar Vanessa Williamson wrote, “It will be difficult to maintain public faith in the value of electoral democracy if the state is too poor to enact the policies that majorities demand.”

Even if not enacted, these types of proposals can do real damage by feeding into anti-tax narratives that make achieving progressive policy victories more difficult. Dreams for a better, more responsive government depend on a robust income tax based on ability to pay that funds our shared national priorities. While progressives cannot win an anti-tax fight against those who seek to destroy the income tax, we should continue the effort to level up on tax fairness by plugging holes that disproportionately benefit the rich and large corporations, rather than level down by giving up and making new holes.

A Hard-Won Achievement—With Holes Left to Fill

For most of the 1800s, the federal government relied on broad tariffs that fell more heavily on low- and middle-income consumers who spent more of what they made than the well-off. After temporarily imposing income taxes during the Civil War through 1872, Congress attempted to enact an income tax again in the late 1800s, but a reactionary Supreme Court struck it down as unconstitutional in 1895. A key goal and enormous achievement of the Progressive Era was overturning the Supreme Court’s decision through the Sixteenth Amendment, ratified in 1913, which expressly authorized Congress “to lay and collect taxes on incomes, from whatever source derived.”

Across generations, Congress used this power to transition from tariffs to progressive individual and corporate income taxes with a broad starting point for income—“from whatever source derived.” This approach reflects a basic bargain: that Americans contribute to shared national priorities based on their ability to pay. And it was fundamental to building a larger revenue base to fund an expanded federal government. Under President Franklin D. Roosevelt, the income tax base was broadened to cover most of the population to help finance World War II and stayed that way to finance more federal public goods generally.

In more recent decades, policymakers enacted meaningful improvements—from bipartisan efforts to close tax shelters in 1986, to increasing the top rate in 1990 and 1993 and letting it revert to higher levels in 2013, to raising the rate on high-income people’s capital gains, dividends, and other investment income to help fund the Affordable Care Act, to enacting a series of targeted base-broadening reforms over time, whether they be efforts to address gaming using offsetting investment positions or attempts to defer interest income. Yet policymakers have failed to plug other longstanding holes, such as how the wealthiest avoid taxation of gains on investments by holding that property until death—a gap that helps drive down their overall tax rates. These types of skewed tax preferences are a key reason why the income tax does not do as much as it could to reduce racial inequality in income and wealth. Policymakers have also opened up new holes, often on a bipartisan basis, that entirely exempt certain income from taxation, such as costly and regressive Roth retirement accounts that some of the wealthiest Americans have reportedly stuffed billions into.

The income tax has also been weakened by rounds of tax cuts, like those enacted under President George W. Bush and by President Trump in 2017. Motivated by decades of conservative anti-tax activism, these regressive tax cuts together cost roughly 3 percent of GDP, or in the range of $1 trillion per year. While the Bush and Trump tax cuts began as largely partisan, there was eventually bipartisan support for maintaining the tax cuts for most Americans. The results of these cuts are substantially reduced tax rates for those with the most ability to pay and structural budget deficits. There is too little revenue to cover the growth in federal spending, mainly due to rising Social Security and health care costs—even as the Trump Administration has enacted cuts to Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and other supports for workers and families. Even with the damage from tax cuts, they left the income tax’s basic structure in place, and the 2017 tax cuts even broadened the base in certain meaningful ways, such as limiting the home mortgage interest deduction.

Nonetheless, despite glaring gaps and some new wounds, the income tax system is a critical progressive policy achievement along several dimensions.

The individual and corporate income taxes combined raise about three-fifths of all federal revenue, worth around 10 percent of GDP—or $40 trillion over a decade. Income tax revenue supports a range of public investments from Medicaid and the Children’s Health Insurance Program (CHIP) to education to nutrition assistance. It also backstops dedicated funding streams for Medicare, Social Security, unemployment insurance, and the federal highway system.

Income taxes are also the most progressive large federal tax. The individual income tax scales up as income increases while providing tax credits for low-income workers, and the corporate income tax falls disproportionately on generally wealthy owners of capital and high-income workers. Average tax rates probably begin to fall toward the very top due to fixable weaknesses, such as ultra-wealthy people’s ability to shelter income from tax through various entities, and to pass on income from asset gains to heirs without facing any income tax. Nevertheless, recent research shows we have more success in taxing billionaires than many other countries, largely because of the corporate income tax.

Additionally, income taxes are an “automatic stabilizer” and form of social insurance, cushioning the blow of recessions and job losses as filers losing income pay less tax or receive greater tax credits. Consumers pay the same in tariffs on necessities whether or not they have a job, but income tax rates fall for people whose incomes face a hit. That’s important in the face of economic uncertainty, including artificial intelligence’s economic impacts.

Overall, the income tax—even its current form—is a primary tool for addressing inequality, both directly by taxing progressively based on resources and indirectly through the programs that it finances.

It is also a tool that could be so much stronger. Historically, progressives have sought to build on the income tax’s achievements and address its weaknesses by ending loopholes and investing in public goods, and in ways that would reduce inequality by incomes, wealth, race, and other key dimensions. They’ve largely resisted a tempting alternative reaction to give up on the promise of the income tax and enlarge its holes to benefit middle-class filers.

Threats From Different Directions

President Trump’s attacks—both his rhetoric and his policy achievements—are increasingly dangerous to the income tax. Last year, he reminisced that “Our country was the strongest from 1870 to 1913. You know why? It was all tariff based. We had no income tax.”

Tariffs can’t come close to replacing the income tax, so the end game here is not just a far more regressive tax system, but a government too small to perform most modern functions. After all, from 1870 to 1913, the federal government did not have health coverage programs including Medicaid, CHIP, or the Affordable Care Act, support for primary education, NASA or the National Science Foundation, food and housing assistance, and much more.

While levying historic tariff increases, Trump has undermined the income tax. A version of his campaign proposals for “no tax on” tips, overtime, and more are now law. These policies cost over $60 billion annually—more than what it would cost to restore enhanced premium tax credits for purchasing affordable health care coverage—while doing nothing for 87 percent of households within the bottom 40 percent of the income distribution (those with income below $66,000). More importantly, they break the logic of the income tax. They designate certain types of income and activities as “good” and tax-exempt, undermining the idea that income from “whatever source derived” should be taxed if a person is able to pay tax (and taxed more as income increases). In doing so, these types of large carveouts invite gaming and even outright fraud, especially in the context of depleted IRS resources. Indeed, early evidence suggests the overtime deduction claims are far exceeding scorekeepers’ expectations, potentially further increasing the deduction’s cost.

Unfortunately, it’s not just President Trump or conservatives putting the income tax at risk. Some Democrats have supported and are increasingly championing policies that undercut the income tax. Recently, many Democrats signed onto no tax on tips or overtime proposals, or have even criticized these policies as enacted for not exempting more income and proposed extensions to more types of income, too.

Now, some want to double down. Apparently in response to perceived political success of President Trump’s “no tax on” idea and understandable concerns about the cost of living for typical Americans, some leading Democrats are proposing to exempt tens of millions more Americans from income taxes, with benefits mainly flowing to middle- and upper-middle-class filers.

Analysts across the ideological spectrum have highlighted many problems with these proposals. The tax cut proposals cost at least $1.6 trillion over a decade; one version could cost over $5 trillion. Those living in poverty get virtually nothing from these income tax exemptions while families with six-figure incomes can get tax cuts worth thousands of dollars. While the proposals include tax increases on high-income people, the tax cuts are new additions to the policy agenda. Those tax increases—which would be improvements on their own—draw from the same pool of popular tax policies policymakers have already spoken for several times over to pay for a range of proposals, from reversing the Medicaid and SNAP cuts enacted last year, to lowering health care and housing costs, to providing universal paid leave and child care, to investing in infrastructure and basic scientific research key to growth and innovation in the years ahead. If they’re used to pay for tax cuts, they can’t pay for those proposals.

Importantly, the design and sales pitches for these tax cuts are far more troubling than they were for past Democratic tax cut proposals or pledges to not increase taxes below certain income thresholds. That’s because they much more explicitly buy into and perpetuate the false narrative treating taxes “only as a burden to be eased rather than as a foundation for democratic governance itself,” as Roosevelt Institute President Elizabeth Wilkins put it. The proponents of these tax cuts echo anti-tax rhetoric, like how the government shouldn’t take what Americans earn. Senator Booker’s plan is in fact titled the “Keep Your Pay Act.” But there’s a fundamental problem with this. To even finance the government we have—not to mention the government we should have—the middle- and upper-middle class will have to contribute. Rhetoric likes this suggests that it isn’t worth it for them to do so—that it’s better for them to keep their pay than finance programs like Social Security, Medicare, Medicaid, and so much more.

This rhetoric strikes a different tone than that associated with past and generally more targeted progressive-supported tax cuts, like an expanded Child Tax Credit. Further, while existing tax policies result in many poor households not paying income taxes or even receiving support through the tax system, that reflects their low incomes and specific circumstances, including the cost of work and raising children, that limit their ability to pay. Unlike those policies, the new cut proposals are explicitly designed to zero out income taxes for middle-income households and extend tax cuts to those with six figure incomes—i.e., households that have more ability to pay. After decades of Republican-driven tax cuts that have benefited middle- and upper-middle-class households as well as the very rich, the proposals seem motivated by a belief that Republicans have not gone far enough in their tax-cutting and expressly aim to further shrink the income tax’s reach.

The Country Needs a Broad Tax Base

Progressives want the government to do more. There is no way to achieve that without broad-based taxes like the income tax.

The income tax is projected to raise about $40 trillion over a decade (10 percent of GDP). Payroll taxes, which are a limited and less progressive form of income taxation on wages, are projected to raise another $23 trillion (6 percent of GDP). Together, income and payroll taxes account for 90 percent of federal revenue. The federal government needs this revenue—indeed far more—to defend and expand the social safety net as progressives hope it will.

Recent proposals for “no tax on X type of income” or “no tax below $Y threshold” go backward by collectively losing trillions in revenue. They also embrace anti-tax logic that fuels a race-to-the-bottom of eroding our bedrock revenue sources. Federal and state policymakers may be tempted to keep raising the tax exemption threshold, or granting tax exemptions to new types of “good” income (as some Democrats have already proposed), and pressure for new tax cuts may only mount over time. For instance: If the policy goal is to ensure “American households don’t pay taxes on their first $75,000 of earnings,” as Senator Booker put it, why should they continue to pay payroll taxes? The revenue damage could therefore be far worse than these initial proposals and could even threaten Social Security and Medicare’s already-fragile finances. And it would be potentially irreversible, given political obstacles to raising taxes on middle-income filers.

Many progressives desire a broader social safety net like those in many European social democracies, such as universal health care coverage, paid leave, and benefits for children. These programs are financed by broad consumption and income taxes, and other high-income countries raise more revenue as a share of the economy than the United States. In recent years, for example, Germany has raised total tax revenue of about 38 percent of GDP and the United Kingdom has raised about 35 percent of GDP. The United States has raised only about 27 percent. There have been thoughtful proposals to shift in a revenue-neutral or revenue-increasing way by replacing a part of the U.S. income tax with progressive consumption taxes, which would involve serious trade-offs, but are at least mathematically plausible. But the same impulse underlying the recent Democratic proposals to exempt broad swathes of middle-income households from taxation would also foreclose any of these options.

Meanwhile, narrower alternative tax bases that some support could not offset a weakened income tax. For example, many have championed proposals to tax the wealth of some 0.15 percent or less of the highest-wealth filers. Even the most ambitious wealth tax proposals could optimistically raise several trillion over a decade—one-tenth or less of what the income and payroll taxes currently raise. So wealth taxes can be rightly proposed as an add-on to existing taxes, but not a full replacement. As a result, it is troubling that some wealth tax proponents including Senators Van Hollen and Bernie Sanders (a cosponsor of Van Hollen’s proposal) are simultaneously embracing proposals that undercut the income tax.

The idea of using a federal wealth tax to replace other progressive revenue is particularly problematic given that a federal wealth tax is likely to be struck down by the current Supreme Court and so would not generate any additional revenue at all. To be clear, a well-designed federal wealth tax could be a good complement to a robust income tax, and we think is allowed under a proper reading of the Constitution. The Tax Law Center and a broad coalition worked hard to successfully ensure the Supreme Court in the Moore case decided in 2024 did not preemptively narrow Congress’s policy toolkit, including by blocking a wealth tax. But based on what was effectively a close vote in that case and questions from key justices, the current Court would very likely strike down a federal wealth tax if it came to them.

To the extent advocates want to dare the Court to strike down a wealth tax to reveal its sympathy for billionaires, those advocates’ efforts to enact a wealth tax should be evaluated on that basis, not seen as a way to raise revenue or push back on inequality. Federal wealth taxes would be incredibly fragile unless and until we have a different or reformed Court or a new constitutional amendment. In the meantime, those serious about actually reducing inequality or funding the government can’t afford to count on a wealth tax even to supplement an income tax—let alone to make up for hollowing it out.

Some might think a narrower income tax could be shored up by taxes focused only on groups they consider “bad,” like billionaires, or excises on activities that produce social ills. That might include carbon taxes to address climate change, better-targeted tariffs focused on actually protecting national security interests, taxing goods and services that have costs both for users and broader society like tobacco and gambling, or “robot taxes” to slow AI deployment. Well-designed taxes that are effective at changing behavior that inflicts harms on others are indeed important add-ons to the income tax.

However, the availability of well-designed excises should not change the crucial priority of having a broad income tax base. Critically, the central goal of these policies is not actually to raise revenue, but, instead, to correct behavior. As a result, a successful excise tax should shrink what it is taxing, illustrating the limits of such measures as a revenue source for financing the government. Even a broad carbon tax might raise in the range of $1 trillion over a decade compared to the $40 trillion brought in by the current income tax—underscoring the need to pair it with maintaining a broad income tax.

In short, progressives need broad taxes to raise the revenue required to fulfill their vision of government, and there is not a ready progressive replacement to the income tax in the United States. It is good to focus energy on solving major tax fairness issues including taxing billionaires, and there are important tools that can complement the income tax. It is valuable to develop, debate, and mainstream ideas to make the tax system fairer beyond what the political and judicial systems can currently bear. But it can be damaging to the progressive project to do so with policies or rhetoric undermining the income tax.

The Path Forward: Protect and Strengthen the Income Tax

Progressives, moderates, and indeed anyone who cares about building a better federal government should take the threats to the income tax seriously and defend it against attacks from all comers. That means standing up to Trump, but also avoiding self-sabotage like the “no tax on X type of income” or “no tax below $Y threshold” trend.

Beyond that, progressives should maintain the focus and resilience of their predecessors who fought to secure the income tax, and who have in recent decades brought important ideas to plug its holes into the mainstream, including several described in other articles in this symposium and that we have detailed elsewhere. Key priorities include enacting reforms to stop the largest corporations from shifting profits overseas and outside the U.S. tax base; addressing weaknesses in how we tax business profits; and preventing the wealthiest from escaping taxation of large gains on their assets by holding them until death, as Senators Van Hollen and Booker have previously championed, and by way of mega-Roth retirement accounts. This is not an exhaustive list, and strengthening the income tax base would complement other needed tax reforms including tax rate increases.

We must have the same discipline as private interests who have pushed against the income tax since before its birth. Their ferocity and repeated attempts to co-opt popular opinion to help achieve their regressive and stunted vision of government is not a reason to give up. It simply underscores what’s at stake.

The progressive income tax is a terrible thing to waste. It needs champions who embrace, defend, and build on its ideals and achievements, not undermine it.